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Archive for Tuesday, January 26, 2010

Statehouse Live: Parkinson urges tax increase; 2 JoCo Republicans propose liquor hike; business unhappy with tax talk

January 26, 2010, 10:27 a.m. Updated January 26, 2010, 3:10 p.m.

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— In the face of a wall of opposition from business interests, Gov. Mark Parkinson said that legislators should not fear voting for a tax increase to balance the budget.

Parkinson said it was a “myth” that voters would punish legislators who vote to increase taxes. “It’s not the end of the world,” Parkinson said of a tax vote.

Gov. Mark Parkinson on Tuesday spoke to the Kansas Children's Cabinet and Trust Fund on need to increase taxes to bridge a $400 million revenue shortfall. He said funding for children's programs are at risk without a tax increase.

Gov. Mark Parkinson on Tuesday spoke to the Kansas Children's Cabinet and Trust Fund on need to increase taxes to bridge a $400 million revenue shortfall. He said funding for children's programs are at risk without a tax increase.

His remarks were made Tuesday during a meeting of the Kansas Children’s Cabinet and Trust Fund.

In the past year, Parkinson and the Legislature have cut nearly $1 billion from a $6.4 billion state budget because of a steep decline in tax revenue.

Still, the state faces a $400 million revenue shortfall. Further cuts, Parkinson said, would do serious damage to the state.

Parkinson has proposed increasing the state sales tax by one cent for three years. He also wants to increase the cigarette tax by 55 cents per pack. Parkinson said that proposal would increase revenue to the state while also preventing more young people from smoking.

But a tax increase has drawn strong opposition from business interests.

12:33 p.m.

Two Republican legislators from Johnson County are proposing an increase in the state liquor tax with the funds dedicated to covering revenue shortfalls for social services.

“In this economy, the need for mental health (services) is even more,” state Rep. Kay Wolf, R-Prairie Village, said Tuesday.

State Rep. Kay Wolf, R-Prairie Village, on Tuesday introduced legislation to double the liquor gallonage tax and divert the increased revenue to social service programs. The proposal would produce $22 million. She introduced her bill during a meeting of the House Tax Committee.

State Rep. Kay Wolf, R-Prairie Village, on Tuesday introduced legislation to double the liquor gallonage tax and divert the increased revenue to social service programs. The proposal would produce $22 million. She introduced her bill during a meeting of the House Tax Committee.

Social service agencies have endured sizeable budget cuts over the past year as Gov. Mark Parkinson and the Legislature have reduced spending by nearly $1 billion because of falling revenue collections. Lawmakers still face a $400 million budget hole for the next fiscal year.

Wolf and state Rep. Pat Colloton, R-Leawood, have proposed doubling the liquor gallonage tax, which would produce $22 million. Under the proposal, the increased revenue would go toward mental health centers and reducing a waiting list for those receiving home and community-based assistance.

The current tax is 18 cents per gallon on beer, 30 cents per gallon on wine and $2.50 per gallon on alcohol. It is levied upon the person who first manufactures, sells, purchases or receives the liquor. It has already been paid by the time the product is for sale in a liquor, grocery or convenience store.

10:30 p.m.

Kansas business groups on Tuesday were united in opposition to Gov. Mark Parkinson’s proposal to increase the state sales tax from 5.3 cents per dollar to 6.3 cents per dollar to help address a $400 million revenue shortfall.

Kent Eckels, a lobbyist for the Kansas Chamber, told the House Tax Committee, that businesses in surrounding states were “salivating” at the thought of an increased sales tax in Kansas.

Art Hall, director of the Center for Applied Economics at Kansas University, testifies Tuesday to the House Tax Committee. Hall said a one-cent increase in the state sales tax would mean 26,000 fewer private sector jobs over 5 years.

Art Hall, director of the Center for Applied Economics at Kansas University, testifies Tuesday to the House Tax Committee. Hall said a one-cent increase in the state sales tax would mean 26,000 fewer private sector jobs over 5 years.

Derrick Sontag, head of the Kansas chapter of the anti-tax group Americans for Prosperity, said state government is spending too much. When asked where the budget should be cut, Sontag said public school funding should be cut further.

Art Hall, director of the Center for Applied Economics at Kansas University, said an increase in the state sales tax would mean 26,000 fewer jobs over five years and have a $2 billion negative impact. He said that was because the increase take more money out of family budgets and Kansans would buy fewer things.

Last week, proponents of the tax increase testified.

In 2009, state legislators and Parkinson cut about $1 billion from the state budget. Parkinson says further budget cuts will cause serious damage to public schools, universities, social services and public safety.

Comments

Stuart Evans 4 years, 11 months ago

By taxing and regulating cannabis for adults, and industrial hemp, we would cut our law enforcement costs dramatically, while increasing our exportable agriculture, and thus increase tax revenue. Kansas should strive to be a leader in the upcoming end of prohibition.
In the short term, this will be an economic boom to Kansas as it will create a run on cannabis tourism. This will subside as other neighboring states adopt the same legislation. However, the end result will still be fewer jails, lower taxes, and happier citizens.

nut_case 4 years, 11 months ago

How about no new taxes until the government gets spending under control and gets out of the babysitting business.

Drew Alan 4 years, 11 months ago

would people really spend THAT much less money if the sales tax was 1 more cent? that blows my mind! the city sales tax rose half a cent, and I barely noticed! (on a part time job/student budget!)

avoice 4 years, 11 months ago

dsmith84: Consider yourself very lucky not to have to give up some groceries when the sales tax rises. A whole lot of people have fixed budgets, more now than ever before. More sales tax out of that fixed budget means less groceries/clothing/supplies in the cart. Which retailers will be hurt the most? Specialties and restaurants. We're getting dwindled down to essentials only here.

preebo 4 years, 11 months ago

Here's an idea, contract the county governments (combine counties , thereby creating less counties and by extension less government and reducing government costs). Kansas has 105 counties (seriously 105!), and 105 county seats, and who knows how many county employees for each of these 105 counties. I would argue that in some cases the County Government is the largest employer in some of those western counties, not that I think that is wrong on face value, but believe it speaks to an extremely shallow job market in these areas. California (where I grew up) has literally 15 to 20 times the population of Kansas and yet has nearly half as many counties (58). Not that Kansas should take too many budgetary tips from the Golden State. However, if you are serious about cutting government spending, that would be the first area to start.

thinkagain 4 years, 11 months ago

I would like to know if Art Hall, director of the Center for Applied Economics at Kansas University can tell us how many jobs have already been lost due to cuts to social service agencies.

texburgh 4 years, 11 months ago

thinkagain:

Art Hall doesn't care. He - along with his buddies Dave Trabert of Kansas Policy Institute and Derrick Sontag of Americans for Prosperity - believe that those people whose incomes are derived from taxes (teachers, health care workers, correctional officers, etc.) are leeches on the body politic. (Just like Derrick Sontag was when we has staff for Republican legislative leadership and drew down a very healthy salary AND got a big bonus when he left.) They are just fine with layoffs of teachers and others. That's why they called for a reduction of over $600 million in school funding as their solution to the budget problem.

And just in case you wonder where their money comes from - Hall is a former Koch exec now directing the Koch-endowed Center for Applied Economics at KU, Sontag is the director of the Koch-founded Americans for Prosperity, and Trabert is the director of the KPI whose board includes some Koch executives. Yeah, that's right, they're out to protect you and me from the big bad government.

SettingTheRecordStraight 4 years, 11 months ago

It's not a "one cent" sales tax increase, Mr. Rothschild. It's a one percent sales tax increase.

We're not talking pennies here; we're talking about another full percent of income vanishing into the coffers of state government.

texburgh 4 years, 11 months ago

setting the record straight:

Yes, indeed, let's set it straight. Mr. Rothschild is right. It is an increase in sales tax of 1%. It is NEVER a "full percent of income" unless of course you only spend your income on taxable items. There is no sales tax on your home or rent, no sales tax on parking meters, no sales tax on most services...So in truth it could not come even close to "one percent of income." You can oppose the sales tax increase for a lot of reasons. Yours is not one of them.

kansasmutt 4 years, 11 months ago

First off i like the idea of combining some counties, GREAT IDEA. Second item is when you get people to belly up to buy a new car or something big, like a washer and dryer , you add another $1.00 per $100.00 spent on more tax and that could send people to Missouri to buy those items. We DO NOT need sales tax raised now !!!!!! Our state leader wants to raise cigarette tax another .55 per pack , so a carton will have about $12.00 in just tax on it. If you raise the liquor tax to the same level instead of a mere penny amount per gallon on beer, that would get some revenue going fast. But, raising any tax now is not something this state can take. Drunk drivers cost the state FAR more than smokers. You have bazillion dollar court battles over accidents and of course the additional law enforcement needed to enforce it. The state leader ( gov ) needs to spend some time looking into good ways to cut expenses and ways to free up money for the people of Kansas.

riverdrifter 4 years, 11 months ago

I'm with preebo on this one. Kansas does not need 105 counties anymore and hasn't for a long time. I have friends in three far-flung western KS counties and they all do their county business online. I went in a county courthouse last fall to buy a game stamp and walked through the beautiful old building to check it out. Fourteen people worked in it full time. The cost per employee to maintain the building must be staggering. Sure, there are many who don't do the internet thing yet & never will. They'll probably have to be gone before Kansas goes to, say, 50 counties. I won't live to see it.

SettingTheRecordStraight 4 years, 11 months ago

tex,

While you intentionally ignore my greater point that government takes too much, spends too much and controls too much, you are correct that the government only wants another full percent of commerce.

To your point on property taxes, Americans would be incredibly lucky to have their property taxes replaced with a sales tax. Once a year, every homeowner and renter in Lawrence pays approximately 1.5%% in taxes on his or her residence. Over 30 years, that's $45,000 in property taxes on a $100,000.

Additionally, "sales tax on parking meters." Seriously? You want us to feel good that government doesn't charge sales taxes on its fees?

Finally, the days of sales tax relief on many goods and services will soon end if command-and-control liberals like you get their way.

kansasmutt 4 years, 11 months ago

Don’t forget all your monthly bills will increase , like water, phone , cable and your gasoline every time you fill up , add another .50 or .60 cents on top of the already high price. Sales tax will destroy Kansas and the smaller businesses we have now. The ( gov ) we have now, doesn’t care about mom and pop stores. His yearly income is more, than 90% of the common everyday Kansans. A raise in sales tax and cigarette tax will hurt almost every Kansan. Think of this, If you spend $20,000.00 a year on bills and needed things , tack on another $200.00 on it. If you spend $60.000.00 a year tack on another $600.00 a year. That money just got taken from small businesses and used to fund special interest groups in Kansas. Wont take long for businesses to drop like flies and soon, more taxes to make that loss up.75% of small business are on the edge of failure in Kansas now. You pull another 1% out and that will be fatal as he#@. I as a small business owner know first hand what the economic weather is like in our state. It is NOT GOOD !!!!!!!! Tax on cigarettes right now will devastate our economy, and will not even come close to showing up as a savings in health care for 40 years , even if smoking causes cancer. Our leaders are living in a bubble and cant see what we the people are facing right now in our state. Common scenes is what we need now and a damn sharp pencil to cut spending in good safe ways.

notajayhawk 4 years, 11 months ago

A liquor hike?

Great idea!

Strolling through the woods in the sunshine and fresh air, pulling a cooler full of beer ...

texburgh 4 years, 11 months ago

setting the record straight:

Sadly, while you claim to have "made a greater point" you never did. You merely claimed that a one cent increase in the sales tax was the equivalent to taking 1% of your income. If you have another point, make it. Don't be a Koch-endowed moron such as your earlier points would indicate.

"Over 30 years, that's $45,000 in property taxes on a $100,000" Only if your home never increases in value. I notice that conservatives are cheesed off if their house increases in value for tax purposes but equally cheesed off it it does not increase when they want to sell it. You can't have it both ways.

"You want us to feel good that government doesn't charge sales taxes on its fees?" This reference to parking meters demonstrates your lack of knowledge of taxes in general. Just because you don't like the cost does not mean you paid sales tax. I want to pay $10 for a new cadillac so I guess the difference between that and what I paid is taxes?

"Finally, the days of sales tax relief on many goods and services will soon end if command-and-control liberals like you get their way." Actually "liberals like me" support sales tax "relief" in a logical way. There should be no sales tax on food; clothing should also be considered for an exemption. Your lawyer fees however should be taxed. We CAN make a sales tax more progressive by broadening the base and lowering the rate or exempting things like food and clothing. Of course I couldn't expect anyone like you who has no understanding of tax policy to get it. Clearly your belief is that "if you have to pay it, it's bad." I can't wait until you are seeking home-based services that will allow your alzheimer's afflicted butt to stay in your home. We'll see how you feel about taxes then.

Bob_Keeshan 4 years, 11 months ago

Kansas raised the sales tax in 2002.

Does Mr. Hall have analysis which proves that the 2002 sales tax increase cost thousands of jobs? Does he have analysis which proves the 2002 sales tax increase cost billions of dollars to the economy?

It is all fun and games to speculate on the future effects of a proposal. I would thing a real scholar would find it more enlightening to examine actual data from the past.

I would think Mr. Hall would look at the sales tax increase passed in Johnson County in 2002 of .25%. That sales tax was renewed in 2005. Here you have a border county, one in direct competition with other states that are "salivating" at the prospects of a Kansas tax hike.

What does the data show? Does it show thousands of jobs lost in Johnson County? Does it show the economy losing billions of dollars?

Mr. Hall isn't looking at actual data for a simple reason - he knows that actual data does not play out his theories.

Mark Kostner 4 years, 11 months ago

This is one tough spot that governments are in right now. Legalizing cannibis and industrial hemp make sense but pigs will fly before that happens, especially in Kansas. Same with shrinking counties. The county is all those small towns have left. You might be able to go to a county school district system like some states have but there again, many small towns would see losing the school district as a death sentence. A lot of Kansans live near the Missouri border so raising various taxes much above what Missouri's rates are will lead to people crossing the state line for liquor, tobacco, gas, and sales, etc. There is one thing that could be considered; dropping the racino rates so the horse and dog tracks could reopen and since the state hasn't had much luck with the SE KS casino proposals because of nearby OK casinos, move the fourth casino to KCK or possibly allowing for off res Indian casinos. Another problem is people really do not want higher taxes, witness the TEA Party movement, so raising taxes or levying new ones will be the end of politicians who do. Ask ex NJ Gov. Jon Corzine.

kansasmutt 4 years, 11 months ago

Bob ) Back when those taxes were raised those were in booming economic times that cant be matched. JO CO taxes were raised, yes, but JO CO is the richest county in Kansas and .25 is only 1/4 of 1.0 % . This is NOT the economic time to take an additional 1.0 % from every dollar spent from our citizens. I know 1.0% doesn’t sound like much , but to people who are struggling to feed kids and keep a roof over their heads , an extra $15.00 a month might put them out on the street or keep them from taking a child to the doctor. NOW is NOT the time to ask our citizens for a more. Now is the time for our state to learn to run economically. .If you look back to the 80s when Kansas raised the tax during that recession , you saw the blight start in Kansas City when businesses failed along the Missouri state line, in Kansas. Doing this now will set off a failure unlike anyone has seen and destroy Kansas economically.

Bob_Keeshan 4 years, 11 months ago

kansasmutt is it truly your recollection that May, 2002 was booming economic times?

To the contrary, Kansas was in the midst of a definite recession, a recession it did not come out of until late in 2003.

What a ridiculous statement to make.

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