Archive for Thursday, May 28, 2015

Kansas Senate leader sees budget cuts after tax plan fails

May 28, 2015

— Kansas legislators must trim state spending, the Senate's top leader said Wednesday, after the chamber rejected a plan for raising taxes to close a projected budget shortfall.

The Senate voted 30-1 against giving first-round approval to a bill to raise sales, tobacco and gasoline taxes and to suspend for two years a 2012 tax break for business owners and farmers that is one of Republican Gov. Sam Brownback's biggest economic initiatives.

"Clearly, we need to do some additional cutting in order to get out of here," said Senate President Susan Wagle, a Wichita Republican.

The Senate's daylong debate exposed multiple divisions among its Republican supermajority over closing a $406 million budget deficit projected for the fiscal year beginning July 1. Wagle, a Wichita Republican, and Majority Leader Terry Bruce, a Nickerson Republican, disagree over preserving the tax break for business owners and farmers.

Half a dozen conservative GOP senators signaled that they won't support any tax increase, and Republicans don't expect to get any help from the eight Democrats in the 40-member chamber.

House and Senate negotiators finished work last week on a proposed $15.5 billion state budget for the next fiscal year, but tax increases would be necessary to meet the state constitution's mandate that it balance. Wagle said they'll have to rethink spending recommendations, but she wasn't specific.

The budget problems arose after Brownback successfully pushed lawmakers to cut personal income taxes in 2012 and 2013 to stimulate the economy. The state reduced income tax rates, dropped its top rate 29 percent, and exempted the profits of 281,000 business owners and 53,000 farmers altogether.

GOP legislators are wrestling with how much to increase the state's 6.15 percent sales tax and whether to backtrack on Brownback's favored tax break for business owners and farmers.

The Senate began Wednesday with a bill to raise $496 million during the next fiscal year, more than enough to close the budget shortfall. It finished with a bill that would have raised $354 million toward closing the shortfall, not enough to do the job after members whittled away at its contents.

The only vote to advance it came from tax committee Chairman Les Donovan, a Wichita Republican.

Conservative Republicans tried unsuccessfully to shorten the debate by killing the bill at the start, and most Democrats supported them. GOP Sen. Dennis Pyle, of Hiawatha, held up a bag containing a closed jar of garlic-flavored catfish food and dropped it into a trash can normally kept under his desk.

"It's called stink bait. If you want to come and smell it, you're welcome to open it," Pyle said. "That's where that tax increase is right now. It's right beside that stink bait."

Senators continued debating the plan, but Bruce acknowledged they were administering "death by a thousand cuts."

But he said afterward that the debate suggested the Senate is unlikely to pass a proposal to narrow or repeal the exemption for business owners and farmers. The plan debated Wednesday would have replaced it for two years with a less lucrative income tax credit against businesses' Kansas payrolls.

"We have some direction as to what doesn't work," Bruce said.

But Wagle argued during the debate that if lawmakers don't rethink the exemption, they must consider boosting the sales tax to 7 percent or 7.15 percent — giving Kansas a statewide rate second only to California's 7.5 percent.

The bill boosted the sales tax to 6.5 percent. But senators voted 27-10 for a proposal from Minority Leader Anthony Hensley, a Topeka Democrat, to drop the rate on food to 5.7 percent to help poor and middle-class families.

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