Business lobbyists seek deeper cuts for education, want to kill plan to stop phase-out of estate tax

Groups hope to kill proposal by Sebelius that would repeal phase-out of the estate tax

? Kansas businesses will have realized more than $1 billion in tax breaks from the Legislature through the next several years.

Even so, leading business groups on Tuesday were lobbying lawmakers for deeper cuts to education and human services, and protection of business tax cuts as the state faces a budget crisis.

The Kansas Chamber, the state’s leading pro-business advocacy group, threw its support behind a $300 million budget cut that will be debated by the Senate on Wednesday.

The proposal crafted by Senate Republican leaders calls for deeper cuts to public schools, higher education and human services than a plan laid out by Gov. Kathleen Sebelius, a Democrat.

But Amy Blankenbiller, president and chief executive officer of the Kansas Chamber, said the Senate Republican plan should ensure no further cuts will be needed in the current fiscal year and, she said, it offered the best choice to avoid a tax increase.

And just in case lawmakers didn’t get the message, Blankenbiller noted in a news release, “This budget proposal gets us there for 2009 and will be considered a key vote as we compile our Voting Record for the 2009 legislative session.”

And the Kansas Chamber was among an army of lobbyists who appeared before the House Taxation Committee hoping to kill a proposal by Sebelius that would repeal the phase-out of the estate tax.

Sebelius included ending the phase-out as part of her plan to get more revenue to fill the current budget deficit.

April Holman, director of economic policy with Kansas Action for Children, agreed with Sebelius.

In testimony to the tax committee, Holman said ending the phase-out was needed because of the budget crunch.

“In this year of extremely difficult decisions, we believe that adequate funding for education, health care and other important programs for children and families is more important to the people of Kansas than further tax cuts for business,” Holman said.

Business-related tax cuts enacted in 2005 onward will total more than $1.1 billion through 2013, according to a recent state study. Lawmakers currently face a $186 million budget shortfall that could near $1 billion by the fiscal year that starts July 1.

But numerous business groups opposed interrupting the phase-out of the estate tax, which is contained in House Bill 2047.

The Kansas Chamber stated the estate tax is an “obstacle” for small and family businesses in leaving their businesses to family members. The organization said Kansas is one of only 10 states that still use the estate tax.

The estate tax also reduces incentives to save and invest, some groups said.

John Donley, assistant general counsel for the Kansas Livestock Association, said, “While we recognize the current budgetary problems that the state is facing, we do not feel that it is proper to place the burden of ‘balancing’ the state budget on the backs of farmers, ranchers and small businesses.”

Other groups opposed to the bill included the Overland Park Chamber of Commerce, Wichita Independent Business Association, Kansas Farm Bureau, and Kansas chapter of the National Federation of Independent Business.

Under House Bill 2047, the estate tax rate would not apply to taxable estates of $1 million or less. The rate would be 1 percent for estates valued between $1 million and $2 million, and increase up to 7 percent for estates of more than $10 million.

State officials say ending the phase-out would produce $5 million of tax revenue in the next fiscal year and $11 million in the one after that.