Senate plan has 1-cent sales tax hike

TOPEKA — Kansans would start paying a penny more in state sales tax starting June 1 under a revenue package passed Friday by a Senate panel.

The package would raise $434.2 million dollars to help plug a budget gap of almost half a billion dollars for fiscal year 2011, which starts July 1.

The revenue bundle would also increase the state tax on a pack of cigarettes to $1.34, up from the current 79 cents. The wholesale tax on tobacco products would increase 40 percent, up from 10 percent.

Left out of the proposal, which now goes to the full Senate for debate, were taxes on sugary drinks and alcohol.

The Senate committee made its recommendation hours before state officials announced that revenue plunged again in April. The state collected $65 million less in April than expected, adding to the mounting budget misery for state legislators.

Most of the drop was because individual income tax payments were lower than expected.

Gov. Mark Parkinson said the income tax collections were disappointing but not surprising given that 2009 was such a bad year.

He once again argued that deeper budget cuts would devastate state programs.

"These numbers underscore the impact the economy is having on our ability to serve Kansans, especially children, the elderly and the disabled," he said in a written statement. "Those in the Legislature continuing to advocate for a budget balanced solely on cuts, are either ignoring, or oblivious, to the real consequences to real people that those cuts would have. It is one thing to speak with compassion, it is entirely another to act."

In addition to raising taxes, the budget bill passed by the Senate committee Thursday calls for cutting $200 million from the state's proposed $13 billion budget, which includes state and federal money.

Any tax package still needs to win approval of the full Senate and the House.

The House's budget proposal relies primarily on cuts to state programs. The package would not require lawmakers to vote on any tax increases, but it would likely increase local property taxes and includes cuts to education that the Senate proposal does not.

The Senate committee's package includes:

* $365 million generated by increasing the state sales tax from 5.3 percent to 6.3 percent, or 1 cent, starting June 1. The sales tax increase would be for three years.

A program offering low-income Kansans tax credits for food purchases would be expanded slightly, at a cost of $11 million.

* $23,000 diverted from sales tax revenue at an intermodal facility in Gardner, Kan.

* $17 million recouped by eliminating a tax break for certain companies.

* $49.4 million gained by increasing the per-pack tax on cigarettes to $1.34 up from 79 cents

* $13.71 million gained by increasing the wholesale tax on tobacco products to 40 percent up from 10 percent.

"Our revenue has dropped," said Sen. Jay Emler, R-Lindsborg, chairman of the Senate Ways and Means Committee. "We have to make sure we cover the essentials, and that is all we are trying to do."

Emler said he anticipates there will be changes to the budget proposal and the tax package next week when they are debated by the full Senate.

Sen. Ty Masterson, R-Andover, who sits on the committee and voted against the tax package and budget proposal, said he plans to offer a proposal that would encourage the state to sell off surplus property. Selling just 1 percent of the state's assets would generate $150 million, he estimated. The committee did not receive specific numbers on what the plan could generate.

There has also been talk of selling off state buildings and then leasing them back. Senate Vice President John Vratil, R-Leawood, called the idea "penny-wise and pound foolish, it will take care of us today but won't take care of us long term."

Senate Democratic Leader Anthony Hensley of Topeka said he hoped to see changes to the state's income tax structure included in the debate.

Lawmakers could get a feel on Monday for what House members would support when it comes to tax increases to raise money. Before ending the regular session at the end of March, the House postponed debating a tax package of its own until May 3.