TOPEKA, Kan. (AP) — Republican legislators drafted a new budget-balancing plan Thursday that raises Kansas’ sales and tobacco taxes and suspends the GOP’s much-touted “march to zero” income taxes, but the Senate canceled a debate on spending as state employee furloughs loomed.
House and Senate negotiators agreed on a plan for raising $432 million in new revenues during the upcoming fiscal year to erase a projected budget shortfall. The House was expected to debate it later Thursday. The plan raises the state’s sales tax to 6.65 percent from 6.15 percent but drops the rate on food to 5.9 percent in January. It boosts the cigarette tax by 50 cents a pack, to $1.29, and imposes the state’s first tax on electronic cigarettes.
The continued negotiations are due to a budget shortfall that arose after Republican Gov. Sam Brownback successfully pushed the Legislature to slash personal income taxes in 2012 and 2013. Brownback touted the cuts as an experiment for other states to emulate, and GOP legislators committed to gradually phasing out income taxes.
The governor still says the state still has “pro-growth policies” if it raises consumption taxes so it can cut income taxes in the future. The new plan from GOP legislators drops income tax rates for 2019 and 2020 but doesn’t decrease them after that.
“It lets the future Legislature look and see where we are,” said Republican Sen. Les Donovan, of Wichita, the Senate’s lead negotiator on tax issues.
House Republican leaders don’t expect the measure to pass because of its sales tax increase, which tax negotiators say will give them guidance in drafting their next plan. GOP Sen. Caryn Tyson, of Parker, calling the House’s impending debate “a temperature test.”
A key issue is whether to backtrack on a 2012 policy championed by Brownback that allowed 281,000 business owners and 53,000 farmers to avoid paying income taxes on their profits. He’s willing to increase their taxes $24 million a year; some lawmakers want to go as high as $100 million.
“They ought to be part of any tax plan we’re drafting,” said Democratic Rep. Tom Sawyer, of Wichita, another tax negotiator.
Thursday was the 105th day of lawmakers’ annual session, making it longer than any other except 2002’s 107 days. And they’re under pressure: Brownback’s administration has said all nonessential employees will be furloughed Sunday if lawmakers do not pass a budget by then because the state won’t have the legal authority to pay them.
“We owe it to our state employees to get moving and to put their minds at ease,” said Sen. Vicki Schmidt, a Topeka Republican.
Some GOP conservatives would prefer to cut spending enough to avoid tax increases. The Senate’s budget committee chairman had a plan to trim $400 million from a proposed $15.5 billion budget that won House approval Wednesday. Senate Majority Leader Terry Bruce, a Nickerson Republican, set a debate on budget issues for Thursday and then canceled it, saying work on tax issues would come first.
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