Kansas governor leaves options open on sales tax

TOPEKA, Kan. (AP) -- Gov. Sam Brownback won't rule out the possibility of canceling a promised decrease in Kansas' sales tax as an option for balancing the state budget next year, even though legislators in both parties are resisting the idea.

Brownback called on legislators this week to reconsider proposals he made previously to offset massive income tax cuts that he championed to help stimulate the state's economy. Lawmakers approved income tax reductions worth $4.5 billion over six years but rejected measures from Brownback to keep state revenues from dropping too sharply, including a proposal to keep the sales tax at its current 6.3 percent rate.

The sales tax is scheduled to drop to 5.7 percent in July 2013. The state boosted the tax in 2010 — before Brownback took office — to protect public schools and social services, and lawmakers pledged that most of the increase would be temporary.

But the conservative Republican governor and the GOP-dominated Legislature now face closing a projected $328 million gap between anticipated revenues and existing spending commitments for the fiscal year beginning in July 2013. Legislative researchers estimate that keeping the sales tax at 6.3 percent would generate at least $250 million a year in additional revenues.

Brownback told The Associated Press that he's looking at all options as he works on recommendations for lawmakers, who open their next annual session in January.

The governor and other GOP conservatives would like to keep reducing individual income tax rates and perhaps even eliminate such taxes altogether. But Brownback also is pledging to protect aid to public schools, social services and other core government programs.

"We're looking at all options of what we need to do on a five-year basis, but overall, to keep on track, moving our tax rates down," Brownback said. "We'll look at a full package."

His comments in the interview followed a speech at a forum earlier in the week in Overland Park. The Kansas City Star reported that he suggested the state should enact some of the "pay fors" he proposed earlier.

The reductions enacted earlier this year will decrease individual income tax rates starting in 2013 and include a drop in the top rate declining to 4.9 percent from 6.45 percent. The state also will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from individual income taxes and increase the standard income tax deduction for all filers.

Brownback's proposed offsets were designed both to lessen the effects of those cuts and make the tax system simpler. He sought to eliminate a popular income tax deduction for charitable contributions, a deduction on home mortgages and a tax credit for poor workers. Legislators preserved the deductions and reduced tax credit without eliminating it.

The governor has acknowledged that the tax legislation enacted this year will cause budget problems as the state waits for increased economic activity to generate new tax revenues. Critics of the tax cuts contend the self-inflicted budget shortfall projected for the next fiscal year will re-occur annually into the foreseeable future.

Brownback said, "We're looking at building budgets now and seeing what the total picture looks like."

Democrats have anticipated for months that Brownback will propose keeping the sales tax at its current rate. While Brownback hasn't ruled out the possibility, he hasn't said specifically what will be included among his proposals.

Brownback's predecessor, Mark Parkinson, relied on fellow Democrats and moderate Republicans to get the GOP-dominated Legislature to boost the sales tax to 6.3 percent from 5.3 percent in 2010. Supporters described most of the increase as an emergency measure, but even after July 2013, part of the increase would remain in effect to help finance highway projects.

"A number of us feel strongly that we made a promise," said Sen. Laura Kelly of Topeka, the ranking Democrat on the budget-writing Senate Ways and Means Committee. "There's no way we would vote to let this continue."

Republicans maintained their majorities of 32-8 in the Senate and 92-33 in the House after this year's elections. But GOP conservatives ousted the Senate's previous moderate Republican leaders from power, and conservatives control both chambers.

Incoming House Speaker Ray Merrick, a conservative Stilwell Republican, said even some lawmakers who weren't in office when the sales tax was increased feel bound by the promise to lower it in July 2013.

"Somebody's going to have to be a good salesman," Merrick said.

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Online:

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

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