TOPEKA — A key part of legislation to lower sales and income taxes will force Kansas to delay highway projects, possibly starting this summer, the state’s top transportation official said Monday.
Transportation Secretary Mike King issued the warning over a bill before the state House to decrease sales and income taxes. King didn’t weigh in on the tax proposals but on a provision to divert $382 million from highway projects over two years to stabilize the rest of the state budget. The diversion would start in July.
Gov. Sam Brownback and many fellow Republicans in the GOP-dominated Legislature want to follow up on massive individual income tax cuts enacted last year with further rate reductions. But last year’s cuts created a budget shortfall, and Brownback has said he wants to protect aid to public schools and other core services and programs.
Brownback has proposed canceling a decrease in the state’s sales tax scheduled by law, also for July. The bill before the House, drafted by the Republican chairman of its Taxation Committee, would permit the sales tax to decline as scheduled and divert funds destined for road projects.
King said such a decision would have serious consequences for the state’s 10-year transportation program. Kansas embarked on the program in 2010 to ensure that it continues to have a highway system that’s regarded as one of the best of any state and to finance major improvements.
“Highway projects will be cut or delayed,” King said in his statement. “At this time, we haven’t analyzed which projects may be affected, but we will consider all categories of projects.”
Taxation Committee Chairman Richard Carlson, a St. Marys Republican, said he isn’t surprised by King’s statement but would prefer delaying highway projects to cutting spending on schools, social services and public safety. Rep. Scott Schwab, an Olathe Republican, said he and other backers of the House plan believe it will stimulate the state’s economy.
“What’s the point of having a good highway if we don’t grow our economy and have people to drive on it?” Schwab said.
King’s statement also is another sign that Brownback’s administration is intensifying pressure on legislators to keep the sales tax at its current 6.3 percent rate, rather than letting it drop to 5.7 percent in July. The House expects to debate its tax bill this week.
Brownback spokeswoman Sherriene Jones-Sontag said the governor welcomes all ideas for stabilizing the budget while still positioning the state to phase out income taxes. But he also sees the transportation program as “a core responsibility,” she said.
Legislators boosted the sales tax in 2010 at the urging of Brownback’s predecessor, then-Democratic Gov. Mark Parkinson, to balance the budget. Parkinson and lawmakers promised that most of the increase would be temporary, and legislators in both parties don’t want to break the pledge now.
Schwab dismissed King’s statement on diverting highway funds as “posturing.”
“If the governor proposed it, they could do it,” Schwab said. “The House proposed it, and they can’t.”
But Rep. Julie Menghini, a Pittsburg Democrat, said it’s logical that a diversion of highway funds would delay projects and slow the transportation program. She argued against the move as a member of the House Taxation Committee.
“You don’t have to be a genius to figure that one out,” she said.
Brownback is proposing to phase in further reductions in individual income tax rates over four years, dropping the top rate to 3.5 percent from 4.9 percent for 2017. The Senate has approved a bill that embraces those reductions, as well as Brownback’s proposal to keep the sales tax at its current rate.
The House plan is less aggressive in cutting income tax rates, dropping Brownback’s proposed guarantee that rates would decline over the next four years. Instead, the House plan says that rates would drop each year if overall state revenues grow by more than 2 percent.