- Associated Press - Thursday, June 4, 2015

TOPEKA, Kan. (AP) - A new plan for balancing Kansas’ next budget by raising sales and tobacco taxes failed overwhelmingly Thursday in the Republican-dominated Kansas House, where some members saw the vote as a referendum on a similar proposal from GOP Gov. Sam Brownback.

But an aide to Brownback said the 108-3 vote against the plan represented progress, because GOP leaders were getting guidance for negotiations between the House and Senate on revenue-raising proposals. Three House members and three senators drafted Thursday’s plan and expected to resume talks Friday morning.

“The wheels of democracy are rolling,” said Tim Shallenburger, the governor’s legislative liaison and a former House speaker.

Legislators face increasing pressure to approve a tax plan and balanced budget for the fiscal year beginning July 1. Brownback’s administration has said all nonessential employees will be furloughed Sunday if lawmakers do not pass a budget by then because the state won’t have the legal authority to pay them.

Thursday was the 105th day of lawmakers’ annual session, making it the second-longest ever, behind 2002’s 107 days, according to legislative researchers. Each extra day costs the state more than $40,000.

Republican Rep. Steve Huebert, of Valley Center, said his constituents are frustrated “that we haven’t gotten the job done.” He and the House GOP’s two tax negotiators were the only yes votes.

The plan rejected by the House would have raised $430 million during the next fiscal year beginning July 1 to erase a budget shortfall. Like the governor’s plan, it would have raised the sales tax to 6.65 percent from 6.15 percent and increased the cigarette tax by 50 cents a pack to $1.29.

House Taxation Committee Chairman Marvin Kleeb, an Overland Park Republican, pushed negotiators to start with a proposal close to the governor’s plan to test support for its key elements, particularly the size of the sales tax increase. He called the negotiators’ plan “very similar” to the governor’s.

Both plans were aimed at closing a budget gap that arose after Brownback successfully pushed the Legislature to slash personal income taxes in 2012 and 2013. Brownback touted the cuts as an experiment for other states to emulate, and GOP legislators committed to gradually phasing out income taxes in what Republicans call a “march to zero.”

The governor says Kansas would still have “pro-growth” policies if it raised consumption taxes so it can cut income taxes in the future. The plan rejected by the House would have dropped income tax rates for 2019 and 2020 but wouldn’t have decreased them after that.

Also, the negotiators’ plan, unlike Brownback’s, would have would have dropped the sales tax rate on food in January to 5.9 percent. The negotiators also considered a proposal to impose the state’s first tax on electronic cigarettes but then dropped the idea.

The negotiators’ plan adopted Brownback’s position on modifying a 2012 policy that he championed to allow 281,000 business owners and 53,000 farmers to avoid paying income taxes on their profits. He’s willing to increase their taxes $24 million a year; some lawmakers want to go as high as $100 million.

“They ought to be part of any tax plan we’re drafting,” said Democratic Rep. Tom Sawyer, of Wichita, another tax negotiator.

Meanwhile, some GOP conservatives preferred to cut spending enough to avoid tax increases.

The Senate’s budget committee chairman had a plan to trim $400 million from a proposed $15.5 billion budget that won House approval Wednesday. Senate Majority Leader Terry Bruce, a Nickerson Republican, set a debate on budget issues for Thursday and then canceled it, saying work on tax issues would come first.

But Republican Sen. Vicki Schmidt, of Topeka, said the debate should have occurred with furloughs looming.

“We owe it to our state employees to get moving and to put their minds at ease,” she said.

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This story has been corrected to reflect that House and Senate tax negotiators dropped the proposal for a new tax on e-cigarettes, dropping the amount of money raised by the plan during the next fiscal year to $430 million instead of $432 million.

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Online:

Kansas Legislature: www.kslegislature.org

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna and Nicholas Clayton at https://twitter.com@ClaytonNicholas

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