Republican legislators in Kansas are tossing around plenty of proposals to raise revenue to help close the state’s budget gap. But they aren’t expressing much enthusiasm for them.
Several Republican leaders said the GOP-dominated Legislature must make significant spending cuts to shrink shortfalls totaling more than $710 million in the current budget and the budget for the fiscal year beginning in July.
Key senators said they want to avoid measures – such as reversing cuts in income tax rates or raising the state’s sales tax rate – that clearly can be labeled as tax increases.
“We’re going to look at just about every possibility,” said Senate tax committee Chairman Les Donovan, R-Wichita. “Trying to pass something that will be perceived as a tax increase is going to be extremely difficult.”
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The tax proposals floated by senators include delaying future promised cuts in personal income tax rates and accelerating the elimination of income tax deductions already set to be phased out as rates drop. The targeted deductions include a popular one for interest paid on home mortgages.
Several GOP senators also said legislators are likely to discuss eliminating exemptions to the state’s 6.15 percent sales tax and increasing gasoline, liquor and tobacco taxes.
“I don’t know what sticks, if anything,” said Senate Majority Leader Terry Bruce, R-Nickerson. “Right now, I don’t like the idea of raising taxes, period.”
Balancing the budget is the most pressing task facing legislators after they convene their annual 90-day session on Jan. 12. Gov. Sam Brownback will be inaugurated that day for a second four-year term after successfully pushing for aggressive personal income tax cuts during his first term to stimulate the state’s economy.
The state cut its top rate by 26 percent, and future reductions are promised, with a long-term goal to eliminate the tax altogether. The state has exempted the owners of 191,000 businesses from income taxes, and the cuts championed by Brownback are worth an estimated $1.3 billion during the current and next budget years.
A few GOP senators initially said lawmakers could require some of the wealthiest business owners now exempt from income taxes to start paying them again. Critics see the break for business owners as a giveaway to high-income Kansans, but Brownback and his allies contend it’s crucial to creating jobs.
“I would be very reluctant to touch that particular portion of the tax cuts,” Bruce said.
Republican leaders expect to rely on GOP votes to pass a budget-balancing plan, given the party’s majorities of 32-8 in the Senate and 97-28 in the House.
Democrats so far are letting Republicans stew, having predicted that the income tax cuts would create the kind of budget problems the state is experiencing.
“It’s their mess,” said House Minority Leader Tom Burroughs, D-Kansas City. “We’re waiting for them to fix it.”
Brownback earlier this month outlined a plan to close the projected $279 million shortfall in the state’s current budget, relying heavily on diverting funds for highway projects and pensions to general government programs. He hasn’t yet proposed tax changes or any measures to address the $436 million gap in the budget for the next fiscal year, saying only that everything is on the table.
“We need to be open-minded,” said House Appropriations Committee Chairman Ron Ryckman Jr., R-Olathe.
Tax proposals so far are coming from senators. House Speaker Ray Merrick, R-Stilwell, has labeled the budget shortfalls “a spending problem.”
The combined shortfalls represent 11 percent of the $6.4 billion in spending financed by the state’s main bank account under the current budget.
“The numbers are too large,” Sen. Jeff Longbine, R-Emporia, said of the budget shortfalls. “The cuts will be too deep. They’ll be too painful to most Kansans.”