New Tax Plan Passes House; Headed To Senate
Associated Press - June 12, 2015 8:50 am
The Kansas Senate will determine whether a plan for raising sales and cigarette taxes to erase a budget deficit will clear the Legislature. Senators are expected to vote Friday on a bill increasing the state’s sales tax to 6.5 percent from 6.15 percent. The House approved the measure early Friday morning. The measures would raise $384 million during the next fiscal year. The new plan for helping Kansas close a budget deficit drops two sales tax proposals favored by Republican senators.
Legislative negotiators signed off Thursday night on a measure outlined by House Republicans. It would increase the sales tax to 6.5 percent from 6.15 percent.
Senators passed a bill Sunday to boost the sales tax to 6.55 percent. But it also would have dropped the sales tax on food to 4.95 percent in July 2016.
After the House rejected the measure Thursday, negotiators for the two chambers agreed to drop the lower sales tax on food.
The Senate bill also would have repealed many exemptions to the sales tax in 2020 and set up a commission to study which ones should be saved beforehand.
The new tax plan also drops that proposal.
A group representing Kansas public school superintendents is criticizing a proposal that Republican legislators are including in their latest tax plan.
The Kansas School Superintendents Association issued a statement Thursday on tax issues and noted its opposition to a program created last year for providing private school scholarships for at-risk schoolchildren.
The group said the program represents using tax dollars to subsidize private school tuition. The tax plan would expand the number of eligible students.
The program authorizes up to $10 million a year in corporate income tax credits for businesses contributing money to scholarship-granting groups.
This year’s changes would allow those groups to give funds directly to schools, rather than to parents. While the number of students eligible for scholarships would increase, the total tax credits available would not.
Republican legislators in Kansas have drafted a new plan for raising sales and cigarette taxes to narrow a budget shortfall.
Three Senate and three House negotiators signed off Thursday night on the GOP measure.
They agreed to bring it to a vote in both chambers, even though the plan might not fully erase a $400 million deficit in the budget approved by lawmakers for the fiscal year beginning July 1.
Lead House negotiator and Republican Rep. Marvin Kleeb of Overland Park said GOP Gov. Sam Brownback might have to cut spending by $50 million.
The sales tax would increase to 6.5 percent from 6.15 percent. The House rejected a measure Thursday with the tax at 6.55 percent.
The cigarette tax would jump by 50 cents a pack to $1.29.
The House hoped to vote on the plan early Friday.
A leading Kansas higher education official says a veto of state funding for its higher education system in order to close a budget deficit would be devastating to students, families, businesses and the state’s economy.
Kansas Board of Regents President and CEO Andy Tompkins issued his statement Thursday night.
Budget Director Shawn Sullivan told Republican legislators during a meeting that if they don’t raise taxes, Gov. Sam Brownback could be forced to veto each state university’s funding for operations during the fiscal year beginning July 1.
Legislators have approved a budget that doesn’t balance without $400 million in tax increases, and lawmakers haven’t been able to reach a deal.
Sullivan said the universities could use tuition dollars to pay staff but not for long.
Tompkins said Sullivan’s announcement puts the state of Kansas in an unprecedented situation.
Disagreements among Kansas legislators over raising taxes to balance the state budget will extend their session into a record 113th day.
The Senate adjourned Thursday evening, on the 112th day, meaning lawmakers won’t be able to finish their business until Friday, at the earliest.
The House was still in session late into the night.
Lawmakers must raise taxes $400 million to balance the budget they’ve approved for the fiscal year beginning July 1. Republicans who control both chambers have not been able to settle proposals for raising sales, cigarette and business taxes.
The previous longest annual session was in 2002, at 107 days. Legislative leaders traditionally schedule sessions for 90 days.
Each extra day is costing the state more than $40,000.
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A Kansas House member who has opposed a bill raising sales and cigarette taxes says future cuts in personal income tax rates are a key issue for him and other GOP conservatives as lawmakers work to close a budget shortfall.
Republican Rep. Steve Brunk of Wichita said Thursday that he wants the state to remain committed to phasing out income taxes even as it increases other taxes.
Lawmakers have passed a spending plan for the next fiscal year, but it is not balanced. They must find a way to close a more than $400 million deficit or face steep spending cuts. The state’s budget problems arose after GOP lawmakers slashed income taxes in 2012 and 2013 in an attempt to stimulate the economy.
Lawmakers have considered various proposals to slow down promised future income tax cuts. One proposal was included in a tax bill the House rejected Thursday.
Vastly outnumbered Democrats oppose increasing the state’s sales tax, arguing the move will hurt poor and middle-class families.
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Officials in Gov. Sam Brownback’s administration say Kansas’ bond ratings would likely be downgraded if the Legislature does not balance the state’s budget with tax increases.
Secretary of Administration Jim Clark told a joint meeting of Republican legislators Thursday that rating agencies would likely act because of budget uncertainty.
Bond ratings determine how much the state must pay in interest on its debt.
The state has been working to issue $1 billion in bonds to add funds to its pension system and boost its earnings. Clark said a downgrade could increase the state’s interest costs by $50 million a year.
Legislators have passed a $15.4 billion budget, but it requires about $400 million in tax increases to balance.
The budget problems arose after lawmakers slashed income taxes at Brownback’s urging.
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Gov. Sam Brownback says he would consider cutting $394 million from funding for state universities if the Legislature does not pass tax increases to balance the state’s budget by Monday.
Brownback said Thursday during a meeting of Republican legislators that vetoing universities’ funding is one of his options. The Legislature has passed a $15.4 billion budget that requires about $400 million in tax increases to balance.
Budget Director Shawn Sullivan said the governor also could veto the budget and call a special legislative session or enact an across-the-board cut to all state agencies.
If Brownback opted to veto universities’ funding, they’d lose money for operating expenses. Sullivan said they still could continue to pay staff from tuition funds, but not for long.