Print edition: 
State Revenue Secretary Joan Wagnon urged Wichita-area lawmakers Thursday to repeal a sales tax exemption on water, power and natural gas bills, a move that would raise utility bills for residents and farmers.
That exemption, worth $140 million in 2010 and $146 million in 2011, was the largest on a list of about 65 sales tax exemptions that Wagnon says should be repealed to help the state balance its distressed budget.
The list includes $196 million in exemptions ranging from breaks for charitable and religious organizations to lottery tickets and coin-operated laundries.
Wagnon has noted for months that sales tax exemptions, along with property and income tax abatements, have stripped the state of the money it desperately needs to maintain public services through the ongoing recession.
She's calling for a three-year moratorium on new tax exemptions and a re-examination of existing tax breaks.
Her list, she said, represents "$200 million of exemptions we could afford to get rid of."
Although there is a line item for sales tax on most utility bills, it's for local taxes and the state doesn't take the 5.3 percent it would without the exemption, Wagnon said.
A former member of the Legislature and former Topeka mayor, Wagnon acknowledged that repealing the exemption could be politically difficult for lawmakers. But she said it would not be as difficult as raising taxes by the same amount would be.
The second-largest line item on Wagnon's list is the exemption for religious organizations. That amounts to $17.9 million in 2010 and $18.6 million in 2001, records show.
In third place was the exemption for lottery tickets, $14.6 million for 2010 and $15.1 million in 2011.
About 25 of the entries on the list are for purchases made by named charities, ranging from the American Heart Association to the Johnson County Young Matrons.
Wichita-area charity exemptions include equipment for playgrounds built by the West Sedgwick County Sunrise-Rotary Clubs, tickets to fundraisers for the Guadalupe Health Foundation and properties and services purchased by Youthville and Catholic Charities.
Wagnon presented her ideas for trimming sales-tax exemptions at a legislative summit meeting of the Regional Economic Area Partnership, which represents county and city governments in south-central Kansas.
Earlier in the meeting, Alan Conroy, director of the Kansas Legislative Research Department, told the local and state officials that the latest estimates of the budget shortfalls are $253.6 million for the current fiscal year and $358 million for the 2011 fiscal year, which begins July 1.
Washburn University professor Bradley Borden laid the economic groundwork for Wagnon's presentation, explaining that exemptions are, in economic terms, essentially the equivalent of government spending.
He also said the exceptions benefit a small but often vocal percentage of the population at the expense of the majority.
For example, he questioned the basic fairness of the state exempting prescriptions for male-potency drugs such as Viagra while taxing items such as baby formula and diapers.
"The purchase of the male-enhancement product arguably serves a limited state interest, if any," he said. "Meanwhile, the essentials purchased by a couple struggling to raise a family are subject to state sales tax."
Lawmakers from both sides of the aisle who attended the meeting appeared ready to consider Wagnon's proposal.
Jim Ward, D-Wichita, said he supports a moratorium to give lawmakers time to re-evaluate existing exemptions and weed out the ones that are unjustified or unfair.
He also said lawmakers need a more systematic means of evaluating requests for exemptions so they don't just go to interests with the most effective lobbying.
Sen. Dick Kelsey, R-Goddard, said "I think we ought to get rid of the exemptions.
"I voted for some of them, so call me a hypocrite, but they've gotten out of hand," Kelsey said.
