Topeka State leaders Wednesday appeared to shut the door to a tax increase to contend with the continuing budget crisis.
“Every economist in the world tells you, you don’t raise taxes in a recession,” House Speaker Mike O’Neal, R-Hutchinson, said at a Kansas Bar Association legislative forum.
Even Gov. Mark Parkinson, a Democrat who days earlier said he may propose a tax increase to prevent crippling budget cuts, seemed to be backing off that position.
After speaking to elementary school students about H1N1 flu, Parkinson told the Journal-World that he hoped to get through next year without a state tax increase.
When lawmakers return in January, they will be working on the state budget for fiscal year 2011, which will start July 1, 2010.
“Our hope is to present a budget that doesn’t include any tax increases for (fiscal year) 2011, but in order for that to happen, we need some help on the revenue side,” Parkinson said.
The state has suffered large downturns in tax revenue over the past year, which has produced four rounds of budget cuts. Since the Legislature adjourned in May, the deficit has continued to grow — to approximately $500 million.
Parkinson said part of his calculation on the issue of taxes in the next fiscal year is whether he believes there is a possibility to pass an increase in the Legislature.
“Right now, I don’t have a strong sense either way,” he said of the Legislature’s position.
But without a tax increase, the state will be forced to carve large chunks out of certain areas of government.
State Sen. John Vratil, R-Leawood, explained that under the federal stimulus law, the state could jeopardize stimulus funds if it cuts public school and higher education funding below 2006 levels.
The state is 0.6 of 1 percent above those levels currently, and education makes up two-thirds of the state budget.
That means the projected $500 million deficit must be carved out of one-third of the budget, which would produce cuts in the 25 percent range, Vratil said.
“That is going to be a real magical feat,” he said.
House Democratic Leader Paul Davis of Lawrence said more revenue must be raised, including removing some exemptions to the state sales tax.
“Our tax structure has really become this patchwork of exemptions and credits that groups that come before this Legislature have been granted over time,” Davis said.
He said he feared that basic government services could be jeopardized if more cuts are made.
Budget experts meet today to determine the final revenue estimate for the current fiscal year and make a projection for the next.