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Archive for Wednesday, October 10, 2012

Brownback not ruling out sales tax plan next year

October 10, 2012, 12:43 p.m. Updated October 10, 2012, 6:35 p.m.

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— Gov. Sam Brownback hasn't ruled out having Kansas balance its budget by keeping its sales tax at the same rate rather than letting it drop next year as planned.

Brownback acknowledged Wednesday that he's anticipating state revenues will dip temporarily because of massive income tax cuts he signed into law earlier this year. He said a sales tax proposal remains a possibility but he won't make a decision until he sees how the budget picture develops.

The sales tax is 6.3 percent, but it's scheduled to drop to 5.7 percent in July. The state boosted the tax in 2010 — before Brownback took office — to protect public schools and social services spending, but pledged that most of the increase would be temporary.

Brownback pushed income tax cuts this year as a way to stimulate the state's economy, but the conservative Republican governor has faced criticism from Democrats for months that the aggressive package he signed into law will force the state to slash its spending in the future. Democrats also have speculated that Brownback is preparing to ask legislators to extend the current sales tax rate.

I'm not opposed to it," Brownback said. "It's just, let's see where we are in the budget."

Brownback proposed this year that the state keep its sales tax at 6.3 percent permanently, to offset income tax cuts he pursued and lessen their effects on the budget. Brownback argued that cutting income taxes would do more to stimulate the economy than lowering the sales tax.

But many legislators, including some Republicans, considered it important for the state to keep the promise that the sales tax would go down. Brownback's predecessor, Mark Parkinson, relied on fellow Democrats and moderate Republicans to get the GOP-dominated Legislature to boost the sales tax to 6.3 percent from 5.3 percent in 2010. Even after July 2013, part of the increase would remain in effect to help finance highway projects.

The Legislature's research staff has estimated that keeping the sales tax at 6.3 percent would raise at least $250 million in additional revenues a year after July 2013. But if Brownback pursued a sales tax proposal, he probably would face bipartisan criticism — in part because he strongly criticized the rise in the sales tax in 2010 while running for governor.

"I'm not surprised that he wants to use the sales tax, but at the same time, the Legislature made a promise that it should end," said Senate Ways and Means Committee Chairwoman Carolyn McGinn, a Sedgwick Republican. "I see it as a tax increase."

The tax cuts enacted this year will reduce individual income tax rates for 2013, dropping the top rate to 4.9 percent from 6.45 percent and exempting the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes. Legislative researchers estimate that the cuts will save taxpayers $231 million during the current budget year and more than $4.5 billion over the next six years.

Legislative researchers also project that the income tax cuts will create collective budget shortfalls approaching $2.5 billion over the next six years. Brownback and his allies view those projections as too pessimistic but Brownback acknowledged Wednesday that economic growth is likely to lag behind the tax cuts.

"There's going to be a two-year dip," Brownback said. "That's the nature of these, when you cut taxes. If you cut them right, you get growth on the other side, but there's a dip first."

In July, Brownback's budget director, Steve Anderson, instructed state agencies to prepare proposals for cutting up to 10 percent of their spending during the fiscal year that begins in July, though state aid to public schools was exempted.

Administration officials have said Anderson's instructions were only a hedge against fiscal uncertainty and noted that he also asked for current-resources proposals and requests for extra spending.

But Brownback's critics have said Anderson's instructions confirmed their fears about how the income tax cuts will affect the budget.

"This tax plan makes it impossible for the government to work," said Kansas Democratic Party Chairwoman Joan Wagnon, a former state revenue secretary. "It is absolutely scary."

Comments

KansasLiberal 2 years, 2 months ago

I thought that all republicans made a blood oath to Grover Norquist to never raise taxes?

chootspa 2 years, 2 months ago

Taxes don't count if they're mainly on poor people.

ksjayhawk74 2 years, 2 months ago

The higher sales tax is an unfair burden on the poor and middle class, who spend a much larger portion of the income on taxable purchases than the rich do.

James Nelson 2 years, 2 months ago

Sam doesn't care about the poor and middle class.

EJ Mulligan 2 years, 2 months ago

What the what? I know it's horribly regressive, but still he's actually considering revenue to offset cuts. I'm sure this position will reverse quickly after certain groups see what he said. Wait for it...

chootspa 2 years, 2 months ago

Trabert's figures are very telling. Remember how Brownback allegedly went around asking everyone to budget in a 10% cut?

hyperinflate 2 years, 2 months ago

I predict the "temporary lag" to be at least 7 years.

somedude20 2 years, 2 months ago

Dudes, they got us by the gonads! Most, again..MOST (31 including DC have no taxes on food) states do not charge this as food is needed for life (unlike shoes, booze, cars). If Kaiser Brownie has to tax food, hit up the junk food that makes people fat thus causing one of the biggest drains on health care...."The medical care costs of obesity in the United States are staggering. In 2008 dollars, these costs totaled about $147 billion." (from a real source, not a bottle of booze) Finkelstein, EA, Trogdon, JG, Cohen, JW, and Dietz, W. Annual medical spending attributable to obesity: Payer- and service-specific estimates. Health Affairs 2009; 28(5): w822-w831.

Steve Jacob 2 years, 2 months ago

Sam the moderate? Many in his own party wanted to repeal the sales tax, and many who voted for the sales tax will not be there in 2013.

I think reality has set in. Somehow, if his tax plan works, it will take years, and how much suffering can we handle?

jesse499 2 years, 2 months ago

What's the chance he goes to work for them after he's out of office as a lobbyist.

JackMcKee 2 years, 2 months ago

Who didn't see this coming. Higher property taxes and sales taxes are the future of Kansas under Sam the Sham.

question4u 2 years, 2 months ago

Wow! You think that you pay FEDERAL property and sales tax?

chootspa 2 years, 2 months ago

I thought it would all go to local governments, actually. I'm a bit surprised to see sales tax reality hit him so soon. Guess someone told him those oil booms weren't really that boomin' after all.

tolawdjk 2 years, 2 months ago

Who is he kidding?

He won't propose it. The Legislature will. He won't oppose it's removal though and when it hits his desk he will shrug and say it is the will of the people to remove it. Then they will look to more cuts to offset that lost revenue.

It is how we got the current tax plan in the first place.

scaramouchepart2 2 years, 2 months ago

The city has already past legislation using the tax. So we we were never going to get it back. The problem now is, how is the city going to pay for the legislation already passed for economic development?

Catalano 2 years, 2 months ago

No they haven't. Why do you think they have? Seriously. Please explain.

verity 2 years, 2 months ago

Brownback just keeps thumbing his noise at us---and somehow he gets by with it.

This isn't about more money for the Kochs---how many billions can one spend? It's about power, pure and simple. Once power is accrued, it is rarely given up without a vicious fight. And those fighting for it see themselves as deserving and don't care at all about the damage caused, even to themselves.

Folks, we are all only collateral damage. We are not seen as being human by those putting these policies in effect.

Richard Heckler 2 years, 2 months ago

The Koch boys and Brownback have been close since he was elected to office in 1986. I have no doubt this the where Brownback gets his direction.

I also believe the Brownback advisory boards come with suggestions from the Koch political machine.

All of this advisory board approach smells like the " beltway" concept. None of the members are necessarily required to have any expertise. A white collar is the rule of thumb. In spite of the fact in the past 32 years it has been the CEO types who have wrecked the economy and the USA job market simultaneously ...... remarkable.

In D.C. when congress does a "investigation" on a matter who they call in for a chat? The foxes in the chicken coop aka CEO of an industry in question. Or just CEO's will do. These are are not truly investigations or problem solvers instead we get mostly political theatre.

Investigators in real life should be the IRS and/or FBI or KBI = removing the politicians who are satisfied with investigating themselves.

Richard Heckler 2 years, 2 months ago

"Brownie likes which folks?.........Brownie likes Rich Folks!" now wait a minute not all rich folks like Brownback or his politics.

It is the selected connected rich folks that accept massive corruption in government.

James Nelson 2 years, 2 months ago

If Sam supports keeping the sales tax increase it would constitute proof that he wants the poor and middle class to subsidize the new statute removing taxes for the rich. How heinous, how cruel, how unnecessarily cold blooded, how heartless, how so republican, how Sam Brownbackish.

Sam, you like to go to Texas. Make a quick trip to Menninger's in Houston and get treatment for your Koch problem.

Dave Trabert 2 years, 2 months ago

Raising the sales tax is bad policy from our viewpoint. First, it’s not necessary to balance the budget and implement tax reform. Our dynamic analysis published in July shows that a one-time spending adjustment of about 8.5% is all that is needed to have balanced budgets and healthy ending balances. No essential services need be eliminated – they must be provided more efficiently.

Every state has schools, social service programs, etc. but some provide those services at much more affordable costs. According to the National Association of State Budget Officers, in 2010 Kansas spent more per-resident in the General Fund than 24 other states…and 16% more than the states with no income tax. Since then, General Fund spending jumped by almost $1 billion.

Second, a sales tax increase could wipe out the benefit of reducing the marginal tax rates on some low income people. The point of tax reform is to reduce the tax burden on individuals and employers, not shift it.

Instead of raising the sales tax, state government should be made to operate more efficiently. The bureaucracy and taxpayer-funded lobbyists are strongly objecting to any attempt to make government operate efficiently, but hopefully the Legislature will stand up for taxpayers by telling government to bring its costs and strongly resist any effort to raise the sales tax.

chootspa 2 years, 2 months ago

It's bad policy from your viewpoint, because you're representing rich neoliberals in favor of anarchocapitalism.

PS - let me introduce Dave Trabert, the paid spokes person for a Koch-funded think tank in Wichita, and a member of ALEC, where corporate interests don't just get to lobby with the legislature -they get to write their bills in secret meetings. But don't worry, kids. It's ok if corporations hand a representative a bill with all sorts of pork in it. Just don't let those icky teachers talk to lawmakers. They might have conflicts of interest.

http://www.alecexposed.org/wiki/ALEC_Exposed

Dave Trabert 2 years, 2 months ago

Population shifts are not a pre-requisite to efficiency and rural Kansas would not be negatively impacted by having government make better use of taxpayer money. Everyone benefits.

Some of the efficiency savings comes not wasting money on non-essential things like spending several hundred thousand dollars to buy memberships in national organizations and eliminating some of the $10 million spent annually on overtime. Other savings comes from structural change, like centralizing IT, cell phone service, payroll and similar functions instead of allowing each agency to do what it wants. There is tremendous buying power advantages with negotiating fleet deals on car rentals, hotels, etc. You'd be amazed at how little of this is done in government.

chootspa 2 years, 2 months ago

That's lovely talk, but it requires having an actual leader in the governor's seat and rational legislators in the chambers. I'm guessing we're zero for three after this year's election.

When push comes to shove, what actually happens with this administration is that Lawrence SRS offices get closed, Main Street gets shuttered, arts funding isn't used appropriately to stimulate business growth, we lose matching federal funds, the state loses bunches of money from lawsuits, and Brownback hires two execs to replace one position.

Plus you lost me with your hypocritical dig at "taxpayer-funded lobbyists" when you get to sit down with the legislators and hand them model legislation behind closed doors. Some animals are more equal than others in your world.

bevy 2 years, 2 months ago

There is already a dip in place. His name is Sam, and God willing, he will be a short-term dip.

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