Politics & Government

Tax increases, budget cuts head to Kansas Senate

Lawmakers are moving closer to a clash over budget cuts and tax increases as they try to confront the harsh realities facing Kansas.

Budget cuts approved by a Kansas Senate committee on Tuesday would take $154 million from K-12 education and other agencies to balance the state’s finances this fiscal year.

The state faces a roughly $320 million shortfall this year.

It’s far from clear that such cuts would win final approval, but “we have to start the conversation,” Senate budget chairwoman Carolyn McGinn, R-Sedgwick, said after presenting them.

The Department of Education would be hit the hardest, with $128 million coming from K-12 education.

The possible cuts also come as lawmakers are waiting to see how the Kansas Supreme Court rules in a school finance case that could force them to come up with millions more for education.

Senate Majority Leader Jim Denning, R-Overland Park, said to “get the state back on long-term financial footing … we needed the education community to share in the cuts this go around.”

The Wichita school district would lose more than $14 million under the bill, the most of any school district in the state, according to the state’s legislative research department. The cuts would come with just a few months left in the school year.

“Fourteen million to cut now, in the last quarter of the year, is just a stunning number,” said Diane Gjerstad, a lobbyist for the Wichita school district.

She said she thought districts would have cash flow problems in June if the cuts are made, adding “many districts are going to be in a difficult position.”

Among other area districts, Derby and Maize would lose about $1.6 million each, Haysville $1.37 million, Goddard $1.26 million and Andover $1.2 million.

Higher education would also be cut under the plan, with more than $22 million combined coming from the Kansas Board of Regents and universities.

Sen. John Skubal, R-Overland Park, voted to move the bill forward despite hesitations about the size of the cuts. He said he wanted the bill to come before the full Senate but that he didn’t want to see that size of a cut made to education.

“There’s no good choices,” Skubal said. “We have been left with what I consider bad choices and worst choices, and to cut schools is not my preference whatsoever.”

McGinn said the amended bill presented Tuesday would give the state an ending balance of around $75 million.

The moves that would make that happen include cutting the agency budgets by a combined $154 million and taking $100 million from the long-term investment fund.

“We’re trying to balance a budget without putting us into increasing debt,” McGinn said.

Income tax rates

Lawmakers also are considering a tax plan that would generate roughly $660 million over two years. The plan was fast tracked in the Senate on Tuesday.

The bill raises the bottom income tax rate to 3 percent and moves the higher bracket to 4.9 percent.

It also ends the income tax exemption for roughly 330,000 business owners.

Gov. Sam Brownback has remained a strong champion of that 2012 tax cut, even as support from lawmakers has eroded in the waning years of his administration.

Both the tax and budget cut bills will head to the Kansas Senate floor on Thursday, Denning said.

The tax money wouldn’t do much to help this year’s shortfall but would help the state as it faces expected shortfalls of roughly $750 million in the next two fiscal years.

“We’re looking at borrowing some money,” said Senate President Susan Wagle, R-Wichita. “We’re looking at increasing taxes, and we’re looking at significant cuts.”

Sen. Julia Lynn, R-Olathe, said the discussion needs to head to the Senate floor.

“This is a situation that has been floundering for four years, and although it might not be the best bill that’s put forward, it’s the beginning of a process,” Lynn said.

But not every senator wanted to see the discussion move so quickly.

Sen. Marci Francisco, D-Lawrence, said she didn’t feel comfortable addressing anything other than the LLC exemption.

“We need to, I think, look at other issues of tax fairness that this committee has not had a chance to fully debate,” Francisco said.

Cautious tone

Brownback sent a strong signal earlier this week that he was against the tax plan, meaning the bill will likely need veto-proof support to take effect.

But in a brief interview Tuesday after the tax bill was approved by the committee, the governor said he would not commit to vetoing the tax plan.

“I don’t know of anybody looking at a broad-based income tax increase,” Brownback said of other states. “The trend line’s away from that and away from taxing productivity.”

He also struck a cautious tone on the Senate budget cuts, saying he was glad efforts were being made to solve the shortfall.

The governor decided late last year to avoid making cuts himself to bridge the 2017 gap.

“You’ve got the legislative body that’s here dealing with the budget,” Brownback said. “I think that’s a superior way to go.”

Hunter Woodall: 785-354-1388, @HunterMw