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Archive for Wednesday, February 12, 2003

Sebelius raises specter of tax increase

February 12, 2003

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— Gov. Kathleen Sebelius acknowledged Tuesday that her budget proposal would require more revenue and could force local governments to increase taxes.

"Frankly, we are probably going to need money that we don't have now," Sebelius said after a speech to the Kansas Association of Counties. "We have all kind of folks who are looking at revenue streams because, frankly, this budget is built on no room for error."

Several lawmakers and advocacy groups have been meeting privately to come up with a state tax proposal, but Sebelius said she was not involved in that effort. Sebelius often has said a tax increase would hurt Kansans already smarting from a slow economy.

But she said she realized her proposal to cut state revenue sharing to counties and cities could lead to local tax increases.

The cuts in state aid "give you an opportunity to make it up at the local level," Sebelius said to about 200 county officials at the Capital Plaza Hotel.

Judy Moler, general counsel of the Kansas Association of Counties, said county officials would not look forward to the prospect of considering tax increases.

"At the local level, if you talk to the man and woman on the street, they're going to scream and yell that property taxes are already too high. But I imagine local governments will do a combination of raising property taxes and cutting some services," Moler said.

Sebelius' budget proposal cuts all revenue sharing to cities and counties, a reduction of about $128 million. Sebelius' plan shifts the $128 million to balance state coffers without raising state taxes.

Douglas County Commissioner Charles Jones said the state cut in revenue has left Douglas County about $1.75 million short of its anticipated budget. The gap has been managed by deferring construction and hiring and sweeping out reserves, he said. Next year, however, will require a tax increase, Jones said.

"We are talking quite openly that we will see a 3-mill increase, or something in that order, in next year's taxes," he said.

A mill is $1 in taxes for every $1,000 in assessed valuation.

Sebelius reminded county officials that in 1998 the state stopped collecting 19 mills in property taxes. At that point, counties had some leeway in increasing local property taxes on their residents, she said.

Sebelius said most state agencies have had to cut their budgets by 7 percent, while the cut in revenue sharing was about 2.5 percent of county budgets.

Coming into office last month, Sebelius faced about an $800 million revenue shortfall to produce a proposed budget that kept up with current services and commitments made by previous Legislatures. In addition to cutting aid to cities and counties, Sebelius reduced highway funding and used up all reserve funds.

Sebelius said she hoped the state cuts in revenue sharing would be a "one-time shot."

"This isn't a strategy that I intend to implement on a regular basis," she said.

Sebelius also said she wanted a new revenue estimate in March, a month earlier than when the Consensus Revenue Estimating Group generally meets to forecast how much money the state will have to spend for the next fiscal year.

"I want to get some early indicators in March of just what the trends are," she said.

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