Fixing Kansas budget problems could mean lawmakers rescinding no-tax promises

The path that leads Kansas out of its budget mess could end up paved with broken promises.

Conservative Republicans came to power vowing to work for a leaner state government, one that would cut taxes and leave a smaller footprint.

They did cut taxes. But a budget deficit followed, one that may now require higher taxes to balance a still-growing state budget.

Gov. Sam Brownback, who pushed for those deep income tax cuts, wants fellow conservatives to ignore the no-new-tax pledges many of them have made since 2012.

He proposed higher taxes on cigarettes and alcohol, an idea that has been coolly received in the Legislature. The governor’s budget also depends on a $136 million tax increase on health maintenance organizations.

Leading lawmakers have entertained their own ideas, including increases in sales or gas taxes or a tax on “passive income,” including earnings from rent.

Another proposal would close a loophole that lets wages go untaxed for owners of limited liability companies, sole proprietorships and the like. Although income from those businesses was supposed to be tax-free, the wages paid from that revenue were always still intended to be taxed, lawmakers said.

But efforts to raise taxes run headlong into opposition from conservatives who ran for office touting anti-tax credentials.

About of a third of the 125-member Kansas House has signaled an unwillingness to raise taxes when revenue falls short of spending. Almost half of the 40-member Kansas Senate is on record as opposing new taxes.

Spending cuts preferred

In the two most recent election cycles, Americans for Prosperity has surveyed legislative candidates about their views on taxes. The group, funded partly by billionaire industrialists David and Charles Koch, asked candidates for their top priority if revenue fell short of expenses.

Thirty-six House members said they would cut spending and not raise taxes, according to surveys filled out during the 2012 and 2014 election cycles.

Another seven House members said they would consider a tax increase only if spending were to be cut more than 5 percent. The proposed state budget for 2016 is now at $6.5 billion, about $200 million more than the current budget.

In the Senate, 11 legislators said they would prefer to cut spending over raising taxes.

Another six senators signed pledges with anti-tax crusader Grover Norquist’s group, Americans for Tax Reform, promising to oppose new taxes.

Among those signing that pledge was Senate President Susan Wagle, R-Wichita. Her office would not comment for this story.

Some lawmakers answering the Americans for Prosperity survey were open to higher consumption taxes as long as the overall tax burden would be reduced or remain steady.

The proposed 2016 budget currently depends on about $200 million in new taxes, unless the state revenue picture gets gloomier. The state is about $48 million below revenue estimates for the current year.

Americans for Prosperity is ready to hold lawmakers accountable for their promises.

“We’ll certainly remind them,” said Jeff Glendening, state director of Americans for Prosperity in Kansas.

Softening tax stance

Some of the lawmakers who said their top priority was cutting spending are softening their anti-tax rhetoric.

House Speaker Ray Merrick, R-Stilwell, has repeatedly said the state has a spending problem, not a revenue problem. He was among lawmakers who said their priority was to cut spending instead of raising taxes. But in an e-mailed statement, he acknowledged that his goal faced a “big obstacle.”

He said the Legislature promised not to cut schools while a new funding formula is developed. He also said the Legislature can’t control escalating costs for social services, including medical care for the poor.

“The Legislature is not equipped effectively to identify savings in the rest of the budget,” Merrick said. “Lawmakers do not have time or resources to go into the agencies and identify places for cuts or where duplication of efforts may exist.”

Merrick pointed out that the current budget includes $3 million for a study to find ways to identify savings and make government more efficient.

But some in the Legislature say lawmakers haven’t done enough to cut the budget. They grumble the House won’t even get a whack at the budget because of a procedural maneuver limiting that chamber’s debate on the spending plan to an all-or-nothing vote without amendments.

“We have not yet exhausted nearly enough effort to reduce spending,” said Rep. John Rubin, R-Shawnee.

Rep. Steve Brunk, R-Wichita, has been a staunch opponent of tax increases. Last year, he told Americans for Prosperity in a candidate survey that he wouldn’t raise taxes. He also has signed the Norquist pledge.

“It’s a different world today,” Brunk said of the survey he filled out before the state’s revenue problems set in.

Brunk said he’s still wrestling with the idea of raising taxes given the massive budget hole the state faces. He still wants to see more budget cuts, but he’s not sure whether that’s enough to fill the deficit.

“There’s my personal ideology on this issue,” Brunk said, “then there’s the uncomfortable reality of where we are.”

Others, such as Sen. Rob Olson, R-Olathe, are dug in.

“I’m not going back on the no-tax pledge,” Olson said. “If they’re counting on my vote (for taxes) to get out of there, it’s going to be a pretty long session.”

This story was originally published April 13, 2015 at 7:18 PM with the headline "Fixing Kansas budget problems could mean lawmakers rescinding no-tax promises."