Boost in Kansas revenues in April adds to debate over tax cuts vs. spending increases

photo by: Peter Hancock

Members of the Kansas Senate's negotiating team on taxes include Sen. Tom Holland, left, D-Baldwin City; Sen. Caryn Tyson, R-Parker; and Sen. Dan Kerschen, R-Garden Plain.

? As the Kansas House and Senate continued to negotiate a final budget bill and a package of tax cuts Tuesday, a new report on state revenues added pressure on lawmakers to try to do some of both.

The Kansas Department of Revenue reported Tuesday that tax collections in the month of April came in $66 million above the recently revised, higher estimates, and that total tax collections so far this fiscal year have come in nearly $1 billion above the same period last year.

That news came during the final week of the 2018 legislative session as House and Senate negotiators on taxes and the budget were meeting in hopes of resolving both issues by Friday.

photo by: Peter Hancock

Members of the Kansas Senate's negotiating team on taxes include Sen. Tom Holland, left, D-Baldwin City; Sen. Caryn Tyson, R-Parker; and Sen. Dan Kerschen, R-Garden Plain.

“Why wouldn’t we want to give more of the taxpayers’ money back to the taxpayers?” said Sen. Caryn Tyson, R-Parker, chairwoman of the Senate tax committee during an interview moments after the revenue report was released.

The Senate has passed a bill that it is now negotiating with the House that is intended mainly to prevent the state from reaping a windfall as a result of the recent federal tax overhaul. For that reason, supporters of that bill say it is not a tax cut but rather the prevention of an unintended tax increase.

But the Senate’s bill also contains a number of provisions unrelated to the federal tax changes that would amount to tax cuts in Kansas, including a 25 percent expansion of the standard deduction, and allowing full deductibility for things like medical expenses and mortgage interest paid.

The House, however, has so far declined to accept the larger deductions. It also declined a Senate proposal that would lower the effective sales tax rate on vehicle purchases by recognizing dealer and manufacturer rebates as an actual reduction in the sale price paid.

Meanwhile, on the spending side of the ledger, House and Senate budget negotiators continued to meet Tuesday on a final bill that calls for partially restoring funding for several programs and services that have taken deep cuts in recent years, including higher education.

At the beginning of the last fiscal year, then-Gov. Sam Brownback ordered a $30 million cut to the universities. Lawmakers restored about $6 million of that for the current fiscal year, but state universities and the Kansas Board of Regents have pleaded with lawmakers to restore the remaining $24 million in the upcoming fiscal year, which begins July 1.

Rep. Troy Waymaster, R-Bunker Hill, who chairs the House Appropriations Committee, said that even with the additional revenue flowing into the state lawmakers are not likely to go on a spending spree.

“I think if anything it gives more pressure for tax cuts,” he said in an interview. “Unless it seems like it’s a drastic need, we don’t want to go beyond what our chambers passed. And, actually, I want to be a little more cognizant of the fact that, yeah, we’re $66 million above the revenue estimates for this month, but next month might be something different. June might be something different.”

But Rep. Kathy Wolfe Moore, of Kansas City, Kan., the ranking Democrat on the House budget negotiating team, said she thinks it’s premature to talk about tax cuts as long as a school finance lawsuit is still pending before the Kansas Supreme Court.

“Everyone wants tax cuts, and I’d love to hand out tax cuts also,” she said in an interview. “But the other thing is, we’re still recovering from the disastrous tax cuts from 2012.”

That was a reference to the tax cuts that Brownback championed, cuts that many people argue were the primary cause of an extended period of revenue shortfalls that forced cutbacks in a number of state programs, particularly highways, higher education and funding for the state pension system.

Other major items on the table in the budget talks include restoring some of the payments into the state pension system that were delayed in recent years and sweeping less money out of the state highway fund to pay for K-12 school transportation.