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Study shows sales tax increase would save about 2,000 jobs over comparable cuts

TOPEKA –Raising the state sales tax would save almost 2,000 jobs statewide over making comparable cuts to the 2011 state budget, a study released Monday showed.

Cutting another $350 million from the state budget in 2011 would result in 5,177 jobs lost across Kansas, showed the study prepared for the Kansas Economic Progress Council by Professor John Wong, interim director of the Hugo Wall School of Urban and Public Affairs at Wichita State University.

The study also estimated that increasing the state sales tax 1 cent would result in the loss of 3,231 jobs.

"This study shows there are no easy choices, but the solution that causes the least economic damage is a revenue enhancement,” Kansas Economic Progress Council Executive Director Bernie Koch.

The study estimated that an average Kansas household would pay about $266 more in retail sales tax with the recommended increase– most of that money would go to housing, followed by food and transportation.

In January, Gov. Mark Parkinson, a Democrat, proposed temporarily increased the state sales tax from 5.3 percent to 6.3 percent to prevent deeper cuts to state programs. The state budget has already had about $1 billion cut from it since the 2009 fiscal year.

Further cuts would cripple necessary state programs, Parkinson said at the time.

The findings are drastically different from a computer simulation which showed the sales tax increase could result in 26,000 fewer jobs and $2 billion less in personal income over six years.

Presenting that study to lawmakers in January, Art Hall, director of the University of Kansas Center for Applied Economics and a former economist for Koch Industries, said his computer simulations also showed state jobs increasing by 7,000 positions with the sales tax increase.

Wong's study gave three reasons why increasing the state sales tax would save jobs over deeper budget cuts. Increasing the statewide sales tax would spread the negative impacts from the raise across the state instead of concentrating it in one region, the study said.

The study also noted that the burden of a statewide sales tax increase would be shouldered in part by tourists passing through Kansas. Additionally, much of the money raised by the state would likely stay in Kansas in the form of salaries to state workers and the goods they purchased.

For more, read Tuesday's Wichita Eagle.