GOP plan would delay tax refunds

? Hundreds of thousands of Kansans would have to wait months for their tax refunds under a plan authored by Republican legislative leaders, Gov. Kathleen Sebelius’ administration said Friday.

On Thursday, House Speaker Doug Mays, R-Topeka, and Senate President Dave Kerr, R-Hutchinson, unveiled a plan they said would hold the line on taxes, protect school funding and balance the budget.

The $10.2 billion budget is under-funded by at least $230 million. Lawmakers will return April 30 after a scheduled break to consider ways to fill that hole.

The Kerr-Mays plan would delay both state payments to schools and tax refunds to people who filed close to the April 15 tax deadline.

Kerr and Mays said they believed the refund delays would affect only a few thousand Kansans, and the delays in receiving refunds would be about two weeks in the next fiscal year.

“Does Kansas want to be one of the few states that does not value returning people’s money?” asked Secretary of Revenue Joan Wagnon.

Wagnon, a Sebelius appointee, said the GOP characterization of the plan was “disingenuous” and “misleading.”

Her agency issued a report that stated that in the next fiscal year, the Republican plan would affect about 30,000 taxpayers, and in the fiscal year after that it would have a snowballing effect, hitting 400,000 refunds — nearly half of all refunds.

And she said Kansans would have to wait months for their refunds.

Currently, people who are due a refund usually receive them about two weeks after they file their tax returns, Wagnon said.

Under the Kerr-Mays plan, tax refunds paid by the state would be limited to $415 million in the budget year that starts this July 1, about $60 million less than what the state is expected to refund. Anything over that ceiling wouldn’t be paid until a few weeks into the next budget year, which starts July 1, 2004. Refund money will run out in April 2004, Wagnon said.

In fiscal year 2005, which starts July 1, 2004, the Kerr-Mays plan appropriates $282 million for refunds. Refund money will run out in February 2005 under that scenario, Wagnon said.

She said the refund debt would continue to grow in the ensuing years and the state also would have to pay interest on that money. In addition, she said, Kansans will soon get wise to the scheme and change their withholding tax rates so that they won’t have to wait in line for a refund.

But Mays said Wagnon’s study was incorrect because she assumed the record rate of refunds, spurred by the dip in the stock market, would continue.

“Her analysis of the data is not objective,” Mays said. “To simply trash something that is probably the best and only alternative to raising taxes or cutting education, including higher education, we don’t believe is the way she should go about business,” Mays said.

Both Mays and Kerr said they believed Wagnon was attacking their plan on behalf of Sebelius, a charge that Wagnon denied. She said she was presenting the facts behind the GOP plan so that lawmakers could “have a fair and thoughtful review.”

Conversely, Wagnon defended Sebelius’ proposal to accelerate property tax payments, saying that would be much less disruptive than trying to hold people’s money longer. Republicans shot that proposal down, saying it was too onerous a burden on taxpayers.

But Wagnon said most people paid their property taxes through an escrow account that would not be affected by the change. “We’re not upsetting the apple cart with that,” she said.

Mays and Kerr, who control significant Republican majorities in the House and Senate, said they believed any problems with their plan could be worked out with Sebelius, a Democrat.

“We think it’s a good plan, a workable plan. If she has ways to improve this, we are willing to listen,” Mays said.

Republicans earlier rejected Sebelius’ revenue package that relied on expanded gaming, accelerated tax collection and issuing bonds backed by future tobacco receipts.