Topeka Legislation cutting Kansas’ personal income tax rates cleared the state Senate on Thursday, but Republicans in both chambers remained split over GOP Gov. Sam Brownback’s proposal to offset such reductions by canceling a promised decrease in the sales tax.
The Senate’s 24-15 vote sends the tax bill to the House, which is working on its own measure. Brownback hopes to follow up on massive income tax cuts enacted last year by cutting rates over four years, and many members of the GOP-dominated Legislature support his goal of eventually phasing out individual income taxes.
To stabilize the budget, the Senate’s bill keeps the sales tax at its current rate, rather than letting it drop in July, as scheduled by state law. The measure also phases out most individual income tax deductions as rates decline.
Supporters of the bill believe that reducing personal income taxes will stimulate economic growth. But the governor also reiterated Thursday that he wants to protect the state’s “core missions,” including education, social services and public safety from potentially drastic budget cuts.
“We’re glad to make a step forward,” Revenue Secretary Nick Jordan said after the Senate’s vote. “We’re moving toward growing the economy.”
The House expects to debate a tax bill next week. Its Taxation Committee approved a plan allowing the sales tax to decrease while phasing out income tax deductions and diverting money from highway projects. The measure’s cuts in income tax rates would be less aggressive than those proposed by Brownback and wouldn’t occur unless state revenues grew at least 2 percent each year.
House GOP leaders have said repeatedly that they don’t think Brownback’s sales tax proposal can pass their chamber.
The sales tax is 6.3 percent and rose to that rate in 2010 under a budget-balancing plan enacted under Brownback’s predecessor, then-Democratic Gov. Mark Parkinson. He and lawmakers who supported the increase promised that most of the hike would be temporary, and the sales tax is set to drop to 5.7 percent in July.
Democrats who voted for the sales tax increase to preserve funding for education and social services are chiding some Republicans for being willing to break the Legislature’s promise. They also contend that shifting the burden for funding state programs from income taxes to sales taxes will hurt poor and middle-class families, something the administration disputes.
Sen. Michael O’Donnell, a freshman Wichita Republican, noted that he unseated veteran Sen. Jean Schodorf in last year’s GOP primary after criticizing her for supporting the 2010 sales tax increase. He was among six GOP senators joining the chamber’s eight Democrats in voting against the tax bill Thursday.
“I promised my district in person and in my mailers I would fight to repeal that sales tax,” O’Donnell said. “The people call me plenty of things, but they can’t call me a liar.”
In the House, Rep. Kyle Hoffman, a Coldwater Republican, faces a similar dilemma. Hoffman said he argued during his first successful campaign for the House in 2010 that lawmakers “took the chicken way out” by raising the sales tax increase to balance the budget.
“I kind of ran on that,” he said.
Other House Republicans feel less bound by their 2010 criticism of the sales tax increase if keeping it allows Kansas to phase out income taxes. Rep. Kasha Kelley, an Arkansas City Republican, said she’s still trying to assess how her constituents feel about such a potential tradeoff.
“I could go either way, with some justification,” she said.
The Senate’s vote on taxes came shortly after its Ways and Means Committee approved a proposed budget of more than $14 billion for the fiscal year beginning July 1, trimming Brownback’s recommendations for higher education and other items so the spending plan would mesh better with the chamber’s tax plan. Both chambers plan to debate budget legislation next week.
The Senate’s tax bill would net the state an additional $497 million in new revenues over the next five years, according to legislative researchers.
Brownback said most lawmakers appear to share his goals of protecting core programs while positioning Kansas to phase out income taxes.
He’s added that he’s open to negotiating details, but, “There are only so many options that ultimately produce that.”