Topeka — Gov. Bill Graves on Monday called for an increase in state sales, cigarette and motor-fuels taxes to offset a slumping economy and escalating health-care costs for poor, disabled and elderly Kansans.
Democratic legislative leaders said the proposal proved Graves mismanaged previous years of plenty, while conservative Republicans criticized the governor for trying to increase taxes during the current economic slowdown.
Total: $228 million in fiscal 2003, which begins July 1.
Cigarettes: Increase 271 percent, to 89 cents per pack from the current 24 cents, to generate $111 million.
Sales: Increase to 5.15 percent from the current 4.9 percent, or 25 cents on a $100 purchase, to generate $95 million.
Motor Fuels: Increase to 22 cents per gallon from the current 21 cents for gasoline and to 24 cents from the current 23 cents for diesel, to generate $18 million.
Vehicle Registration Fees: Increase 3 percent, to generate $4 million. Car owners pay $25 a year, and that fee would go to $25.75.
Budget Restorations
Total: $139 million, compared to the fiscal 2003 budget Graves submitted to legislators assuming no new revenue sources.
Public Schools: $91.1 million, preventing a cut in state aid of $158 per pupil.
Higher Education: $27.2 million, to prevent cuts in spending on universities, community colleges and vocational schools. Includes $100,000 for teacher training at Emporia State University.
Highway Projects: $22 million. Over seven years, $154 million would be available for construction.
Social Services: $11.4 million. Restores $4.4 million to in-home services for the elderly, $3 million to community mental health centers, $2 million for family preservation services, $1.5 million for groups providing services for the disabled and $500,000 for burying indigent Kansans.
Prison System: $5.5 million. Allows Department of Corrections to keep open minimum-security prisons in Osawa-tomie, Stockton and Toronto and camps for men and women in Labette County.
Aid to Cities and Counties: $3.6 million.
Aid to Local Libraries: $200,000.
New Spending
Total: $52.6 million.
Public Schools: $12 million. Raises state aid $20 per pupil, to $3,890.
State Employees: $12 million. Gives many employees a 2 percent pay increase, though university faculty are not included.
Social Services: $10 million. An extra $5 million would go to in-home services for the disabled and another $5 million, to doctors, clinics and hospitals providing services for the poor.
State Universities: $8 million. The State Board of Regents could distribute $7 million as it sees fit, but that amount would not be enough to provide a 2 percent raise to university faculty. The remaining $1 million would go to financial aid for students.
Court System: $4.1 million. The money is designed to prevent the Supreme Court from having to close district court offices extra days to save on personnel costs.
Economic Stimulus Package: $3 million.
Homeland Security: $2 million.
Anti-tobacco Use Programs: $1.5 million.
Rainy Day Funds
Total: $14.3 million, set aside to meet a legal requirement that the fiscal year end with a balance in the state treasury equal to 7.5 percent of spending.
Source: State Budget Division.
Graves proposed the $228 million tax increase during his State of the State address to open the 2002 legislative session.
"What I propose is the right thing to do. It is fiscally responsible, and more importantly, it is right for Kansans," Graves said.
Facing lawmakers for the last time before his term expires, Graves said more revenue was needed to combat fiscal problems brought by a national recession and increased health-care costs. The Kansas economy also has been rocked by the terrorist attack, which has led to cutbacks in the state's aviation industry.
Tax increases
"We're either going to invest in the future, or we're going to deny vital services, critical programs and economic opportunity to Kansans. It's just that simple," he said to a House chamber packed with lawmakers, state officials and invited guests.
The Graves plan would:
l Increase the state sales tax from 4.9 cents per dollar to 5.15 cents per dollar. With the addition of local sales taxes, that would raise the levy to 7.15 cents per dollar in Lawrence.
l Increase the state tax on cigarettes from 24 cents per pack to 89 cents per pack, which would push the price of many brands of cigarettes to more than $4 per pack.
l Increase the state tax on motor fuels 1 cent per gallon, which would raise the state tax on gasoline to 22 cents per gallon and diesel to 24 cents per gallon.
l Increase by 3 percent registration fees on all vehicles. The increase would raise the registration fee on a standard vehicle from $25 to $25.75.
The increase in sales and cigarette taxes would be used to provide small increases to public schools, higher education and social services. The increases in the motor-fuels tax and vehicle registration fees would be used to offset cuts to the state highway program.
Cuts restored
Graves said that for the median Kansas household earning $40,000 per year, the increases would equal 12 cents per day "or the equivalent of one liter of soda per week. The Kansans I know are prepared to provide these resources in support of their neighbors, friends and family who will benefit from these restorations and enhancements."
Graves' plan would restore proposed cuts made to education, highways and social services in the current fiscal year and provide some increases in the 2003 fiscal year, which starts July 1.
The proposal would:
Restore $91 million in cuts to public schools in the current fiscal year and increase per pupil spending by $20, at a cost of $12 million, for the next fiscal year.
Restore a $27 million cut to higher education in the current fiscal year and provide $7 million for salary increases at institutions of higher education in the next fiscal year. If used for an across-the-board salary increase, it would raise salaries of faculty, classified employees and unclassified professionals by about 1 percent.
Increase salaries of state employees, outside of higher education, by 2 percent.
Provide a $1-million increase in student financial aid for higher education.
Restore numerous cuts to welfare programs and increase by $5 million at-home services for the poor and elderly.
Critics speak out
The proposal also included numerous tax incentives, a $3 million economic stimulus plan and an initiative to spark economic development in rural areas. Graves also reminded lawmakers that he supports casino-style gaming at pari-mutuel racetracks, but he would be "less supportive" of other types of expanded gaming, such as video poker.
Conservatives were unmoved.
"This is a full, frontal, wallet assault," Rep. Tony Powell, R-Wichita, said. "It's hard to justify a tax increase, particularly when people are being laid off and losing their jobs."
Sen. Nancey Harrington, R-Goddard, said, "If we look hard enough, we might find the kitchen sink in those spending increases."
Democrats, vastly outnumbered in the House and Senate, said the need for more revenue shows how Graves and the Republican-dominated Legislature have mismanaged previous years of unprecedented prosperity.
"This Republican dominance has produced exploding budget deficits, crowded classrooms and teacher shortages while our most vulnerable citizens languish on waiting lists for life-enhancing services," House Democratic Leader Jim Garner of Coffeyville said.
Democrats also criticized the regressive nature of the proposed tax increases because a sales-tax increase takes a larger portion of the earnings of low-income people.
Poor hit the hardest
But Sen. Sandy Praeger, R-Lawrence, said she could support the package, though she would like to see sales-tax rebates expanded for poor people.
"I liked all of his (Graves') points of emphasis," Praeger said, especially increasing funding to schools.
Rep. Barbara Ballard, D-Lawrence, was less critical than fellow Democrats, saying at least Graves made a proposal.
"It's generating money that we need. If we don't generate more revenue, it's going to fall on the poor and those with disabilities," Ballard said.
Rep. Troy Findley, D-Lawrence, said Graves' tax increases would hit poor and middle-income Kansans the hardest. He said he would like to see restoration of a portion of the state-inheritance tax to increase revenue.
Rep. Ralph Tanner, R-Baldwin, said Graves did a good job of laying out the choices for lawmakers. But Tanner said he didn't like Graves' tax proposals because they would hurt low-income Kansans.
Graves said he expected "no shortage of critics of my proposal." But he attacked anti-tax rhetoric. "Government living within its means translates to thousands of Kansans unable to live within theirs. Tightening the belt means tightening the noose around the economic future of rural Kansas," he said.
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