- Associated Press - Sunday, June 7, 2015

TOPEKA, Kan. (AP) - Top Republicans in the Kansas Legislature pushed Saturday to separate several revenue-raising proposals with broad support from other tax issues, only to see the effort become mired in the GOP divisions blocking all plans to close a projected state budget shortfall.

Leaders of the Senate’s GOP majority called off a Saturday night debate on a stripped-down tax bill. The move came after the Senate voted 34-5 against a plan to increase the state’s sales tax to 6.55 percent from 6.15 percent.

The measure also would have raised $24 million during the fiscal year beginning July 1 by increasing taxes for business owners who benefited from a 2012 policy allowing 281,000 of them and 53,000 farmers to avoid income taxes on their profits. Brownback has threatened to veto any plan that increases their taxes more than $24 million.

The House had another plan - but didn’t debate it Saturday - to increase the sales tax to 6.5 percent and raise taxes for business owners by $62 million during the next fiscal year.

Three Senate and three House negotiators planned to meet Sunday to draft a new “global” tax plan.

Business taxes and the sales tax increases were the toughest issues to settle in raising more than $400 million during the next fiscal year to close the projected budget shortfall. The budget gap arose after lawmakers slashed personal income taxes in 2012 and 2013 at Brownback’s urging as an economic stimulus.

Here’s a look at significant tax issues.

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TAXING HMOs

Legislators approved a bill that would increase a tax on HMOs to 3.31 percent from 1 percent to raise $48 million toward closing the budget gap for the next fiscal year. The tax would drop to 2 percent in 2018.

Most of the tax is paid by three private insurance companies that manage the state’s Medicaid program, which provides health coverage to the needy and disabled. Collecting more in taxes from them would attract additional federal dollars for the Medicaid program.

The votes were 28-11 in the Senate and 63-41 in the House. The measure goes next to Brownback for his potential signature.

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LOW-HANGING FRUIT

One proposal with broad GOP support would create a short-term amnesty program, waiving penalties and interest for delinquent taxpayers who settle their bills in full from Sept. 1 to Oct. 15. The Department of Revenue believes it would raise $30 million.

Another proposal would eliminate most of the state’s personal income tax deductions to raise $97 million during the next fiscal year. The only deductions left would be for charitable contributions, half of the property taxes paid by homeowners and half of the interest paid on their home mortgages.

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TOBACCO TAXES

Legislators are considering a proposal to increase the state’s cigarette tax by 50 cents a pack to $1.29, which would raise about $40 million during the next fiscal year.

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HELPING THE POOR

Legislators have been considering proposals to drop the sales tax rate on food even as they’re considering boosting the tax on all other taxable items. The plan rejected by the Senate would have decreased the tax on food to 5.95 percent.

Brownback also has proposed eliminating income taxes for 388,000 poor Kansas residents, and the idea has some support among lawmakers.

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Online:

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

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

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