Analysis: Governor may be setting stage for tax increase

? Gov. Kathleen Sebelius handled her latest major policy announcement with much public relations savvy.

She chose a parking lot full of idle state cars as the venue for a news conference on her plans to sell off such superfluous vehicles, shut down the state’s central motor pool and drastically reduce new car purchases by state agencies. She said her efforts would save $8.6 million.

The governor also painted the initiatives as part of an ongoing government review process and as signs of a major attitude change in state government. She even declared, “This is the new day.”

Launching pad

But such a visible public display of her efforts to find efficiencies in state government raises questions about a larger political and policy strategy — and whether she’s building toward proposing higher taxes.

Sebelius herself repeatedly linked the two ideas, both during her successful 2002 gubernatorial campaign and after taking office. Asked frequently whether she supported higher taxes, Sebelius said she couldn’t ask Kansans to pay more for government services until she had assured them that government ran efficiently.

Now, she is trying to demonstrate that government is becoming more efficient. Such an effort naturally leads to queries about what comes next.

“Nobody likes to pay taxes — of any kind, at any point — but I find over and over again, Kansans want to know how their tax dollars are being spent, whether they’re being spent for services that they want or are being wasted,” she said after her most recent news conference.

During her campaign, Sebelius faced questions about whether she would propose a tax increase to deal with the state’s financial problems. Her predecessor, Gov. Bill Graves, advocated higher taxes to shore up the state budget in 2002, and legislators approved $253 million worth.

Sebelius’ answer was deft, making her sound as if she would not increase taxes without also making an absolute promise. She came as close as she would at the end of an October 2002 debate, when she said, “No one is talking about a tax increase. We need to do more with less.”

She received a good deal of criticism because at the same time, she promised not to cut spending on education.

She managed to avoid both a tax increase and cutting education this year mostly with accounting tricks, such as moving one of the state’s aid payments for schools from June to July and requiring Kansans to pay part of their property taxes in May 2004, rather than June.

Taxing speculation

Yet concern that Sebelius will propose higher taxes remains, so much so that both the Kansas Chamber of Commerce and Industry, the state’s largest business group, and the Freestate Center for Liberty Studies, a conservative research institute, launched pre-emptive messages.

The KCCI commissioned and released a poll suggesting that Kansans don’t want higher taxes, and the Freestate center issued a white paper on school spending, concluding that the state hasn’t shortchanged education.

As for a tax increase, Bob Corkins, the Freestate center’s executive director, said, “Sure, there’s a concern.”

He added, “The economy is beginning to recover, and now is not the time to dampen that.”

Part of the latest speculation about whether Sebelius will propose higher taxes is rooted in her gubernatorial campaign. Not only did she promise to avoid cutting education spending, she said a good goal for the state would be adopting recommendations from the Denver consulting firm of Augenblick & Myers.

Last year, the consultants suggested the state needed to spend an additional $862 million annually — $3.4 billion, instead of its current $2.6 billion — to provide every student with a suitable education.

With money tight again next year, a tax increase would appear necessary to provide any significant increase in aid to schools. At least, it’s difficult to conceive how Sebelius would pull it off without higher taxes, even with an expansion of legalized gambling.

Justification

And in July, Sebelius said a tax increase was an option “on the table” as she began work on a proposed budget.

“I think that there is every belief that we need some additional revenue in Kansas for some of the promises that the Legislature has made over the years that really aren’t being kept,” Sebelius told reporters.

She has not dropped the idea that she cannot ask Kansans to pay more in taxes until they believe their government is efficient. Instead, she has tried to convince them that government is leaner than it was.

Before her latest news conference about state vehicles, her administration touted its review of government as identifying $76 million in savings, though much of the money came from a tax amnesty program and higher fees.

As for the news conference, the message clearly was meant for a wider audience of taxpayers.

“Part of the effort today is to assure them that I’m doing everything I can to make sure that the dollars that they pay for state government are going to be used on essential services and not to keep idle cars in parking lots,” Sebelius said.

In short, she is telling Kansans that she has met the requirement for proposing a tax increase, whether she takes that next step or not.