Few back governor's sales tax proposal

TOPEKA — The governor's idea of raising the state sales tax to help offset a $400 million budget shortfall hasn't gained much support, even among fellow Democrats.

"I've never been a fan of the sales tax," said House Assistant Democratic Leader Jim Ward of Wichita. "When 40 percent of your budget goes for food, that is a pretty big impact."

And House Minority Leader Paul Davis, D-Lawrence, concedes: "Any kind of tax increase with this Legislature is an uphill battle."

If the money doesn't come from a temporary sales tax increase, though, where could it come from? Over the past year, lawmakers and Gov. Mark Parkinson have sliced about $1 billion from what was a $6.4 billion budget.

No other concrete plans have emerged in the legislative session that started Monday, but two ideas have been widely mentioned:

* More cuts.

* Eliminating sales tax exemptions.

Parkinson has said more cuts aren't an option if state government is to continue to provide basic services.

But not all lawmakers agree.

"You can cut where you don't think you can cut sometimes. If you are prudent with the way you do it, you don't kill anybody," said Sen. Les Donovan, R-Wichita, Chairman of the Senate Assessment and Taxation Committee.

Sen. Ty Masterson, R-Andover, who sits on the Senate Ways and Means Committee, said he isn't convinced more cuts can't be made.

"We may need to change the scope of government, what services are provided and what education gets," he said.

Many Democrats oppose further cuts.

"At the end of the day we need to come together and develop a revenue package," said Senate Democratic Leader Anthony Hensley, of Topeka. "The alternative is absolutely devastating to the people of Kansas."

One way to increase the money Kansas collects is to eliminate some of the sales tax exemptions lawmakers have created over the years.

"Either we are looking at being able to eliminate, curtail or control exemptions that will net us dollars or we are looking at tacking on an additional tax or fee," said Rep. Melody McCray-Miller, D-Wichita, who sits on the House Taxation Committee.

Hensley favors examining the tax credits and sales tax exemptions. When he was first elected in 1977, the state had 13 sales tax exemptions — now it has more than 90.

Revenue Secretary Joan Wagnon has traveled the state discussing a plan to recapture a little less than $200 million by eliminating exemptions for specific nonprofits and taxing residential utility rates at the state level.

Taxing utility bills would garner about $140 million but would be controversial, she told House and Senate tax committees this week.

Eliminating some exemptions would have a better chance of passing the Legislature than increasing the sales tax, said Senate President Stephen Morris, R-Hugoton.

Masterson said he opposes a tax increase of any kind but would not oppose looking at tax exemptions and making sure they were still justified.

The recommendations on exemptions are part of a package developed by the Kansas Advisory Council on Intergovernmental Relations before lawmakers knew what kind of budget shortfall they might face, said Sen. Tim Owens, R-Overland Park, vice chair of the council. The money is a fraction of the $1.28 billion lawmakers could choose not to exempt, but it won't be easy.

"These are a herd of sacred cows. Everybody has one in it, but if we were to look at that we would be able to not cut any appropriations," said Owens, who noted he advocated for some of the exemptions himself.

Those sacred cows give everyone a reason to vote against eliminating tax exemptions, he said.

The idea has also met with resistance from lawmakers who consider removing the exemptions as tax increases.

Donovan said he worried about the burden a utilities tax would place on poor people. "That's not a good approach," he said.

Kansas State University political science professor Joe Aistrup, a Democrat, said he thought there would be "a variety of innovative efforts to raise revenue without the appearance of raising taxes."

Parkinson's speech was an opening salvo and started the discussion, he said. "He at least provided the foundation for discussion."

Ken Ciboski, a Republican and political science professor at Wichita State University, said he thought a 1-cent sales tax would raise a lot of questions.

He said he thought lawmakers should expand their thinking to include a tax on soft drinks, which contribute to obesity, or possibly to a graduated income tax.

It will likely be near the end of the session before lawmakers have a budget solution. And that might be a combination of various options.

"At this stage of the game we are all about getting in as much information and options and alternatives as we can," McCray-Miller said.

"The only surprise around here is if there are no surprises," Morris said.