Archive for Sunday, March 22, 2015

Analysis: Kansas GOP lawmakers set up debate on higher taxes

March 22, 2015

— Republicans who control the Kansas Legislature are boxing themselves into considering tax increases by drafting proposed budgets in both chambers that don't balance without them.

GOP legislators have repeatedly said that the budget shortfall projected at nearly $600 million for the fiscal year beginning July 1 represents a spending problem, not a revenue problem.

But, absent a significant, positive change in the state's financial picture, top Republican lawmakers are now anticipating general tax increases of more than $100 million a year.

Gov. Sam Brownback has proposed backing off future income tax cuts and raising tobacco and alcohol taxes, and the House and Senate tax committees have had a hearing on other proposals, such as taxing renewable energy, imposing the state sales tax on utility bills and even raising property taxes.

The $15 billion-plus spending plans for the next fiscal year approved by the House and Senate budget committees rely heavily on shifting funds from transportation projects to other areas of government, and lawmakers have trimmed some general government spending. But GOP leaders also are promising new money to public schools — albeit, mostly to cover rising teacher pension costs — and greater spending on social services.

The state cut its top personal income tax rate by 29 percent and exempted 281,000 business owners and 53,000 farmers from the tax altogether. Legislators are not talking about reversing the rate cuts, but some GOP lawmakers are proposing to tinker with the tax break for business owners and farmers.

The shortfall arose after Brownback won approval of aggressive income tax cuts in 2012 and 2013 as an economic stimulus. While there's some thought of tinkering with those policies, Brownback and GOP legislators are floating a wide variety to proposals to raise taxes in other ways.

The House and Senate expect to debate their committees' proposed budgets this week and to pass a final spending blueprint for state government before lawmakers start their annual spring break on April 4. They are scheduled to return from their break April 29 to finish the year's business, and their wrap-up is likely to be dominated by tax issues.

"We have no choice," Sen. Les Donovan, chairman of the Senate Assessment and Taxation Committee and a Wichita Republican, told the panel's members last week. "We're going to do what we have to do to get balanced."

At least a few legislators hope the spring brings good financial news. The state collected $22 million more than anticipated in taxes in February, and an unanticipated surplus in March would reduce the projected shortfall. State officials and university economists are meeting April 20 to draft a new financial forecast for state government through June 2016.

"We're seeing improvements in our economy," said House Appropriations Committee Chairman Ron Ryckman Jr., an Olathe Republican. "We'll see if those results end up in the treasury."

Both the House Appropriations Committee's budget proposals and the Senate Ways and Means Committee's recommendations include $6.5 billion in spending financed with the state's general tax revenues for both the next fiscal year and the one beginning July 1, 2016.

"It's not sustainable," said Sen. Laura Kelly of Topeka, the ranking Democrat on the Senate Ways and Means Committee and a strong critic of Brownback's tax-cutting policies. "And we're kidding ourselves."

Each spending blueprint assumes that lawmakers raise more than $210 million a year in new revenues. GOP leaders expect to raise about $100 million by taxing health care insurers, mostly the private firms running the state's Medicaid program, leaving lawmakers to close the rest of the gap with other tax proposals.

"The folks in charge, who in general are fairly fiscally conservative, were not able to cut the budget enough to match available resources," said Rep. Don Hineman, a Dighton Republican who's less conservative than GOP leaders and critical of the Brownback tax cuts. "That indicates we really do have a revenue problem, not a spending problem."

Ryckman and Senate Ways and Means Committee Chairman Ty Masterson, an Andover Republican, said the budget proposals emerging from their committees represent a balance between cutting taxes and funding core government programs.

But the balance the committees have struck have put legislators on the path to spending the last days of their session looking at raising taxes to close the last gaps in the next budget.


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