Topeka ? Gov. Bill Graves outlined a new budget proposal Friday that balances increases in estate, income and business taxes with reductions in spending on social services and general government.

Graves’ plan would raise taxes $364 million during the fiscal year that begins July 1, and it would cut $366 million from spending required under state and federal laws.

Aid to public schools would increase by $12 million, or $20 per pupil to $3,890.

Even with the tax increases, Graves’ plan would cut $33 million from programs for the poor and elderly while closing five minimum security prisons and eight driver’s license exam stations. General spending would be tightened, and the 2003 legislative session would be shortened to 80 days from the traditional 90.

“At the end of the day, this is a pretty sad situation to have to face,” Graves said during a Statehouse news conference.

Graves and legislators must close a $700 million gap between expected revenue and spending required under state and federal law over the next 15 months.

Under the proposal Graves released Friday, overall state spending would decline $110 million, or 2.4 percent, during the next fiscal year, to $4.4 billion.

The sales tax would rise to 5.2 percent from its current 4.9 percent and individual income taxes would increase 5 percent. Both of those changes would be in effect for three years.

In January, Graves proposed increasing the sales tax to 5.15 percent and no income tax increase.

Spreading the load

The new plan contains the proposal Graves made in January to increase the cigarette tax by 65 cents a pack, to 89 cents.

But it adds a proposal to double the fees corporations and nonprofit groups pay for the right to do business in Kansas, from a minimum of $40 to a maximum of $5,000.

Graves also endorsed a Democratic proposal to increase estate taxes by $20 million, restoring a burden legislators eliminated in 1998 for nephews, nieces and nonrelatives who inherit property.

“There is simply no way to avoid a collective state solution,” Graves said. “Everyone will be asked to carry some of the load.”

Graves said he singled out schools for more money because he wasn’t ready to “give up on our kids.” He acknowledged, however, that many legislators expect to cut aid to public schools.

“I think if someone’s going to hold the bar up high, it’s going to have to be me,” he said. “I think my role this year is to set the ceiling and hold tight for as long as I can.”

Praise from leaders

Senate President Dave Kerr and House Speaker Kent Glasscock praised Graves’ plan as balanced.

Kerr, R-Hutchinson, noted that some GOP senators have a target of $280 million in tax increases, but Graves’ plan is close enough that “the governor and I are singing out of the same hymnal.”

Glasscock has promised to oppose any cut in aid to public schools. He said Friday that he has no specific plan for raising revenue but expects one to emerge.

“The 2002 session is about relative pain,” said Glasscock, R-Manhattan. “We’ve got to pick our pain.”

Rep. Tom Sloan, R-Lawrence, agreed.

“There is no way that I as an individual legislator and the state can afford to reduce the state budget by 15.5 percent. There’s also no way we can raise 15.5 percent in taxes,” he said. “I agree with the governor’s approach that programs should be reduced and taxes raised roughly in equal amounts.”

Rep. Carl Holmes, R-Liberal, said he would let his constituents decide whether Graves’ proposal is acceptable. He’s mailing a survey today that itemizes each of the proposed budget cuts and asks voters which ones they support. Voters who don’t support cuts will then be asked which tax increases they would support instead.

“When I get that survey back, that’s going to guide what I do,” Holmes said. “My district’s going to have to tell me.”

Criticism, too

The governor’s package drew criticism from some Democrats as well as Republicans who oppose any tax increase.

Sen. Robert Tyson, R-Parker, called it “reprehensible” to think of increasing taxes in the current economy.

“Who’s thinking about the taxpayer?” he said. “He’s the one stressed out there. His country is at war, and he’s struggling to make ends meet.”

House Minority Leader Jim Garner, D-Coffeyville, said it does no good for Graves and Glasscock to talk about tax increases in the face of last week’s repeated House votes against tax increases. He said they need to build support among their fellow Republicans.

“I haven’t seen them break a sweat to even try to work Republicans,” he said.