Kan. lawmakers get closer but stall on sales tax

May 31, 2013 • Business

Kansas Gov. Sam Brownback answers questions from reporters about [auth] tax issues after chatting with legislators in Statehouse hallways, Friday, May 31, 2013, in Topeka, Kan. Brownback wants to adjust the state sales tax to raise new revenues while the state cuts income taxes. (AP Photos/John Hanna)

TOPEKA, Kan. (AP) — Republicans in the Kansas Legislature appeared Friday to be moving closer to a deal on raising new sales tax revenues to prevent budget shortfalls, only to break off negotiations abruptly when they couldn’t agree again on the details.

House and Senate negotiators considered rival proposals for setting the sales tax at 6.15 percent in July, one from top Republicans in each chamber. The talks are designed to find a compromise on legislation that also would reduce personal income taxes to follow up on massive cuts enacted last year.

Republican Gov. Sam Brownback proposed keeping the sales tax at its current rate of 6.3 percent to stabilize the budget after last year’s aggressive tax cutting — and to allow for additional income tax reductions. The sales tax is set to drop to 5.7 percent in July because of a 2010 pre-Brownback tenure law that temporarily boosted the rate to balance the budget.

Republican senators embraced Brownback’s sales tax proposal, along with his recommendations for further income tax cuts. But the House so far has rejected alternatives to a plan it passed earlier this year to allow the sales tax to drop as planned and make less aggressive income tax cuts.

Some GOP legislators saw House Republicans’ willingness to suggest as sales tax of 6.15 percent as a positive sign. But the House GOP’s plan came with a twist — provisions to continue dropping the sales tax in future years if overall state revenues grew by more than 2 percent, stopping when the sales tax dipped to 5.7 percent.

Top Senate Republicans pushed to set the sales tax at 6.15 percent permanently. GOP senators have argued that phasing out personal income taxes will permanently boost the state’s economy — even if the state keeps the sales tax where it is.

Senate Majority Leader Terry Bruce, a Hutchinson Republican, said he’s surprised that House GOP leaders are still pushing to get the sales tax back to 5.7 percent and settle for less aggressive income tax cuts.

“That’s the absolute opposite direction the Senate’s been trying to go all year,” he said.

Many House members — in both parties — have balked at breaking the promise made three years ago to lower the sales tax, even as most Republicans support phasing out personal income taxes.

“We’re making progress,” said House Majority Leader Jene Vickrey, a Louisburg Republican.

Both chambers still haven’t approved a $14.5 billion budget for each of the next two fiscal years, starting in July. A separate team of budget negotiators made their last revisions Friday, so the House could consider the measure Saturday, followed by the Senate.

Saturday was the 99th day of Legislature’s annual session, when the state constitution specifies 90 days.

The tax impasse has persisted partly because some conservative House Republicans see proposals to cancel all or part of the sales tax decline as a tax increase. Even the latest proposal from House GOP leaders would result in net revenue gain of $733 million for the state over the next five years.

Revenue Secretary Nick Jordan sought to lessen House Republicans’ resistance by reminding them during a meeting that last year’s cuts still would dwarf any net revenue gain.

“Don’t fall into the opponents’ talking points that this is a tax increase,” he said.

But Rep. John Rubin, of Shawnee, one of the skeptical GOP conservatives, said later: “It’s definitely a tax increase, and I’m not going to vote for a tax increase.”

Meanwhile, Democrats oppose efforts to shift most of the burden of financing state government to the sales tax, viewing it as unfair to poor families that tend to pay a higher percentage of their incomes to the tax than do wealthy ones.

“This needs to be fixed next session, when the people get to weigh in on it,” said Sen. Tom Holland, a Baldwin City Democrat, referencing next year’s elections.

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