Archive for Thursday, January 9, 1992

BUSINESS ISSUES ON BACK BURNER

January 9, 1992

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Many concerns that relate primarily to business are likely to be given a low priority while the 1992 Kansas Legislature focuses on broader issues that affect the state as a whole, a Lawrence lawmaker says.

It's highly unlikely, said Sen. Wint Winter, R-Lawrence, that the Legislature will look at such economic development issues as how to alter the tax structure to make it easier for Kansas to compete for relocating businesses.

"We have been diverted by the larger issues," Winter said, explaining that Kansas lawmakers will be concentrating on the state's dire fiscal straits and issues such as school finance and property tax relief.

However, business people still have a huge stake in such issues, particularly since they are one of the constituencies that has the most to gain or lose from what the Legislature does with taxes to increase badly needed revenue, Winter said.

"The business community has a heck of a lot of chips in this game," he said.

If the Legislature revisits the issues of property classification and Gov. Joan Finney's proposal to impose the sales tax on services, Winter said business people will have no trouble seeing how those issues directly affect their livelihoods.

"THE BUSINESS community would be hurt by the governor's proposal last year to extend the sales tax to services," Winter said, noting that Lawrence has a high proportion of service businesses, such as law practices, architectural firms and consulting services.

"I think the business community that I hear from expects reasonable services and to pay taxes but they want them stable and they want them reasonably related to what they do," he said.

As a result, Winter said, he perceives that business people would prefer to see revenue raised from an increase in the sales tax on merchandise or upper-bracket income taxes.

"But I think they would go ballistic with an increase either in property taxes or an extension of the sales tax to services," he said.

Winter and Rep. John Solbach, D-Lawrence, agreed that what the Legislature does or doesn't do with property tax relief will affect business owners most directly.

But despite the clamor from businesses for a lighter property tax burden, Solbach said, any relief would have to be compensated with increases elsewhere.

"I DON'T know of any practical way to provide any relief without a classification amendment and that wouldn't shift the burden back to where it came from," Solbach said.

Lower commercial property taxes could mean higher taxes on inventories; utilities, railroads and pipelines; and machinery and equipment.

Winter agreed that a new classification amendment really would only trade dollars within the business community.

"All of the changes in the classification thing really don't impact homeowners it's the business community," he said.

Solbach said that business people, along with all other Kansans, would benefit if the Legislature decreased the state's dependence on property taxes.

Solutions that are likely to be proposed this year include increasing upper-bracket income taxes and sales tax revenue, Solbach said.

"Doing away with (sales tax) exemptions, taxing services will be talked about," he said. "So will the intangibles tax."

That could include proposals to tax bank deposits and investments such as stocks and bonds, and anything else that doesn't get taxed as real or personal property. But it wouldn't do much to aid businesses, he said.

BOTH LAWMAKERS said that aside from their impact on taxes, other issues the Legislature is likely to consider this year really aren't as remote from business as they might seem.

"I think that virtually everything the Legislature does ought to be important to business," he said, listing education and social welfare funding as other issues that are likely to be addressed during the 1992 session.

"It all ultimately affects the quality of life and the climate for commerce in the state," he said.

"If I were a businessman, I'd be concerned about funding for higher education. . . . I'd also be concerned that the social welfare programs that are essential be adequately funded," he said, noting that welfare dollars are spent in the community.

Winter agreed, noting that Lawrence business people should see education funding as important to the health of the local business community.

"I think that part of the growth of Lawrence has been the relative attractiveness of the schools here that's kindergarten through doctoral programs," he said.

One of the issues lawmakers will have to confront is the October ruling by Shawnee County District Judge Terry Bullock that the state's current finance formula appears to be unconstitutional because wealthier school districts still have greater resources. Finney is proposing a statewide 45-mill levy to fund schools.

THE EFFECT of such a move on the business community wouldn't be limited to a tax increase, Winter said.

"If we go to a complete and total leveling of education across the state, it will take away from the competitive advantage that Lawrence has had," Winter said.

"If Lawrence becomes just like everybody else and the money for education is lessened, then we have a negative situation for local businesses."

Coming Friday: The state's water resoures and the Legislature.

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