Topeka Republicans in the Kansas House outlined a new, compromise plan Wednesday for cutting income taxes in hopes of breaking a stalemate that’s prevented legislators from wrapping up their business for the year.
The new plan would cancel part of a decrease in the state’s sales tax scheduled by law for July. The move would be aimed at stabilizing Kansas’ budget, while cutting personal income taxes further to follow up on massive reductions made last year in hopes of stimulating the economy.
The sales tax is 6.3 percent, and both Republican Gov. Sam Brownback and the GOP-dominated Senate wanted to keep that rate in place. The House approved a tax plan allowing the sales tax to drop to 5.7 percent as planned, with less aggressive income tax cuts than Brownback or senators wanted.
The new proposal would drop the sales tax to 6 percent in July and phase in additional cuts in individual income tax rates over four years. The top personal income tax rate, 4.9 percent after last year’s cuts, would decline to 3.8 percent for 2017, compared to the 3.5 percent proposed by Brownback and endorsed by senators.
House Taxation Committee Chairman Richard Carlson presented the new plan during a meeting of three senators and three House members appointed by legislative leaders to reconcile the chambers’ differences. Carlson, a St. Marys Republican, is the House’s lead negotiator.
“We think it’s a very fair offer,” Carlson said during the negotiators’ half-hour meeting. “We think we’ve come to the middle.”
Legislators must resolve tax issues to finish a state budget of roughly $14.5 billion for the fiscal year beginning July 1 and a similarly sized spending plan for the following fiscal year. Lawmakers cannot adjourn without passing budget legislation.
Republican senators planned to caucus Thursday morning to review the new tax proposal; they invited GOP House members.
House Republicans had a caucus Wednesday afternoon and invited GOP senators. A handful attended, including Senate President Susan Wagle of Wichita and other leaders.
Senate Assessment and Taxation Committee Chairman Les Donovan, his chamber’s lead negotiator in the public tax talks, called the new proposal “a great distance move” for House Republicans.
“It’s the first progress we’ve seen,” said Donovan, a Wichita Republican.
The appointed tax negotiators hadn’t met publicly for more than a month, creating frustration among lawmakers who felt they were getting little information about possible compromises. Instead, Wagle and House Speaker Ray Merrick, a Stilwell Republican, had private talks with Brownback to broker a deal, but the two legislators acknowledged an impasse Tuesday.
Brownback didn’t see their stalemate as serious, however, describing it as part of the typical give-and-take on major issues near the end of lawmakers’ annual sessions.
“You’ve got to come to a final conclusion, and it’s tough,” Brownback told The Associated Press before a public appearance at a Topeka high school. “This is normal. This is what happens this time of year.”
Later, Revenue Secretary Nick Jordan declined to offer an opinion on House Republicans’ new tax plan.
“It’s all part of negotiations,” he said. “It’s good they’re talking.”
The private GOP talks have excluded Democrats, whose leaders have said their members aren’t likely to vote for any compromise that emerges anyway. Democrats see last year’s income tax cuts as reckless and oppose the GOP’s goal of shifting most of the burden of funding state government to the sales tax, because poor families tend to pay a higher percentage of their incomes than wealthy ones.
Many Republicans, including Brownback, contend putting Kansas on “a glide path to zero” personal income taxes will result in greater prosperity for all residents.
Republican leaders had promised that lawmakers would be in session 80 days, trimming 10 days off the normal 90-day schedule. But Wednesday was the 82nd day.
House GOP leaders want to cut income taxes further but have been wary of canceling all or part of the scheduled sales tax decrease. Some GOP conservatives view raising new revenues as a tax increase.
The move also would break a promise lawmakers made in 2010 when they boosted the sales tax to balance the budget. They pledged that most of the increase would be temporary.
Merrick defended the new tax proposal during Wednesday’s packed House GOP caucus, saying, “We had to do this to get the process moving along.”