TOPEKA — A study released Monday says that an increase to the state sales tax — instead of comparable budget cuts — would save about 2,000 Kansas jobs.
The study, commissioned by the Kansas Economic Progress Council, reported that a 1-cent increase to the state sales tax — which would raise $350 million — would result in the loss of 3,231 jobs. If the state were to cut $350 million from the 2011 budget, the study projected the state would lose 5,177 jobs.
"This study shows there are no easy choices, but the solution that causes the least economic damage is a revenue enhancement," said Bernie Koch, executive director for the Kansas Economic Progress Council, which represents businesses and business organizations throughout the state.
Kent Eckles, vice president for government affairs at the Kansas Chamber of Commerce, called the study "misguided and off the mark."
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The study was released as lawmakers from both chambers return to Topeka this week to start work on their respective budget proposals for fiscal year 2011, which starts July 1. The state is facing a deficit of about $500 million next fiscal year.
The Legislature's wrap-up session, during which the budget must be approved, begins April 28.
The Kansas Chamber of Commerce has been, and remains, a vocal opponent to any tax increase.
Increasing the state sales tax would help save government jobs at the expense of private business, Eckles said.
"Private sector jobs are the ones that fund the state," he said. "Businesses fund the state, not government jobs."
The report was prepared for the Kansas Economic Progress Council by John Wong, interim director of the Hugo Wall School of Urban and Public Affairs at Wichita State University.
"If you cut government spending or increase taxes, that reflects negatively on someone," Wong said.
Both scenarios that the study looked at had negative outcomes, but there was a difference in magnitude.
Given the state's budget circumstances — lawmakers are wrangling with a budget shortfall of $450 million to $510 million depending on the spending proposal — both cuts and revenue enhancements will likely be needed, Wong said.
When he unveiled his budget proposal in January, Democratic Gov. Mark Parkinson said further cuts to state programs would be devastating. He proposed a three-year, 1-cent sales tax increase to raise about $350 million.
On Monday, the governor praised the study.
"This study demonstrates the importance of funding our critical state services, not just for our children's education, our communities' safety and our vulnerable citizens' safety net, but also for our state's economy," Parkinson said in a statement.
"That is why I have called on the legislature to implement a temporary solution so that we can create lasting economic recovery."
The Senate Ways and Means Committee began work Monday reviewing the budget proposal it had approved before lawmakers adjourned earlier this month.
Normally, lawmakers would have passed the main state-spending package before leaving town for a mid-session break. This year, both chambers postponed their budget debates until the veto session, which begins April 28. Legislative leaders said they wanted to see how new revenue estimates would affect the available revenue before debating a budget.
Those numbers came out Friday and are reflected in the current shortfall estimates.
The Senate's budget proposal relies on about $100 million in cuts to state spending and looks to increased state revenue to fill the remainder of the hole.
Included in the budget are state dollars that will replace about $172 million in federal stimulus money for public schools, which is disappearing.
The proposal would also restore a 10 percent cut to Medicaid provider payments.
Committee Chairman Sen. Jay Emler, R-Lindsborg, said he anticipated his committee would finish work on the budget proposal today. The panel would then turn its attention to a package that would help pay for the budget.
Emler said he thought the budget committee's revenue package could include taxes on cigarettes, alcohol and sugary drinks and possibly an increase in the sales tax or discussion about the state's income tax structure.
He said he has warned his committee that they "have to be willing to vote for this package that funds the budget."
Wong said his study only reflected the impact of changes to the state sales tax, not other taxes.
"If you had taxes that were industry specific it would have a very different impact," Wong said.
He said one problem with taxes that target a narrow base — such as cigarettes — was the amount that Kansas could reasonably collect was too small to solve the state's budget woes.
For example, a $1 per pack tax increase on cigarettes — which is double any current proposal — would mean the state would have to sell 350 million packs of cigarettes to fill the budget gap, he said.
"You can throw those things into the equations but they are very narrow slices of the economy," he said.
The House Appropriations Committee is set to meet Thursday and Friday to revise its budget proposal.
That current proposal would not replace the federal education dollars with state money so public schools would see their budget decrease — although state spending on schools would stay flat.
The House budget also includes no tax increase, which lawmakers would have to vote on. The proposal would most likely increase local property taxes as schools turned to taxpayers in their districts to offset their decreased budgets.