Archive for Thursday, April 5, 2007

Legislators approve $32 million in tax cuts

April 5, 2007


— Legislators kept pre-session promises to lower taxes on businesses and residents, sending Gov. Kathleen Sebelius a package of cuts saving them nearly $32 million the first year they're in effect.

Completed early Wednesday, the bills reduce the income tax liability for some Kansans, as well as eliminating the franchise tax that all businesses pay for the privilege of doing business in the state. Over five years, the savings to taxpayers is a little more than $300 million.

"I think it's a balanced and fiscally responsible package," said Senate Majority Leader Derek Schmidt, R-Independence.

The cuts are less than the $60 million for the fiscal year beginning July 1 sought by House Republican leaders throughout the session but close to those Schmidt and other Senate leaders thought the state could afford and not create budget problems in future years.

Included in the package were several bills giving local governments the authority to increase sales or property taxes for specific purposes.

One that inspired heated debate would allow Johnson County officials to decide whether to put to a vote taxes that would fund construction of three bioscience research centers. The House passed the measure 75-44, and the Senate following suit, 32-6.

In the House, Majority Leader Ray Merrick derided the measure as a perk for Johnson County "elitists" seeking funding for their pet projects. He also said the proposal, pushed by the Senate, had no public hearing in his chamber before the House was asked to approve it.

"I don't like how this whole thing's been handled," said Merrick, R-Stilwell. "I think the Senate ought to get serious."

Supporters said voters won't automatically approve tax increases, noting that Johnson County last year rejected a proposal to raise taxes for a massive soccer complex designed to lure the Kansas City Wizards away from Arrowhead Stadium.

"Our people can think for themselves and decide what to do," said Rep. Sue Storm, D-Overland Park.

The biggest tax cut adopted eliminates the franchise tax, which charges businesses a fee for the privilege of operating in Kansas based on their net worth. The proposal has enjoyed bipartisan support this session and was sought by Sebelius in her State of the State message as a means to improve the business climate. It was approved 120-1 by the House and 40-0 by the Senate.

The measure would cut $7 million from state tax collections during the next fiscal year, rising to $48 million in the fifth year when the tax would be wiped off the books. The total saved over five years would be $135 million.

Another proposal exempts some Social Security benefits from state income taxes and increases an earned income tax credit for low-income workers. The votes were 40-0 in the Senate and 122-0 in the House.

Legislators also sent the governor measures allowing six counties to increase local tax rates to fund numerous road, bridge and building projects, as well as a bill giving some Kansans 55 and older reductions in property taxes.


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