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Tax committees go back to the drawing board; new numbers show depths of budget crisis

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Kansas lawmakers made little progress Thursday toward resolving a stalemate over tax policy, but the House tax committee got a look at some new numbers that illustrate the depths of the state's impending budget crisis.

In short, the committee was told, they will need to raise about $1.5 billion in new revenue over the next two years if they want to fund everything currently in the House's draft budget, plus fully fund payments into the state's pension system and pay for the draft school finance plan that adds $150 million each year in base per-pupil spending.

And even with that, the state would still need to sweep nearly $300 million out of the highway program each year to balance the budget. So, put another way, that brings the full budget shortfall to a little more than $2 billion over the next two years.

"It's nice to think we could get one package that addresses this," Chairman Steven Johnson of Assaria said after the meeting. "Doing the math on how we pass a package, or multiple packages, unfortunately I think we've discovered we may have a ways to go to get to whatever that looks like."

Johnson's committee met at the end of a day in which there was virtually no progress toward finding a tax package that could get enough votes to overcome an all-but-certain veto by Gov. Sam Brownback.

Senate tax committee chairwoman Caryn Tyson, R-Parker, works to put together another tax package for the Senate to consider while Sen. Tom Holland, D-Baldwin City, says it's still too early to debate taxes before deciding on a school finance plan.

Senate tax committee chairwoman Caryn Tyson, R-Parker, works to put together another tax package for the Senate to consider while Sen. Tom Holland, D-Baldwin City, says it's still too early to debate taxes before deciding on a school finance plan. by Peter Hancock

On Tuesday and Wednesday, both chambers abruptly called off scheduled votes on tax proposals that only added up to about $1 billion or less over the next two years. The House-Senate conference committee that produced those bills was scheduled to meet again at 10 a.m. Thursday, but that meeting was cancelled early Thursday morning, and by the end of the day it had not been rescheduled.

Instead, the full House and Senate tax committees met separately to look over budget numbers and start discussions about other tax options.

One of the biggest stumbling blocks so far has been that Democrats, along with many moderate Republicans, don't want to vote on a tax plan until they've at least settled the issue of school finance. And their votes are needed to get a two-thirds super majority in both chambers to override a governor's veto.

But GOP leaders in both chambers appear to believe that they can exert more control over spending growth if lawmakers settle the revenue question first.

The Senate tax committee spent the day working on two different tax plans. One of those would only repeal the most controversial of the tax cuts that Brownback championed in 2012, the so-called "LLC loophole" that completely exempts certain kinds of non-wage business income from state taxes.

All of the other major tax bills lawmakers have considered have packaged that together with other kinds of tax increases that will be less popular with voters, including across-the-board increases in individual income tax rates.

Sen. Caryn Tyson, R-Parker, who chairs the Senate tax panel, said leaders in the Senate have requested that bill. It is believed that a stand-alone bill repealing the LLC exemption would be hard for anyone to vote against. But it also would only generate about $230 million a year in new taxes, and separating that issue would make it much more difficult to pass other, less popular tax measures.

That same committee also worked on cobbling together another, more comprehensive tax measure. But Sen. Tom Holland of Baldwin City, the ranking Democrat on the committee, repeated the Democrats' insistence that it is still too early to vote on a tax measure.

"I strongly believe that we need to know what our school finance program is going to cost us before we do a tax plan," Holland said.

Meanwhile, Johnson said, there are other efforts taking place behind the scenes to find a consensus on tax policy.

"I think there are some other efforts that are going on, including some efforts that the governor had had in working with a plan with some of the leadership to see what pieces we can get through," he said.

Senate President Susan Wagle, a Wichita Republican, has said she intends to bring the Senate into session both Saturday and Sunday this week if there is no progress on a tax plan by then. House leaders have not said whether they plan to work through the weekend.

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