- Associated Press - Friday, May 15, 2015

TOPEKA, Kan. (AP) - A plan to raise Kansas’ sales tax to erase a budget deficit failed Friday in the state House, and members of its Republican majority said they’ll be looking at alternatives that include backtracking on one of GOP Gov. Sam Brownback’s biggest economic policies.

The House refused on a voice vote to give first-round approval to a bill to increase the sales tax to 6.85 percent from 6.15 percent. Supporters sought to offset criticism that the measure would hurt poor and working class families the most by also dropping the sales tax on food to 5.9 percent and reducing the state’s lowest personal income tax rate to 2.55 percent from 2.7 percent.

The bill also would have eliminated most personal income tax deductions and waived penalties for people who owe back taxes for six weeks this fall to get them to pay up. But the bulk of the $363 million that would have been raised during the fiscal year beginning July 1 would have come from the sales tax increase.

Lawmakers must close a projected budget shortfall of $406 million for the next fiscal year that arose after they slashed personal income taxes in 2012 and 2013, at Brownback’s urging, to stimulate the economy. A key policy exempted the profits of 281,000 business owners and 53,000 farmers from income taxes; Brownback championed it and wants to preserve it.

But House Taxation Committee Chairman Marvin Kleeb, an Overland Park Republican, said after the vote that Republicans must consider proposals to re-tax business profits and increase tobacco, alcohol and gasoline taxes. He said the House’s action signaled that many members think a sales tax of 6.85 percent is too high.

“We know more than we did before,” House Majority Leader Jene Vickrey, a Louisburg Republican, said after the session. “It’s about discerning where our members are.”

Legislators also are working on a separate proposal to increase an existing tax on health maintenance organizations to raise between $44 million to $80 million during the next fiscal year. Most of the increase would be paid by three companies managing the state’s Medicaid program for the poor and needy, allowing Kansas to draw additional federal funds to offset their extra costs.

The failure of both chambers to pass a tax plan will push the Legislature’s annual session beyond the traditionally scheduled 90 days, costing about $43,000 a day. Kleeb scheduled a meeting of his committee for Monday, the 92nd day.

“We’re nowhere,” said Democratic Rep. Jim Ward of Wichita.

Republicans acknowledged they’re split over keeping the tax break for business owners and farmers. If lawmakers don’t tinker with it, they’ll have to rely more heavily on increasing the sales tax or other taxes, but business groups are fighting the idea.

“We have made a commitment to business owners,” said Republican Rep. Randy Powell of Olathe.

During its debate, the House rejected a proposed amendment to re-impose personal income taxes on farmers’ and business’ owners profits, at 2.55 percent. But Kleeb said the voice vote against it showed House Republicans wanted to first consider a bill centered on raising the sales tax.

Republican Rep. Kasha Kelley of Arkansas City said she was “sick” over supporting a sales tax increase but saw it as the best option for keeping the state on a path to phase out income taxes.

But Rep. Mike Kiegerl, an Olathe Republican, said he can’t support any tax increase until “we get government spending under control.” Kelley said she’s hoping Republicans will now trim spending.

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Online:

Failed tax bill: https://bit.ly/1Hik85j

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


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