Desire to boost schools pushes Kansas toward bigger tax hike

TOPEKA, Kan. (AP) — Bipartisan support for higher spending on public schools pushed Kansas legislators Tuesday to be more aggressive about the income tax increases they’re already considering to fix the state budget.

Top Republicans abruptly scrapped a plan that would have raised $879 million in new revenue over two years by rolling back past income tax cuts championed by GOP Gov. Sam Brownback. Support for the proposal had collapsed, with Democrats and moderate Republicans complaining it wouldn’t provide extra dollars for schools while closing projected budget shortfalls.

The same negotiators who drafted that plan Monday evening resumed talks Tuesday evening and quickly settled on a new proposal to raise more than $1 billion over two years. But its future was just as uncertain as Monday’s plan, because Democratic negotiators still didn’t think it generated enough new dollars for state government.

Both plans were similar to a bipartisan bill vetoed by the conservative Republican governor in February, also worth more than $1 billion over two years. Supporters of increasing income taxes are trying to attract the two-thirds majorities necessary in both chambers to override another potential veto.

“It will continue to be a needle to thread to find what solution will pass,” said Rep. Steve Johnson, a moderate Assaria Republican and the House’s lead negotiator.

The House would take up the newest plan first and could vote Wednesday — assuming GOP leaders aren’t deterred by misgivings in their chamber or the Senate.

Kansas now imposes two personal income tax rates, 2.7 percent for lower-income earners and 4.6 percent for higher-income earners. The new plan would move to three brackets, with the lowest rate at 3 percent and a new top rate of 5.6 percent. It would eliminate an income tax exemption for more than 330,000 farmers and business owners championed by Brownback as a pro-growth policy.

The tax debate has grown more complicated because the Kansas Supreme Court ruled in March — days after Brownback’s tax-bill veto — that the state’s funding for public schools is inadequate.

Democrats and moderate Republicans now argue that a new plan must be significantly larger than the one Brownback vetoed.

Kansas faces projected budget shortfalls totaling $887 million through June 2019. Its budget woes followed the income tax cuts Brownback sought in 2012 and 2013 and later economic slumps in agriculture and energy production.

Lawmakers could cover much of the gaps by diverting money from highway projects to education, social services and other programs, as Brownback has proposed. But they’d still be short of balancing the budget.

The Supreme Court did not specify how much the state must increase its $4 billion-plus in annual aid to schools. A House committee reviewed a plan Tuesday to phase in a $750 million increase over five years.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said the state needs to generate between $1.2 billion and $1.4 billion in new revenue over two years. Some Democrats have even higher figures.

“We need to recoup as much income-tax-revenue loss as we can,” said Sen. Tom Holland, a Baldwin City Democrat, another negotiator.

Meanwhile, GOP conservatives want to hold down the size of the tax increase and resist the idea that satisfying the Supreme Court’s order on schools requires a big boost in spending.

“I get the impression that we might be moving in the wrong direction,” said Sen. Caryn Tyson, a conservative Parker Republican and her chamber’s lead negotiator.

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