- Associated Press - Monday, June 1, 2015

TOPEKA, Kan. (AP) - Kansas’ GOP-dominated Senate abandoned a tax package Monday to fill looming budget shortfalls after debates and procedural votes showed the chamber’s Republicans are still sharply divided on the issue.

Administration officials warned senators Sunday that state workers would be furloughed June 7 if a deal is not reached. But lawmakers were not ready to accept the compromise package that included a variety of tax increases, said Senate President Susan Wagle.

“I think that everybody is still stuck on their individual plan that they’re hoping to win other members over for,” the Wichita Republican said.

Unable to resolve tax issues, lawmakers have yet to pass a budget for the fiscal year beginning July 1, and on Tuesday the session will be tied for the second longest in the history of state, at 103 days. Only 2002’s was longer, at 107, according to legislative researchers. Lawmakers traditionally set sessions for 90 days.

The state’s projected $406 million budget shortfall for the fiscal year beginning July 1 arose after lawmakers cut income taxes in 2012 and 2013 at Gov. Sam Brownback’s urging in an effort to stimulate the economy. One 2012 policy championed by the governor allowed 281,000 business owners and 53,000 farmers to avoid income taxes on their profits.

But Republicans have been divided over whether to raise some taxes on those businesses, with critics arguing that tax break had unintended consequences. Other GOP lawmakers have insisted the shortfall be made up by consumption taxes or spending cuts.

Wagle compared the tax package under debate Monday to a “cocktail” of medicines that would include unpleasant ingredients but could heal the budget. Republican Sen. Jeff Melcher from Leawood opposed the tax increases in the package and retorted, “I don’t think this is a medicinal cocktail; I think this is an overdose.”

Budget Director Shawn Sullivan told GOP senators Sunday that all nonessential state workers will be immediately furloughed if the Legislature does not pass a budget by June 7. He said the state isn’t authorized to pay workers beyond Saturday without a budget in place because of payroll rules.

He acknowledged that lawmakers could pass a short-term budget measure, but said, “I don’t know that anyone thinks that would be a good option.”

In the House, GOP leaders released the results of an informal poll of the chamber’s Republicans. It showed that the only proposal supported by the majority of respondents was an increase to the state sales tax, bringing it to 6.5 percent from 6.15 percent.

Thirty-five of 71 representatives who responded to the House poll said they would support a 2.7 percent tax on net income from businesses given exemptions in 2012. Republican Rep. Mark Hutton, of Wichita, has supported such taxes and said the poll “does show there’s support for our direction that’s probably more than the other directions.”

The governor has recommended taxing the compensation business owners guarantee themselves, regardless of income. But, Revenue Secretary Nick Jordan relayed to GOP senators Sunday that Brownback intends to veto any measure that would establish a higher business tax. Wagle said that such proposals were “on ice” in the Senate.

House Majority Leader Jene Vickrey, a Louisburg Republican, said the business tax is the “watershed issue.” He said the groups wanting no tax increase and others wanting a plan more aggressive than Brownback’s are roughly equal in size. Other House members want budget cuts, he said.

A tax plan Brownback outlined Saturday would increase the sales tax to 6.65 percent from 6.15 percent and increase the cigarette tax by 50 cents a pack, to $1.29 from 79 cents.

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Online:

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

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