TOPEKA – Lawmakers from the House and Senate met for the first time today in hopes of negotiating a tax reform bill that both chambers agree on.
But with massive price tags on the tax-cutting plans, major discrepancies between what the House and Senate have approved and some missing details, the six-member negotiating team agreed only that they need more time.
“We do want to make substantive changes in tax laws to grow the Kansas economy,” said St. Marys Republican Rep. Richard Carlson, who chairs the House Assessment and Taxation Committee.
“I think we will agree with you on that,” responded Wichita Republican Sen. Les Donovan, who chairs the Senate Tax Committee.
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But tough decisions abound.
The tax reform bill approved by the House, which eliminates sales tax on groceries, would cost $369 million in the 2013 fiscal year, increasing to $489 million in 2014 and $491 million in 2015. A heavily altered version of Gov. Sam Brownback’s tax reform plan approved by the Senate would cost $233 million in 2013, $829 million in 2014 and $851 million in 2015.
Wichita Democrat Rep. Nile Dillmore said both the House and Senate tax bills are geared toward economic growth, but are likely to create a continuous crisis on how to pay for basic government services.
“What I hope we’re going to do is apply some rational decision making to this euphoria of tax cutting,” he said.
Dillmore said he hopes to soon learn how many new jobs would have to be created to backfill an $800 million hole. He said an initial calculation shows that would be about 35 percent growth in employment in 18 months, which he said isn’t realistic.
Both the House and Senate have approved eliminating nonwage income tax for most businesses – limited liability companies, subchapter S corporations and sole proprietors.
House Republicans would start by eliminating the tax on the first $100,000 of income in 2013-2015 and increasing that to the first $250,000 of income in 2016-2017 before eliminating it altogether. The bill approved by the Senate would eliminate that tax starting in 2013.
The House Republican plan would cap the growth of state spending at 3 percent and use additional revenue to dial down individual income tax rates. Brownback’s plan, as amended by the Senate, would initially bring rates down from 3.5 percent to 3 percent on the first $30,000 of income; from 6.25 percent to 4.9 percent on income from $30,0000 to $60,000; and from 6.45 percent to 4.9 percent on anything more than that.
A Senate committee killed part of Brownback’s plan that would have capped the growth of spending at 2 percent and used anything beyond that to buy down tax rates as long as the state’s ending balance was at 7.5 percent.
Negotiators said they plan to meet each day this week to find common ground. In addition to Carlson, Donovan and Dillmore, the negotiation teams include Sen. Pat Apple, R-Louisburg, Sen. Tom Holland, D-Baldwin City, and Rep. Marvin Kleeb, R-Overland Park.
Donovan said he wants negotiators to find a way to help the most people while harming the fewest.
“It always seems that when you change tax law, you help someone and you hurt someone and you never hear from the one you helped,” Carlson said.
“You hear a lot from those you didn’t,” Donovan said.