Archive for Friday, April 30, 2010

Statehouse Live: Senate committee recommends tax increase

The money would be raised from a higher sales tax and cigarette tax.

April 30, 2010, 10:22 a.m. Updated April 30, 2010, 7:19 p.m.

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— As the budget crisis worsened, a Senate committee Friday approved a $434 million tax increase, which includes a temporary 1-cent increase in the state sales tax rate and a 55-cent per pack increase in the cigarette tax.

The measure represents the first tax bill to address a ballooning revenue shortfall after cuts of nearly $1 billion to the state budget have shut down corrections facilities and slashed social services and education.

And the news got worse late Friday on the revenue front — April tax collections were down $65 million, or 10.2 percent, from an earlier estimate. Most of that was due to lower than projected state income tax receipts.

Gov. Mark Parkinson issued a statement saying the collections were disappointing but not surprising because they were based on 2009 tax returns and “2009 was a very bad year.”

Parkinson said the drop underscored the need for the state to provide services to the elderly, children and those with disabilities.

“Those in the Legislature continuing to advocate for a budget balanced solely on cuts, are either ignoring, or oblivious, to the real consequences to real people that those cuts would have,” he said.

The first major tax proposal of the session would increase the state sales tax from 5.3 cents per dollar to 6.3 cents per dollar on June 1. The rate would return to 5.6 cents per dollar July 1, 2013, and the revenue from the three-tenths of a cent would go to the state highway plan.

The cigarette tax would increase from 79 cents per pack to $1.34 per pack and the wholesale tax on tobacco products would increase from 10 percent to 40 percent. The plan would also eliminate an existing tax break for large businesses, while increasing a food sales tax rebate program for poor people.

The measure approved by the Senate Ways and Means Committee will be debated by the full Senate next week as the Legislature nears the end of the wrap-up session.

The new revenue under the plan would plug a budget hole and avoid more cuts to education and social services, supporters say.

Committee Chairman Jay Emler, R-Lindsborg, said he expected the bill to be changed during votes in the Senate and negotiations with the House. House Republican leaders oppose any state tax increase and have pushed a budget with more cuts.

To critics who say that the increase is too high, Emler said, “I can only remind them that we have cut a billion dollars over the last two years.”

The state has been mired in an unprecedented budget crisis as tax revenues plummeted during the recession.

But several committee members voiced opposition to the plan.

Sen. Pat Apple, R-Louisburg, said the sales and cigarette tax increases would hurt Kansas businesses along the border with Missouri, which has lower state taxes. “I’m really concerned about our competitive advantage,” Apple said.

Much of the committee discussion centered on a part of the bill that removes the state portion of a domestic production tax break for businesses. The move would produce $17 million for state coffers.

Sen. Mark Taddiken, R-Clifton, said that would hurt businesses in a struggling economy.

But others argued that the businesses would still get the federal tax break, which is increasing this year.

Allie Devine, vice president and general counsel of the Kansas Livestock Association, told the committee that removal of the state tax break wouldn’t be too bad.

“There’s a whole lot of stuff you could do that would be worse for us,” she said.

After the committee recommended the tax package, Senate Democratic Leader Anthony Hensley, of Topeka, said the bill represented “a good starting point.” Hensley and some House members are interested in adding increased state income tax rates on the most wealthy while lowering them for most other Kansans.

Comments

DRsmith 5 years, 4 months ago

Sure it would fall back. Don't hold your breath.

kusp8 5 years, 4 months ago

lawrenceguy, you go find the gap in budget without cutting essential services anymore than they have already been cut. Good luck to you! If you find the money let the legislature know!

Shardwurm 5 years, 3 months ago

Cut the fat out of schools would be a good start.

remember_username 5 years, 4 months ago

Well, I'd say those "liberals" are convinced that if the state stopped giving to those who are in need of support and left it up to the charity of others like yourself, those in need would soon be left to die of neglect. I don't know where they could possibly have gotten that impression.

headdoctor 5 years, 4 months ago

What makes you think it is okay for the Republicans to fill their pockets with money from everyone else? The Republicans do plenty of redistribution of money. It is just their effort generally doesn't go to the lower income people.

anon1958 5 years, 4 months ago

Lawrenceguy40, your question is not serious, your statement is a fundamental exercise in flawed logic known as begging the question. Because you have made such a simple minded error I can only assume that you received your high school education in Kansas or only made it through the fifth grade in a state with a fully funded and well run education system. Implied in your posts is an attitude that we should continue to cut social services and education. If being labeled as a liberal identifies me as a person that willingly gives some of my income to the poor, the elderly the sick and to educate our children I am quite happy to wear that label.

monkeyspunk 5 years, 4 months ago

Last I checked lawrenceguy40, the Kansas State Congress was overwhelmingly dominated by "Conservatives." Our representatives in Washington are all also "Conservatives".

If you don't like what is happening, there are other people to vote for.

EyeonKansas 5 years, 4 months ago

I just hope they don't change it so much that it's no longer a viable option.

My husband said he won't notice a difference... he doesn't get to see his check anyways because I take it off him before he even gets to sign it. ;)

texburgh 5 years, 4 months ago

There he goes again! Lawrenceguy simply says, "cut, cut, cut!" He ignores the fact that the legislature and governor have cut $1 billion out of what was a budget of about $6 billion. So, Lawrenceguy - instead of chanting your "cut, cut, cut" or "cut the fat" mantra, I challenge you again to identify the fat you want cut, cost it out, and let us know your plan to pay for services. Alternatively, please choose from the following list and be specific. The Kansas legislature should cut: 1. K-12 education, reducing student support programs, low-enrollment classes like AP, and increase class size. 2. post secondary education, pushing tuition higher and putting universities, community colleges and technical colleges out of reach for low income Kansans. 3. support services for the physically or developmentally disabled, sending more of them to institutions or forcing others to quit work to provide care for disabled relatives, 4. Home and community based services for seniors, sending more of them to more expensive nursing homes, 5. Corrections; we have already reduced through attrition the officers on duty at any given time in state prisons, this cut would put even fewer officers between us and the inmates, 6. Maintenance of state roads and highways causing more accidents and forcing you to pay for more car repairs.

I could go on. So, hey, Lawrenceguy...quit chanting and start thinking.

nut_case 5 years, 3 months ago

  1. While it may be argued society owes every child an education, I believe this should be limited to the basics. If a person wants to study additional material or do extra curricular activities, I have no problem with a pay-to-play system. It simply separates those with a drive and motivation from those who want everything handed to them on a plate. I had a summer job to pay for extra things I wanted to do, it's not that hard.

  2. Post secondary education is surely a privilege. I would have no problem returning that to a 'you want it, you work for it' scenario like it was when I went through 'the system'

  3. You are slipping a bit...police, fire, seniors and handicapped service cuts are usually the first flags to be run up the pole as a reason to raise taxes to avert a 'crisis' - but you put it at number 3. How much of the budget are these services? I can't imagine they amount to 1/2 a percent total? If they are less, even cutting them totally wouldn't make much difference and if they are more, surely there is some more efficient way to do things.

  4. Due to the baby boom, I'll always be outvoted on this, but why is it society owes seniors home and community based services? Why do they need those services in the first place...probably because taxes are so high and they are on a fixed income?!? So lets raise taxes more?

5 & 6. Hummm, we are paying big money to house inmates and having short falls for road and highway maintenance? Maybe we could combine the two, get some free/cheap labor from the inmates and also teach them job skills and or guarantee employment after release.

In short, if the state has claimed a cut of $1 billion so far - so that means there was at least a billion in waste before this point. I'm sure there is plenty of pork to still be cut. Then we can start looking at ways to make existing programs and processes more efficient. Every time someone receives a service without paying, that means someone else paid for that service without receiving anything. Tax hikes should be the absolute last resort instead of the first option.

Shardwurm 5 years, 3 months ago

"...putting universities, community colleges and technical colleges out of reach for low income Kansans."

Clearly a false and ill-conceived statement. Low income Kansans are subsidized to such a degree that an education is very affordable. Increases in tuition burden the average middle class student - which not shockingly is the largest group out there.

Try being a white, middle-class family with two children who scored 25 on their ACT in college. There is no help for them and their debt load is equal to a mortgage payment upon completing school. THAT is a huge problem for the economy when your largest group of educated people can't spend money on goods and services because they're paying back $80,000 for a Sociology degree. Education in this country is a scam...from elementary to post-graduate.

independant1 5 years, 3 months ago

Everybody nowadays is suggesting ways of getting prosperous on somebody else’s money. (Will Rogers)

tbaker 5 years, 3 months ago

texburgh: So would it be fair to assume you believe items 1-4 on your list are things the "State" must deliver? How about not sending the money to Topeka. Consider letting the counties, the school districts, and the municipal governments KEEP the tax money that would otherwise be sucked out of their respective domains. I'll not debate whether or not these "services" to the population are a role for government. Like it or not, there is Kansas law that says they are, misguided though it may be. My question is WHICH government should deliver it. The more local the government is, the more responsive it is to the people it is supposed to serve.

geekyhost 5 years, 3 months ago

Some of these programs have matching federal funds that will be cut, so cutting $1.00 in state funding will effectively cut $1.50 or $2.00 of actual funding. This is already happening for HCBS funding for developmental disabilities, and it will happen for early intervention services if they cut further, effectively destroying Tiny-K. I'm fairly sure we're close to matching funds being cut in higher ed at this point, too.

Handing power and funding to the local communities sounds great in theory, but communities don't come with equal access to a tax base, so in addition to having to raise more money total to make up for those lost federal funds, there are lots of communities that are simply too poor to be able to make up for the shortfall.

Chris Beilman 5 years, 3 months ago

Did someone say budget crisis ??? In this economy ??? Give me a break !! Find a way to live within the budget Senators, that's what most of us are forced to do right now. We have no other way to increase our wages so how do you expect us to pay more taxes? I guess I can find another job and start working 80 hrs. a week ??

tbaker 5 years, 3 months ago

76trombones: ditto

Those who think we need tax increases believe, at least to some degree, the government knows how to spend the money the tax-payers go out and earn better than they do.

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it."

Frederic Bastiat

booyalab 5 years, 3 months ago

I think people forget that politicians have a different definition of "budget" than most of us.

This is the normal understanding of the word: "Ok, I make $X,XXX a month. I will allot XXX for food, XXX for transportation, XXX for rent and bills, XXX I save, and XXX for recreation. If I stick to that, I won't get overdraft charges or run out of money for one or more of the categories.

This is the bizarro government understanding of the word: "OK, we want X,XXX,XXX for this department. We want XXX,XXX for this department. Everyone in this department expects a raise. (etc...) Now we just have to hope that we get XX,XXX,XXX in tax revenue this spring. If we don't, we'll whine and fret and ultimately make it illegal for citizens to keep the same amount of money they earned last year."

SnakeFist 5 years, 3 months ago

So when your child needed braces or your elderly parent needed help with the heating bill did you simply say "sorry, that's not in the budget", or did you borrow the money? Did you pay cash for your home and college education, or did you borrow the money? I'll bet you borrowed like everyone else, hence the high levels of personal debt. Government is no different. Its way too simplistic to say government should cut programs in order to balance its budget. In a truly capitalist society, people would either successfully compete in the marketplace or die in the street; thankfully, we (liberals) have enough compassion for others that we fund social welfare programs for the needy, and we invest in the future, even if it means going into debt.

booyalab 5 years, 3 months ago

If your point is that liberals have enough compassion to spend money they don't have.....I don't think we have the same definition of the word "compassion", much less "budget". Even the worst dictators in the history of the world have used tax revenue to fund "nice" things, if only to feed their egos.

yourworstnightmare 5 years, 3 months ago

Yes, more cuts.

Which roads would you like to stop maintaining? Which highways would you like to stop building? Which state construction contracts would you like to cancel? Which low-enrollment rural school districts would you like to close or consolidate? Which low-population western Kansas counties would you like to merge to eliminate bureaucracy?

Many choices....

MyDogHoudini 5 years, 3 months ago

Tax increase: It's about time. But they should raise taxes on high income earners first, instead of raising the sales tax. increases in sales tax hurt low income people more, because a larger proportion of their income goes to purchases that get hit with sales tax. Bur for some unknown reason, the state refuses to raise taxes on the rich. It's just crazy that KS does not have a higher tax rate for people who make very large incomes. The way the system is set up now, our buddy Lew Perkins pays the same KS tax rate as many of the admin. assistants at KU. That's just not fair.

geekyhost 5 years, 3 months ago

Nobody's advocating for a bracketing system so high that everyone would get exactly the same amount of money each year no matter how much they earned.

Shardwurm 5 years, 3 months ago

What if we increased sales tax to 50 percent for two weeks? Then we could get this over with. LOL.

You don't spend your way out of a recession by taking $400 million out of the pockets of consumers. Absolute insanity.

geekyhost 5 years, 3 months ago

You also don't spend your way out of a recession by laying off bunches of teachers, professors, and therapists and then making sure other people have to quit their job to care for their disabled family members.

MyDogHoudini 5 years, 3 months ago

FYI LawrenceGuy, my taxes would go up, in my proposed plan. Geekyhost is right, there would still be plenty of incentive for me to keep working hard to earn more money. But under this plan other people who are also working very hard but making less than me would feel less of a pinch on their pockets

geekyhost 5 years, 3 months ago

My taxes would go up, too. And I'm ok with that.

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