Topeka Gov. Sam Brownback is meeting resistance to his tax plan from fellow Republicans because he’s mixing promises of future cuts in individual income tax rates with proposals to raise hundreds of millions of dollars in new revenues to plug holes in the state budget.
The backlash was evident Thursday as Kansas legislators wrapped up hearings on Brownback’s proposals. Some Republican lawmakers worried about getting tagged as tax increasers only a year after the state enacted massive income tax reductions to stimulate the economy.
Brownback is pitching his package as a five-year plan to position Kansas for phasing out individual income taxes. But to stabilize the budget after last year’s tax cuts, he proposed changes in sales and income tax laws that would net the state more than $1.1 billion in new revenues over the three years starting in July, according to the Legislature’s nonpartisan research staff. The bulk of the new tax relief Brownback proposes would then come in the fourth and fifth years of his plan.
The governor’s fellow Republicans have supermajorities in both the Kansas House and Senate, but GOP legislators are searching for alternatives to his proposals. The powerful, conservative-leaning Kansas Chamber of Commerce wants lawmakers to consider spending cuts.
Rep. Arlen Siegfreid, a conservative Olathe Republican, said the plan from Brownback’s administration “doesn’t sell very well.”
“This pathway that they’re taking requires legislators to make a decision to take something away from their constituents rather than something away from government, and a lot of people are not comfortable with that,” said Siegfreid, who serves on the House Taxation Committee.
Last year, the state cut income tax rates, increased the standard deduction for most filers and exempted the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes. Supporters believe the changes will spur economic growth, but they created a budget shortfall for the fiscal year beginning in July.
The governor wants to phase in another round of income tax rate cuts over four years, arguing that it will keep Kansas economically competitive. However, he’s proposing to immediately eliminate popular income tax deductions that homeowners receive for the interest on their mortgages and their property taxes.
Also, Brownback wants to keep the state’s sales tax at 6.3 percent rate, rather than letting it decline to 5.7 percent in July. The decline was mandated by legislation boosting the tax to balance the budget three years ago, enacted under Brownback’s Democratic predecessor.
He said that if the state doesn’t raise new revenues first, it faces “dramatic” budget cuts.
“If you will do it this way, it is a tax cut over the five years,” Brownback told reporters this week.
Some Republicans are sticking with Brownback for now because they support his long-term goal of phasing out individual income taxes.
“This all works together, so we need it all,” said Sen. Larry Powell, a conservative Garden City Republican.
Democrats criticized last year’s tax cuts as reckless and likely to cause continual budget shortfalls.