The Kansas Legislature continues to be bogged down with the budget/tax process. Late Sunday and into early Monday morning, the Kansas Senate worked on a tax amendment offered by Sen. Steve Abrams (R-Arkansas City), which would have ended all but six sales tax exemptions while speeding up income tax cuts for individuals and corporations. Supporters of the bill argued that removing the sales tax exemptions was the only way to close the budget shortfall without raising taxes. After six hours of debate the only thing agreed upon was a reduction in the state sales tax from 6.15 percent to 5.95 percent. This would add
$118 million to the budget hole. The Senate could not agree upon any other tax policy.
See http://www.kansas.com/news/politics-government/article22761891.html; and see also http://www.therepublic.com/view/story/857a50087ed14aae86c7c4a4a4c472f3/KS--Kansas-Taxes
The quote of the night came from Sen. Greg Smith (R-Overland Park), who in support of the Abrams amendment, said "Taxes are wrong. Taxes are legalized theft.” Smith is a retired police officer and current history teacher.
The main drag on the tax discussion was the veto threat from Gov. Sam Brownback on any tax plan that called for a more aggressive tax on business than what he proposed on Saturday.
The Brownback plan includes:
- Increase sales tax to 6.65 percent;
- Eliminated income tax on bottom 388,000 taxpayers;
- 50-cent tax on cigarettes;
- $30 million in tax amnesty;
- Tax "guaranteed income” for some LLCs; and
- Make changes to the allowable exemptions for single/married taxpayers.
The rub is that amnesty may only bring in half of the projected revenue, and the tax on guaranteed income would also fail to meet expectations since LLCs can simply rename the earnings and avoid tax.
Complicating matters is the strong possibility of state employee furloughs starting on June 7. The state will run into cash flow problems and may be forced to lay off workers should a budget not be in place by next Saturday. Rumor has it that a possible budget work around is getting drafted but no one knows what it looks like.
On the judicial branch front, the Kansas Senate reconsidered Saturday’s rejection of the court budget and passed it out easily 25-14. The hang up on Saturday was the non-severability clause proposed by Sen. Jeff King (R-Independence). While this provision is not being challenged, last year’s budget bill containing local control policies contrary to a centralized court system are being challenged. To rule against those local control policies would trigger the non-severability clause and cause budget issues for the courts. The Kansas House will take the court budget up soon.
The good news: should the court budget be signed by the governor prior to the June 7 furlough deadline, the courts would have the authority to use funds to side step an otherwise difficult June for state employees. First things first, the Kansas House need to adopt the conference committee report that contains the judicial budget bill, HB 2005.