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The fight over sales tax has consumed Kansas politics for three years
It's amazing how much of the political fighting in Kansas is wrapped up in one penny that most Kansans pay every day without a fuss. Of course, the penny adds up to approximately $300 million a year, and is key to state budget and tax policy.
During the Great Recession, Kansas saw historic drops in tax revenue that resulted in cuts to higher education, Medicaid and public schools.
In 2010, to avoid even deeper cuts, a slim majority of Democrats and moderate Republicans in the Legislature approved a temporary one-cent sales tax increase to shore up the state budget.
Under the plan, the state sales tax went from 5.3 cents per dollar to 6.3 cents per dollar, and on July 1, 2013, the sales tax rate would then decrease to 5.7 cents per dollar with 0.4 cents going to transportation.
The Kansas Chamber of Commerce had vehemently opposed the tax increase, and after the Legislature approved it the chamber worked hard during the campaign season to defeat those who voted for it.
When the smoke cleared after the November 2010 elections, conservative Republican Sam Brownback was elected governor by a large margin and the moderate coalition in the House was crushed.
As the 2011 legislative session started, many conservative Republicans said they wanted to repeal the increased sales tax. But Brownback didn't; the state budget was still struggling and he needed the revenue.
And the Kansas Chamber of Commerce adopted a new strategy, arguing against repeal by saying the revenue from the increase should be used to offset the loss of revenue from what it wanted: elimination of the state corporate income tax.
In 2012, Brownback called for making the increased sales tax permanent to help pay for income tax cuts. He later signed into law cuts in income tax rates, elimination of income taxes for the owners of nearly 200,000 businesses, and removal of tax credits for the poor. But nothing was done on the sales tax issue.
In 2013, the Legislature is still arguing about the temporary sales tax increase, which is scheduled to decrease in a little over two months.
Again, Brownback wants to make the 6.3 percent rate permanent, saying it is necessary to balance the budget and avoid cuts to higher education. Democrats want to protect funding for education, but say Brownback really wants to keep the sales tax higher to cover deficits created by his income tax cuts and to help pay for more income tax cuts in the future to benefit the wealthy. Meanwhile, conservatives in the House also said they want the sales tax to decrease and that the budget can be cut more. Conservatives in the Senate have gone along with Brownback's plan on the sales tax issue, saying it is key to start drawing down the income tax. In fact, many of those Senate conservatives who voted against the temporary sales increase, recently voted to make it permanent.
So, the penny has come full circle. It started as a temporary Band-Aid approved by a moderate coalition to avoid drastic budget cuts.
Now, it is being pushed by a conservative governor, who wants to make it permanent to be used for either propping up the budget that was undercut by large income tax cuts, or to pay for future income tax cuts, or both.
When the Legislature returns, the fight over one penny will be front and center again.