Politics & Government

Democrats claim governor’s plan would result in tax hike for Kansans

The state would collect about $1 billion more in taxes over the next four years even though the state would further cut income tax rates under Gov. Sam Brownback’s plan, say Democrats based on numbers from the governor’s proposed budget and legislative research.

The increased collections, described as a tax hike by Democrats and Realtors, would come from extending a temporary sales tax and eliminating mortgage interest and real estate property tax deductions.

The state would need the additional tax money to prevent drastic reductions to services caused by the income tax cuts last year that eliminated taxes for most small businesses and farms and lowered individual rates.

Democrats say the figures prove some Kansans — homeowners in particular — will have to pay more to make up for tax cuts that disproportionately benefit the business owners and the wealthiest Kansans.

“How do you undo a train wreck?” Wichita Democratic Rep. Nile Dillmore said. “There’s collateral damage everywhere.”

Brownback doesn’t see it that way.

“This is a tax cut,” he said. “I don’t support tax increases. I haven’t supported them. I’m not now.”

Brownback said his tax plan uses the first two years to prevent cuts that would be caused by the new income tax rate reductions and the following three years to “ride the rates down.”

His plan starts by lowering the state’s lowest tax bracket from 3 percent to 2.5 percent in 2014 and 2015 before dropping it to 1.9 percent in 2016. The top rate would drop from 4.9 percent to 3.5 percent in 2017. In following years, his plan sends any growth in state revenue beyond 4 percent to pay for more income tax rate reductions.

His plan mostly retains existing state services by extending a six-tenths of a cent sales tax that would have gone away this summer, generating $262 million, and by cutting mortgage interest and property tax deductions that send tax money back to homeowners, giving the state $231 million.

“Unless you do something on the next two years, you’re going to have to make some dramatic cuts somewhere to find the kind of resources that you need,” Brownback said.

Wichita Democratic Rep. Jim Ward said many people will pay more in taxes and see diminishing quality of schools, roads and services for people with disabilities.

"There are going to be way more losers than winners because it’s a billion more in taxes, not a billion dollars less," he said.

Democrats say lawmakers should consider repealing some of the cuts from last year.

"The Legislature didn’t do this," Ward said. "The governor and extreme conservative Republicans did it. They’ve got to own it. They to explain why a billion more in taxes, and less for schools, public safety and less help for poor people is good Kansas policy."

Secretary of Revenue Nick Jordan acknowledged the state would collect more at first.

But he said the numbers presented by Democrats ignore the income tax cuts that have already become law.

Those cuts dropped the state’s top two rates from 6.25 percent and 6.45 percent to 3.9 percent. It dropped the lower bracket from 3.5 percent to 3 percent. It eliminated non-wage income taxes for about 191,000 small businesses and farms.

It helped mitigate the loss of state revenue by eliminating food sales tax rebates and a variety of other tax credits. But that wasn’t enough to prevent it from big budget problems.

When Brownback signed that bill, it was poised to cut state income taxes by $3.7 billion over five years while creating projected budget deficits of $2.5 billion by 2018.

Jordan said the state is trying to find a balanced approach to drive economic growth.

"We’re looking at the governor trying to fulfill two promises: ‘I’m going to fund core responsibilities of government, but I’m going still continue to drive down income tax rates because we think it’s good economic growth strategy,’ " he said. "So it’s the combination of the two that he’s trying to wrestle with."