Tuesday, May 1, 2012

Study: Tax-cut proposal would still produce deficit even after improved revenue forcast

By SCOTT ROTHSCHILD, The Lawrence Journal-World

A tax-cut proposal endorsed by Gov. Sam Brownback remained in conference committee Monday as wide-ranging fiscal forecasts showed the measure would lead to state deficits.

An earlier projection provided by the Kansas Legislative Research Department showed the tax cuts would transform a $612 million surplus in the next fiscal year into a $911 million deficit in a little more than five years.

But that, officials said, was based on an earlier version of the bill.

The newest state general revenue fund profile showed a deficit of $161 million by July 1, 2017.

Despite the reduction in the projected deficit, opponents of the proposal said it would still produce huge problems for the state.

"We need to slow this process down," said state Sen. Tom Holland of Baldwin City, who is the lead Democrat in the Senate on tax issues.

Republicans on the House-Senate tax conference committee had agreed to the bill last week, but on Monday indicated more work needed to be done. The committee is scheduled to meet again Tuesday.

Democrats and some Republicans have endorsed a plan to follow current law and allow the state sales tax to decrease from 6.3 percent to 5.7 percent next year. They also have supported a plan aimed at providing $180 million in property tax relief over four years.

But Brownback, a Republican, and his supporters want to cut taxes more.

Brownback has voiced approval of a plan to decrease income tax rates and phase out the non-wage income tax on nearly 200,000 businesses.

The plan would also eliminate or reduce several tax credits aimed at helping low-income Kansans.

Brownback says the plan will boost the economy. Democrats say it will leave no revenues to adequately fund core services of state government.

According to the most recent projection provided by the Kansas Legislative Research Department, the tax cuts would start producing deficits three years out.