Kansas Senate rejects repealing sales tax exemptions

? The Kansas Senate met late into the night Sunday debating a proposal to balance the state budget next year, mainly by repealing a number of sales tax exemptions.

In the end, though, the Senate could only agree on one part of the proposal, reducing the overall sales tax rate. But it voted 30-9 against the main part repealing a host of sales tax exemptions that would have raised nearly $600 million in new revenue — enough to pay for the rate reduction and still fill in the $400 million revenue shortfall in next year’s budget.

It was expected that the vote would force the Senate to continue working through Monday, the 102nd day of the session, to come up with another plan for balancing the budget.

The idea was offered as an amendment onto a bill that is being used as a vehicle for senators to offer their own tax plans. Republican leaders in the Senate are trying to find any combination of revenue increases that both fill the projected $400 million budget shortfall and receive enough votes in the Republican-led Legislature to pass.

“This is an attempt to try to end up with an ending balance in the positive, accelerate the ‘march to zero’ and try to do some good things for the people of Kansas,” said Rep. Steve Abrams, R-Arkansas City, who offered the proposal.

The “march to zero” refers to Republican Gov. Sam Brownback’s goal of eventually eliminating all income taxes and shifting the state’s reliance onto what he calls “consumption” taxes such as sales tax. A portion of Abrams’ proposal would accelerate the scheduled phase-out of individual income taxes, and would reduce the top corporate income tax rate to 5.35 percent from its current 7 percent.

Abrams’ amendment would lower the overall sales tax rate by two-tenths of a cent, to 5.95 percent, but would remove many longstanding exemptions.

Those include exemptions for property or services purchased by public schools, nonprofit hospitals and other local governments, as well as items purchased by nonprofit youth development organizations such as the Boy Scouts and Girl Scouts.

Abrams’ proposal stirred sharp, and sometimes biting, debate on the Senate floor between those who view the sales tax exemptions as favors for special interests and those who view them as a way of encouraging certain kinds of social or business activity.

“We’ve looked at this over and over and over again, and we always leave them in place,” said Sen. Les Donovan, R-Wichita, who chairs the Senate tax committee, who opposed the proposal. “They’re in place for a reason. They have broad-based support from their constituents.”

But Sen. Greg Smith, R-Overland Park, said it was unfair that some groups have to pay sales taxes while others do not.

“Taxes are wrong. Taxes are legalized theft,” said Smith, a former police officer and ex-school teacher.

Sen. Julia Lynn, R-Olathe, said the exemptions only benefited well-connected groups.

“We have taxpayer-funded lobbyists coming to this body, saying gimme, gimme, gimme, gimme,” Lynn said. “And I’m sorry, but I’m tired of hearing about pharmacies and hospitals and everybody else that comes in here to say we need an exemption. Because old people out there are paying for those prescriptions. And those people out there that are working right now aren’t getting an exemption on anything.”

Senate Democratic Leader Anthony Hensley asked that the proposed cut in the overall sales tax rate be considered separately from the rest of the proposal. That portion, which would reduce state revenues by an estimated $94 million, passed on a unanimous, unrecorded voice vote.

Check back with LJWorld.com for further developments.