House and Senate negotiators focused Wednesday on the Republican-driven push to dial down income tax rates and fix impending budget problems created by last year’s tax cuts.
Wichita Republican Sen. Les Donovan tried to set the tone by advocating for the continuation of a temporary six-tenths of a cent sales tax hike slated to expire this summer. That’s the primary difference between the plans — dubbed tax hikes by Democrats because both plans phase down the value of popular tax deductions — that the House and Senate approved in recent weeks.
The sales tax extension that would raise an estimated $262 million next year is a critical part of the plan, Donovan said.
“That is the bottom line, the linchpin if you will, of whether this works or not,” he said.
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Gov. Sam Brownback, who has made tax cuts the most prominent issue in the state for the past two years, recommended continuing that sales tax in his proposal.
But it has proven politically unpopular with some lawmakers who promised to let the sales tax expire on time when they approved the increase in 2010. Others view it as a tax increase.
Rep. Richard Carlson, R-St.Marys, said many House Republican leaders don’t believe they can get their chamber to approve continuation of the sales tax.
“We’re looking forward to finding solutions to the problem in the long run,” Carlson said.
The plan approved by the Senate cuts rates over the next few years, as proposed by Brownback, and would channel any growth in state revenues beyond 4 percent to more income tax reductions. It continues the sales tax rate at 6.3 percent and trims the value of tax deductions, except the charitable tax deduction, in coming years as rates decline.
The House approved a plan that doesn’t provide automatic rate cuts. But it triggers income tax reductions whenever state revenues grow beyond 2 percent. It allows the sales tax to drop on schedule and trims tax deduction values.
Democrats have blasted both plans as tax hikes designed to make up for big budget problems created by the hastily approved income tax cuts Brownback signed into law last year after a brutal political battle between Brownback’s conservative allies and moderate Republicans and Democrats.
The House’s negotiators are Carlson, Rep. Scott Schawb, R-Olathe, and Rep. Tom Sawyer, D-Wichita. The Senate’s team is Donovan, Sen. Caryn Tyson, R-Parker, and Sen. Tom Holland, D-Baldwin City.
They plan to continue to work out differences in the tax plans next week.