Topeka Legislators said Wednesday they are eager to hear Gov. Sam Brownback's plan for reforming the Kansas tax code and what it would mean to funding of state agencies.
They will get some indication when the Republican governor gives his State of the State address to a joint session of the Legislature.
Brownback has said his tax plan will be revenue-neutral — meaning it would not reduce overall tax collections — but will make the income tax fairer, simpler and, in his words, "flatter."
Sen. John Vratil, a moderate Leawood Republican who has been targeted in this year's election by his party's anti-tax, small-government wing, said the next state budget is likely to remain tight, despite improvements in the state's finances.
Vratil also said of the governor, "I don't know what he means by revenue-neutral."
Last session, the House approved a bill that would reduce the state income tax rates each year collections exceed the previous year's totals. The reductions would apply to corporate and individual income taxes.
The bill stalled in the Senate but is likely to be revived. The Senate has appointed a commission to study tax reform that begins meeting Friday. Sen. Carolyn McGinn, a Sedgwick Republican, is proposing the early rollback of a 1 percent increase in the sales tax rate approved in 2010. The rate would fall from 6.3 percent to 5.7 percent on Jan. 1, 2013, six months earlier than scheduled.
Rep. Marvin Kleeb, an Overland Park Republican, said he expects Brownback to outline a plan for stimulating economic growth and reducing income taxes, calling it "a good place to start."
"We need solutions now," he said.
Others were more tempered in what they expected to hear during the annual 30-minute address.
"We've been around enough State of the States that there won't be much details. It will give a general overview," said House Assistant Minority Leader Tom Burroughs, a Kansas City, Kan., Democrat.
He said most legislators aren't expecting any surprises from Brownback on taxes or the budget. However, Burroughs said he wants to see what the governor proposes to do for workers and to help small businesses create jobs, saying the speculation of tax cuts "creates a level of fiscal uncertainty" that affects economic growth.
Kansas has seen steady improvement in the economy since Brownback's first State of the State a year ago. The unemployment rate fell to 6.5 percent in November. But momentum was tempered last week when Boeing Co. announced it is closing its Wichita defense plant, eliminating 2,100 jobs.
Senate Majority Leader Jay Emler, a Lindsborg Republican, said he expected to hear the broad outline of Brownback plan, with more details Thursday and Friday. He said his constituents — many of them living in rural areas — are more concerned about property taxes.
"The concern I have about it is, how does it affect the revenue stream and how are you going to provide the services you're providing?" Emler said.
Brownback and the GOP-controlled Legislature will have $200 million to $300 million in reserves as they begin writing the budget for the fiscal year beginning July 1.
Brownback is expected to continue to again ask state agencies to reduce spending and push for efficiencies. In 2011, the governor downsized many state functions and pared the state workforce by eliminating about 2,000 vacant positions and offering a voluntary early retirement program.
State revenues are expected to be in the black for the first time in several years, to the tune of $200 million to $300 million. Brownback has said in interviews ahead of the session that he wants to get closer to the statutory requirement of a 7.5 percent ending balance of general fund revenues. That would require reserves of close to $450 million of the $6 billion in general fund spending annually.
Democrats want to spend more than $300 million of the reserves over three to restore funding cut in recent years to public schools and provide $45 million in property tax relief to cities and counties.
Senate Minority Leader Anthony Hensley said the school plan highlighted the differences between Democrats and the governor on education. The governor will propose rewriting the funding formula, shifting the authority to raise funds to the local school boards and limiting future state spending increases.
"Unlike Gov. Brownback's school finance plan, our plan will not raise local property taxes. In fact, we're going to give Kansans a much-needed property tax cut," said Hensley, a Topeka Democrat.