Overland Park Gov. Sam Brownback urged Kansas lawmakers to take another look at ways to pay for massive income tax cuts signed into law earlier this year because restoring the tax rate to its previous level isn’t an option.
In remarks to hundreds of people at a forum Tuesday in Overland Park, the Republican governor acknowledged that the state is facing a “hard dip” in revenues because of the cuts that will go into effect in January. But The Kansas City Star reported Brownback suggested lawmakers reconsider what he calls “pay fors” to fill the gap.
Those include eliminating many tax deductions and credits, including deductions for interest on home mortgages and for charitable contributions.
“I think we ought to do some of the pay fors that I proposed last year,” Brownback said at a forum Tuesday sponsored by the Lathrop & Gage law firm. “I think the Legislature ought to do those. We will see if they are going to do it.”
His proposals, which also included keeping part of a penny sales tax that is supposed to expire July, never made it out of the Legislature.
In January, the state will reduce individual income tax rates, drop the top tax rate to 4.9 percent from 6.45 percent and increase the standard deductions claimed by married couples and heads-of-household. The state also will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from taxes.
Legislative researchers have estimated that the cuts will be worth $4.5 billion over the next six years. But the researchers also project that the cuts will create collective budget shortfalls approaching $2.5 billion during the same period.
Brownback’s proposal ran into problems when lawmakers received a cool reception from constituents who didn’t want to give up their home mortgage interest deduction.
He also faced a negative backlash when it was revealed his tax plan as originally proposed would actually have raised taxes on people with incomes under $25,000, while everyone else’s taxes would be lowered.
Within days of his initial proposal, conservative lawmakers in the House created their own plan that would lower taxes without eliminating many tax deductions and credits.
“I thought the plan we put forward was a good, full plan,” Brownback said Tuesday. “We got the tax cuts, which was good, but we didn’t get the pay fors.”
He said education, public safety and medical services for the poor would be protected categories.
Brownback and other advocates for the tax plan believe a short-term dip in tax revenues will eventually be replaced with revenues created by economic growth prompted by the tax cuts.
He said in an interview after the forum that he wants to talk the issue over with legislative leaders to see what can be realistically accomplished.
“What I am not going to do — and what I won’t sign — is putting taxes back on small businesses and raising the income tax rate back up,” Brownback said. “Certainty is a key issue on tax policy.”