Kansas considering tax amnesty to help encourage payment of back taxes

? Three key Republican senators proposed Tuesday that the state use an amnesty program to lure Kansans into paying back taxes and help the state with its budget problems.

Such a program would allow people to pay their outstanding taxes without penalty or interest for a short time. The state used a 2-months-long amnesty program late in 2003 to collect more than $30 million in back taxes.

Senate Majority Leader Derek Schmidt, an Independence Republican, said the Department of Revenue estimates a new program could raise $22 million during the state’s 2010 fiscal year, which begins July 1.

Legislators must close a projected $328 million deficit in the fiscal 2010 budget. They return Wednesday from their annual spring break.

Granting amnesty to people who have not paid their taxes on time is not an ideal way to raise money, Schmidt said, but it’s “preferable to raising taxes or cutting vital services even more deeply.”

Joining Schmidt in proposing the program were Republican Sens. Les Donovan, of Wichita, and Jay Emler, of Lindsborg. Donovan is chairman of the Senate Assessment and Taxation Committee and Emler, chairman of the budget-writing Ways and Means Committee.

“People who have paid their taxes need to know that everyone has paid what they already owe before we even think about asking anybody to pay more,” Donovan said.

Legislators have approved a $13 billion budget for fiscal 2010, believing it would balance. But officials and university economists later slashed projected revenues, creating the deficit.

Rep. Jim Ward, a Wichita Democrat, said a tax amnesty program is “another thing to put in the mix” in trying to balance the budget.

“My first instinct is that it’s a good idea,” said Ward, the House assistant minority leader.

Lawmakers must cut spending, boost revenues, or both. Emler’s committee has approved $125 million in cuts, while the House Appropriations Committee has proposed trimming $215 million.

Legislative leaders see little support for a general tax increase, but Gov. Kathleen Sebelius and fellow Democrats have proposed other measures for boosting revenues.

Those measures include relying on $50 million in licensing fees from yet-to-be-selected developers for state-owned casinos, diverting revenues from cities and counties, and gathering up fees paid to regulatory agencies that are now being held outside the state’s main bank account.

Democrats have proposed “decoupling” the state and federal income tax codes. That would increase state revenues in the short-term, because Kansas would not automatically enact temporary tax breaks granted by the federal government to boost the economy.

Sebelius also has proposed canceling estate and corporate franchise tax cuts scheduled to take effect next year.

But such proposals so far have gained little traction in the GOP-controlled Legislature.

Last week, House Speaker Mike O’Neal, a Hutchinson Republican, said he wants legislators to first seriously consider furloughing state government employees to save money. The House Appropriations Committee plans to have a hearing Wednesday on the matter.

The Kansas Organization of State Employees has called furloughs “a shortsighted solution” to the state’s budget problems.