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Archive for Sunday, May 20, 2012

Legislature approves budget; tax cuts at center of dispute

May 20, 2012

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— Kansas legislators adjourned their contentious annual session Sunday with Gov. Sam Brownback’s conservative Republican allies crowing that they’ve set the state on a new and prosperous economic course with a coming wave of income tax cuts.

Critics, including Democratic and moderate Republicans, were equally certain that Kansas faces years of budget problems. They predicted the state will slash spending on schools, social services and other programs because of the aggressive tax cuts that Brownback is preparing to sign into law this week.

The income tax cuts, along with an already scheduled sales tax reduction, will provide $231 million in tax relief for the fiscal year beginning July 1, with the annual figure growing to $934 million after six years. The bill on Brownback’s desk would cut top individual income tax rates for 2013 and eliminate income taxes for the owners of 191,000 businesses.

Those tax reductions overshadowed the last piece of important business Sunday, final passage of a $14.3 billion state budget for the next fiscal year. The budget trims overall spending by 3 percent and leaves healthy cash reserves at the end of June 2013, even with the tax cuts.

“We are living in historic times, and Kansas — the world is looking at us right now,” said House Speaker Mike O’Neal, a conservative Hutchinson Republican. “Everybody’s just going to be amazed, and your constituents will be very proud of you.”

Brownback declared that Kansas will become “the best place in America to start and grow a small business.”

“The 2012 Legislative session came down to a simple question: Do we want to grow the government or grow the economy?” he said in a statement. “The resounding answer: We’re going to grow the economy.”

Unfinished business

Though Brownback and his allies predicted Sunday that the aggressive income tax cuts will provide a jobs-creating boost to the economy, they’d been worried enough about future budgets problems to look for less aggressive alternatives, some phasing in the same cuts over six years. The effort faltered amid recriminations over whether Brownback and his allies, or moderate GOP senators and theirs, were inflexible.

The Legislature’s research staff has projected that the combination of income and sales tax cuts will spawn a budget shortfall that would balloon to nearly $2.5 billion by July 2018 if left unchecked.

“If we can’t rectify some of the issues with that when we come back next year, there will be huge problems,” said Senate President Steve Morris, a moderate Hugoton Republican who also was skeptical of even alternative proposals to phase the same cuts in over six years.

Sunday was the 99th day of the Legislature’s session — nine days longer than scheduled. The record is 107 days in 2002. The only scheduled business remaining this year is a brief, formal adjournment ceremony June 1.

Lawmakers left one big task — redrawing political boundaries to reflect population shifts over the past decade — to a federal court. A bitter feud between GOP factions, anticipating primary elections that will determine which camp controls the Senate next year, prevented passage of any redistricting proposals. The acrimony spilled over into most other big issues, including taxes.

OK for this year

The Senate approved the proposed budget on a 22-13 vote just hours after the House passed it, 80-35. The measure was a compromise drafted by negotiators for the two chambers.

The spending plan didn’t need much more tightening once lawmakers settled tax issues, because the state expects to have adequate cash reserves to cover the tax cuts and still have a $464 million surplus at the end of June 2013.

The forecast surplus for June 2013 is in sharp contrast to the projected shortfall Brownback faced when he took office early last year. And the proposed budget would boost base aid to public schools by $60 per pupil, or about 1.6 percent, offsetting a small portion of earlier reductions in aid prompted by the Great Recession.

O’Neal called it “a healthy budget.” House Majority Leader Arlen Siegfreid, a conservative Olathe Republican, said, “We found that by making bold moves, that we could change direction of Kansas.”

However, many critics of the tax cuts doubted the spending in the budget can be sustained into the future.

“This session is the beginning of devastating school cuts, social services cuts and critical government services that are not going to be able to be delivered in the same capacity,” said House Minority Leader Paul Davis, a Lawrence Democrat.

Under the tax bill, the state’s top individual income tax rate would drop to 4.9 percent from 6.45 percent for 2013. The business tax break is targeted at the owners of partnerships, sole proprietorships and other small businesses, though critics believe large companies will change their legal structures to take advantage.

The sales tax will drop to 5.7 percent from 6.3 percent in July 2013. Lawmakers promised the reduction two years ago when they boosted the rate to close a budget shortfall, before Brownback took office.

Comments

Joe Hyde 1 year, 11 months ago

I would not presume to offer a blanket explanation for why anyone contemplating a career choice would decide to become an historian. But I will say this:

Out there right now are historians who have already begun the careful process of accumulating and examining the political events now unfolding in Kansas, as entomologists might view pinned insect specimens on a laboratory study board. These historians are, or will soon begin, gathering verifiable data from a spectrum of sources. They must be licking their chops at the prospect of authoring a best-seller detailing the catastrophic financial and cultural unravelling of the State of Kansas.

I sincerely hope I'm wrong, but for non-resident readers across the rest of the nation, and the world, the book "What's The Matter With Kansas" may prove to have been only a teaser. This story could end up being a boxed set.

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IndusRiver 1 year, 11 months ago

As I recall, wasn't it the wealthy who wanted, and received, two illegal, mega-trillion-dollar wars? Wasn't it the wealthy who raided the Savings & Loan, and wasn't it the wealthy who concocted pyramid schemes that ripped a cool trillion (thereabouts) right out of the economy? Wasn't it the wealthy who shipped thousands of American jobs overseas, and wasn't it the wealthy who couldn't find billions of U.S. tax dollars in Iraq?

Tip of the iceberg.

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Liberty275 1 year, 11 months ago

This thread is like watching babies cry because their mommies took the bottle away.

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Cait McKnelly 1 year, 11 months ago

My advice to Kansans; get your butt out of that state and run as far away and as fast as you can because Kansas is working on becoming the Somalian cess pool of the nation. Corporate "war lords" will frack and tar sand to their heart's content, live in gated communities or estates with private police forces (if they bother to live here at all) and suck the state dry without paying a dime in taxes. Welcome to Libertarian paradise, folks. Better fasten your seat belts because it's gonna be a bumpy ride (from all of the potholes in the streets.)

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somedude20 1 year, 11 months ago

"I feel like I just gave birth.......to an accountant."

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just_another_bozo_on_this_bus 1 year, 11 months ago

If folks really want workers to have "skin" in the game, then give them some skin. Best way to do that is increase the minimum wage to $12 an hour, and quit trying to destroy unions, which are the only hope for workers to get corporate fat cats to treat them with respect, and pay workers what they deserve.

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CountyResident 1 year, 11 months ago

Do you not think that paying sales tax of 6.3% (including on food) is "skin in the game"? The combined per centage of state and local taxes that the "poor and middle class" pay on their income is far and above what the weathly pay. It only got worse with Brownbacks tax cuts.

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tolawdjk 1 year, 11 months ago

I, for one, look forward to a new era of fiscal growth! I can only imagine how this legislation will allow Kansas to tap into the vast wealth of natural resources at our disposal. I can't wait until I can patronize busineeses like "Chigger World" and "Noxious Weeds R Us". I look forward to an antique shop on every corner next to a Starbucks.

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FalseHopeNoChange 1 year, 11 months ago

It's about time the "poor and middle class" started paying for the 'luxries' the wealthy have provided for them. "Skin in the game" makes the state work.

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Michael LoBurgio 1 year, 11 months ago

just_another_bozo_on_this_bus Well the GOP wants to lift the ban on propoganda anyhow so I guess we need to get used to it!

Congressmen Seek To Lift Propaganda Ban Propaganda that was supposed to target foreigners could now be aimed at Americans, reversing a longstanding policy. “Disconcerting and dangerous,” says Shank

An amendment that would legalize the use of propaganda on American audiences is being inserted into the latest defense authorization bill, BuzzFeed has learned.

The amendment would “strike the current ban on domestic dissemination” of propaganda material produced by the State Department and the Pentagon, according to the summary of the law at the House Rules Committee's official website.

The tweak to the bill would essentially neutralize two previous acts—the Smith-Mundt Act of 1948 and Foreign Relations Authorization Act in 1987—that had been passed to protect U.S. audiences from our own government’s misinformation campaigns.

http://www.buzzfeed.com/mhastings/congressmen-seek-to-lift-propaganda-ban

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just_another_bozo_on_this_bus 1 year, 11 months ago

"“We found that by making bold moves, that we could change direction of Kansas.”"

The sad part is that they actually believe their own propaganda. And they're so narcissistic that over the next few years as the deficits rise, and they have to make major cuts to every state program, they'll claim they do so not because they want to, but because they have to in order to be "fiscally responsible."

These creeps are downright criminal.

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Paul R Getto 1 year, 11 months ago

Voodoo economics; get used to it in this "faith-based" administration.

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tange 1 year, 11 months ago

My penny jar overfloweth.

/ hmm... gonna have to buy a bigger one....

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anotherview 1 year, 11 months ago

Most likely a family of four that owns a home, a couple of cars and has less than $50,000 of salary income will see their Kansas income tax go up. While their tax rate will go down a little, they will no longer be able to deduct the real estate and personal property taxes they pay. The loss of these two deductions will offset the reduction in the tax rate.

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Mike1949 1 year, 11 months ago

” House Majority Leader Arlen Siegfreid, a conservative Olathe Republican, said, “We found that by making bold moves, that we could change direction of Kansas.”

Bankruptcy IS a different direction!

For the sake of at least turning Kansas around, in the next two elections, vote either Democrat or moderate Republican (Prefer either Democrat or Independent personally) if you really care about Kansas and want to keep it a violable State.

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kansanjayhawk 1 year, 11 months ago

Thank you governor for looking out for the middle class and reducing our tax burden! Government must grow more slowly as we move toward more efficiency.

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kennethterry92 1 year, 11 months ago

Brownback don't give a damn about the poor and working class people. I work full time and don't have a problem with tax dollars to help poor people. Brownback can go back to Washington cause he is not what Kansas needs for a govenor.

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Bob_Keeshan 1 year, 11 months ago

This is not a tax cut, this is a tax shift. In the future, the entire tax burden in Kansas will be borne by the poor and the middle class.

At least the wealthy will have more money to contribute to Brownback's "policy organization," basically a slush fund for unlimited political contributions his rich supporters will now pour money into as a nice thank you.

This tax shift won't create any jobs. Well, it will create one job -- Brownback's Chief of Staff Kensinger has left the job to serve as the leader of his political PAC and cash all those big new campaign contributions.

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observant 1 year, 11 months ago

Why doesn't brownie just flat out state the signing ceremony will be at Koch headquarters in Wichita. After all, they bought and paid for the results, give them the credit they deserve.

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chootspa 1 year, 11 months ago

"The package is expected to provide $231 million in tax relief during the fiscal year that begins July 1, and the annual figure grows to $934 million in six years."

Tax relief - really? Can we not embrace the language of the fiscally irresponsible? The package is expected to result in $231 million less in state revenue. It's an income tax cut, not "tax relief." If anything, the resulting shift to local property taxes makes this a regressive shifting of tax burden. If the economy magically and inexplicably grows to keep state revenue steady, it's not "tax relief" either. It's merely a shift in who pays the tax bill.

Ah well. Enjoy your signing ceremony over in Kansas's new capital: Koch headquarters, Wichita. I'm sure they're a bit mum on the details, because a massive protest doesn't make for the best photo op.

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bobberboy 1 year, 11 months ago

idiots would rather give up and go home rather than do the hard work !!

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