Topeka Gov. Bill Graves and Republican legislative leaders struck a deal late Thursday on a $250 million package of tax increases to help prop up the state budget.
Graves met with House Speaker Kent Glasscock and Senate President Dave Kerr after negotiations between their chambers broke off and they seemed ready to produce rival plans and force the other chamber into a take-it-or-leave-it decision.
After the meeting, Kerr, R-Hutchinson, and Glasscock, R-Manhattan, began trying to sell the package of sales, inheritance, corporate and tobacco excise taxes to colleagues.
"I wouldn't write any stories right now, because I don't know whether this is a story with a happy ending or a tragedy," Graves said.
The proposal was modeled after one offered by the House's negotiators.
It would increase the sales tax to 5.3 percent on July 1 from its current 4.9 percent, but drop that rate to 5.2 percent in 2004 and to 5 percent in 2005. Also, the sales tax would be imposed on customized computer software.
A tax of between 10 percent to 15 percent would be imposed on the property inherited by nephews, nieces and nonrelatives.
The cigarette tax would increase by 46 cents a pack on July 1, to 70 cents, then another 9 cents, to 79 cents, on Jan. 1.
Corporations would see the annual fees they pay to do business in Kansas double, to a minimum of $40 and a maximum of $5,000.
Offsetting those increases would be breaks for businesses and a 50 percent increase in income tax credits for poor, working families.
Graves said the differences between the two chambers on a plan had been "very, very minor." He wouldn't say whether Kerr and Glasscock called on him, or whether he intervened.
"We had one another on speed dial," he said.
Just hours before, the Legislature had appeared on the brink of adjourning the longest session in Kansas history after 106 days. But Senate leaders relented in the face of some House members' desire for more time to work out an agreement on taxes.
Senate Majority Leader Lana Oleen, R-Manhattan, announced Thursday evening the chamber would adjourn until May 31, the date set for a brief ceremony to mark the end of legislative business for the year.
Oleen later said House members "found renewed energy," and senators agreed to wait on negotiations.
An agreement between House and Senate negotiators proved elusive, and both chambers began work on their own proposals. Then the latest plan emerged.
"I knew somebody else was going to make the decision for me leadership and the governor," said Senate Assessment and Taxation Committee Chairman Dave Corbin, R-Towanda.
The stop-and-go talks on tax issues followed House rejection in the pre-dawn hours Thursday of a $252 million package raising sales, inheritance and tobacco excise taxes. It was the third time the House had rejected a package.
The latest plan's provisions on computer software, corporate income taxes and tax credits for the poor were designed to attract votes from Democrats, who had criticized relying on sales and excise taxes.
Democrats have argued that increasing income taxes for wealthy Kansans was the fairest way to raise money but Republicans said such changes would stymie economic growth.
But even with a tax package, legislators might not eliminate the gap completely in the budget to finance state government starting July 1. They needed $290 million to balance the $4.4 billion budget they sent to Graves earlier.
Graves had promised to call legislators into their first special session since December 1989 and threatened to cut $300 million from fiscal 2003 appropriations if lawmakers did not approve a tax plan.
His planned cuts included a reduction in state aid to public schools of $329 per pupil, making it $3,541.
Larger tax bill is SB 39; liquor tax bill was HB 2828.