- Associated Press - Sunday, February 1, 2015

TOPEKA, Kan. (AP) - Gov. Sam Brownback and his top aides can’t predict when Kansas will meet his stated goal of eliminating income taxes, now that he has slowed the implementation of promised reductions to stave off predicted budget cuts.

The Republican governor promised in his annual State of the State address that Kansas will continue a “march to zero” income taxes even if some critics “consider this course too bold.” But his new tax proposals abandon most of the cuts in personal income tax rates scheduled for the next three years, divert revenues to a rainy day budget fund ahead of future reductions, and allow future governors and lawmakers to delay cuts.

The governor and many of his allies contend he’s being practical in the face of budget problems that arose after legislators aggressively cut personal income taxes at his urging in 2012 and 2013 to boost the economy. The state is facing predicted shortfalls totaling more than $710 million in the current budget and the one for the next fiscal year, which begins July 1.

After dropping its top personal income tax rate 29 percent over three years, the state won’t reduce it again for at least four years. The lowest rate, which declined 23 percent during the same period, to 2.7 percent, would decline only to 2.66 percent for 2016.

Brownback’s administration isn’t projecting when Kansas will end income taxes, with Revenue Secretary Nick Jordan saying there are too many variables, particularly future revenue growth. But Jeff Glendening, state director of Americans for Prosperity, the anti-tax, small-government group backed by billionaire political donors Charles and David Koch, said the purported march “would take an awfully long time.”

“It seems more like a crawl to me,” Glendening said. “We might never get to zero.”

Brownback is not backing off a key part of his policies, exempting the owners of 191,000 businesses from income taxes altogether. Democrats and other critics believe that measure has cost the state far more in revenues than anticipated, but many Republicans, like Brownback, believe it is spurring job-creation.

But under Brownback’s latest proposals, the state would abandon its promise to drop its top personal income tax rate - once 6.45 percent and now 4.6 percent - to 3.9 percent for 2018. The lowest rate was set to go to 2.4 percent for 2016 and to 2.3 percent for 2017.

A tax law enacted in 2013 required automatic income tax cuts after 2018 if the state’s general tax revenues grew by more than 2 percent in a given fiscal year.

Brownback’s new proposal would require that when revenues are growing year-to-year, part of the growth go first into a rainy-day fund. If revenues grow more than 3 percent, additional tax cuts would be an option - but state officials could let the funds accumulate, unspent, rather than reducing rates.

“You have to make your budget balance, and you have to take care of your core services,” Brownback said last week. “Many Kansans are pragmatic conservatives - ‘I’m conservative; I don’t want this tax, but it’s got to work.’”

So far, many Republicans in the GOP-dominated Legislature are being patient - at least publicly - about slowing future tax cuts.

“The way it’s crafted, it looks to me like that it’s set up to keep reducing rates when we can afford to do it,” said Senate Assessment and Taxation Committee Chairman Les Donovan, a Wichita Republican.

But Glendening said Kansas risks being left behind if other states cut income taxes more aggressively to spur economic growth. He said cutting taxes required Kansas to shrink state government - which Americans for Prosperity views as a positive move.

“We’re not going to be able to buy down income taxes if we don’t cut spending,” Glendening said.

As for Brownback, he said: “He needs to own it and stick with it.”



Summary of governor’s budget-balancing, tax plans: https://1.usa.gov/1EuzLaN


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

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