Kansas Senate committee finalizes proposal for $417M in tax increases to eliminate budget gap

Kansas Senate panel approves $417M tax plan

TOPEKA, Kan. — A Kansas Senate committee on Friday endorsed a $417 million tax package that would nearly eliminate an expected shortfall in the 2011 state budget.

The Ways and Means Committee’s plan, which would increase the state sales and tobacco taxes, heads to the full Senate next week. The chamber is expected to take up the plan, along with the committee’s budget blueprint, as early as Tuesday.

As proposed, the package would raise $434 million, with $21 million set aside specifically for the Kansas Department of Transportation and not used to finance general government programs. It also includes increasing the sales tax rebate for low-income Kansas residents for the purchase of food.

The new revenues would cover the gap between expected state revenue and the $13.6 billion budget endorsed by the committee for the fiscal year that starts July 1.

“It balances within government work,” said Ways and Means Chairman Jay Emler, a Lindsborg Republican. “I don’t for a minute think that it’s the final product. You have to have something to start debating on the floor.”

Legislative staff project that there would still be a budget gap of $93 million in the 2010 budget, growing to $325 million in 2011. The tax package is aimed at closing the entire shortfall.

The committee wants to raise the state’s 5.3 percent sales tax to 6.3 percent and increase the cigarette tax by 55 cents a pack to $1.34. The plan would also eliminate an existing income tax break for manufacturers.

Senators largely followed the same revenue proposal outlined by Democrat Gov. Mark Parkinson in his State of the State address in January.

The committee sought to avoid cutting education funding and social services.

Emler said there were additional cuts that could have been considered, but all of them had ramifications for Kansas residents that were too painful to consider, such as reducing the amount for home- and community-based services for the disabled.

“I don’t think that anyone is getting fatter or richer off this budget,” Emler said.

Democrats had been hoping that the revenue plan would include raising income tax by creating new brackets for higher earners.

“I think this is a good starting point,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat. “You have to have a two-house strategy. It has to stand a chance to pass in the House and I’m not sure this has a chance to do that.”

The House budget relies on further cuts in state spending, transferring dollars from various state programs and some federal money. It would reduce public education spending by $86 million but would not require most school districts to raise taxes. House members are expected to debate their budget next week.

Senators didn’t approve some suggestions that the state sell some of its property and lease back the space.

Sen. John Vratil, a Leawood Republican, said that while such a proposal would net the state cash it could use in the short term, it would end up costing the state more over time in rent payments.

On the Net:

Kansas Legislature: www.kslegislature.org