Gov. Sam Brownback’s glide path to zero income taxes could send the state’s budget into a tailspin.
A new analysis by the nonpartisan legislative research department shows Brownback’s proposal to drive down income tax rates would start eroding the state’s ending balances in 2014 and force lawmakers to cut $781 million in state spending or raise taxes by 2018.
“I think people should be concerned about that in terms of how it could impact their children in school, older parents who depend on social services and disabled Kansans who depend on community-based services,” said Senate Minority Leader Anthony Hensley, D-Topeka. “If the budget cutters have their way, they will cut the budget in order to pay for income tax cuts. That’s a lot of cutting.”
The budget projections caused sticker shock for some lawmakers, and some noted it could be worse if the state is forced to increase education spending, as a district court ruling has suggested, or if the economy falters.
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Brownback’s Secretary of Revenue, Nick Jordan, tried to ease fears.
He said the estimates don’t account for any of the growth spurt Brownback and his conservative economists project as the result of people and businesses flocking to Kansas for lower income taxes and existing residents having more of their income to spend at will.
Jordan also stressed the projections assume state revenue from other taxes will grow at only about a 4 percent clip – which is slower than what the state has seen in the past year as it climbs out of the recession.
Between fiscal years 2011 and 2012, the state had 8.2 percent growth. In the first six months of this fiscal year, the state had 6.2 percent growth, Jordan said.
The new figures emerged as builders and Realtors attacked Brownback’s plan because it would eliminate the mortgage interest and property tax deductions they say promote home ownership and bolster the economy.
Those in Brownback’s administration say they understand those concerns and are open to new ideas to eliminate the state’s income tax in coming years. But they’ve also defended their plan, saying the benefits of the income tax cuts significantly outweigh the loss of the deductions for most Kansans.
House Tax Committee Chairman Rep. Richard Carlson, R-St. Marys, said it’s important to look at projections, but he said he wasn’t shocked by the new numbers.
“You look out five years and it’s very difficult to make any sort of assumptions accurately,” he said. “I think the governor’s staff said it best: ‘The governor submits and the Legislature perfects.’
“We’ll see what we think needs to be corrected or not corrected.”