- Associated Press - Sunday, June 7, 2015

TOPEKA, Kan. (AP) - A new plan for raising Kansas’ sales and cigarette taxes to close a projected budget shortfall won the state Senate’s approval Sunday, as the chamber’s Republican supermajority overcame deep divisions that have made this year’s annual legislative session the longest in state history.

The 21-17 vote represented the first time this year the Senate has approved a bill raising enough new revenues to balance the budget. The action sent the measure to the GOP-dominated House, where Republicans also have been fractured all year.

The bill would increase the state’s sales tax to 6.55 percent from 6.15 percent and boost the cigarette tax by 50 cents a pack to $1.29. It would raise $423 million during the fiscal year that begins July 1 - more than enough to balance the budget. The gap arose after lawmakers slashed personal income taxes in 2012 and 2013 at Republican Gov. Sam Brownback’s urging as an economic stimulus.

Republican leaders pushed the tax plan to passage after Senate and House negotiators added several sweeteners to proposals that senators had overwhelmingly rejected only the day before.

“I think overall, it’s a pretty good sandwich,” said Republican Sen. Steve Fitzgerald, of Leavenworth. “I think we ought to get through this and get it down.”

Republicans’ inability to resolve budget and tax issues had threatened to force the state to furlough thousands of workers next week. But lawmakers passed a bill to avert a partial government shutdown, Brownback signed it and the new law took effect Saturday night.

The Senate followed up quickly by approving a proposed $15.4 billion budget for the state’s next fiscal year, 23-11. The House approved the spending blueprint Wednesday, so it goes next to Brownback.

The tax bill approved by the Senate would also raise $24 million during the next fiscal year by increasing taxes for business owners. More than 330,000 business owners and farmers don’t have to pay income taxes on their profits under a 2012 policy.

Democrats argued that under the plan, poor and middle-class families were being asked to pay for income tax cuts for the wealthy through consumption tax increases. Some GOP conservatives didn’t think lawmakers were doing enough to curb spending.

“You can resist and work for better government and limited government,” said Sen. Dennis Pyle, a conservative Hiawatha Republican.

The Senate on Saturday voted 34-5 against a plan with the same three tax proposals. But GOP leaders attracted votes with a proposal to lower the sales tax on food to 4.95 percent in July 2016, another to force the state to study eliminating most sales tax exemptions in 2020, and a third aimed at reducing city and county property tax levies, starting in 2018.

The House’s lead tax negotiator, Rep. Marvin Kleeb, an Overland Park Republican, said Sunday that he doubts the tax plan could pass his chamber. The House didn’t meet Sunday, forcing lawmakers to convene Monday for a 109th day.

The most contentious issues have been how much to increase the sales tax and how much to backtrack on the 2012 policy eliminating income taxes on farmers’ and business owners’ profits. Brownback threatened to veto any plan that increases taxes for them by more than $24 million during the next fiscal year.

Many House Republicans have pursued plans with a lower sales tax increase and a greater tax increase for business owners, defying Brownback’s veto threat.

Legislators approved another, limited tax bill Saturday that more than triples a tax on HMOs’ premiums to raise $48 million toward closing the budget shortfall. The votes were 28-11 in the Senate and 63-41 in the House, and the measure goes next to Brownback, who is expected to sign it.

Each extra day of the Legislature’s annual session is costing the state more than $40,000. Lawmakers traditionally schedule their sessions to last 90 days, and the previous record of 107 days was set in 2002 - another year lawmakers increased taxes to close a budget gap.

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This story has been corrected to show that the proposal in the plan is to study eliminating most, not all, sales tax exemptions in 2020.

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Online:

Kansas Legislature: http://www.kslegislature.org

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna

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