Tuesday, May 15, 2012

Tax cuts at center of dispute in Legislature

By SCOTT ROTHSCHILD, The Lawrence Journal-World

Unhappy with projections of budget shortfalls caused by the proposed tax cut, Gov. Sam Brownback’s administration is preparing rosier numbers.

During a meeting of the House Republican caucus, Majority Leader Arlen Siegfreid, R-Olathe, said Brownback’s Budget Director Steve Anderson would soon release a “dynamic scoring model” that Siegfreid said will show the positive effect of tax cuts cycling back through the economy.

The financial projections produced by the non-partisan Kansas Legislative Research Department show the tax cuts will start producing a revenue shortfall in July 2014, increasing to an estimated $2.5 billion to $3 billion shortfall in 2018. The current annual state budget is about $6.2 billion in tax funds.

Moderate Republicans and Democrats have said a tax cut of that size will mean Brownback and the Legislature will have to make drastic cuts to schools, social services and public safety.

The tax-cutting plan headed to Brownback’s desk would cut individual income tax rates and exempts 191,000 partnerships, sole proprietorships and other businesses from income taxes.

An alternative plan approved by a House-Senate conference committee was less aggressive, phasing in some of the tax cuts over a longer period of time.

Brownback has said he prefers the conference committee plan but will sign into law the larger one if the Legislature doesn’t approve an alternative.

On Monday, the Legislature, having already broken the 90-day mark in the session on Friday, lurched in fits and starts with no noticeable progress on tax cuts, the budget or redistricting.

Sen. Les Donovan, R-Wichita, and a leader on the House-Senate tax conference committee announced that the committee would start negotiating again after last week’s legislative blow up over the issue. Then he said the meeting was canceled. Then he said there would be a meeting Tuesday.

“I want to get something out of committee, on the floor (of the Senate), so we can vote,” Donovan said.

While conservatives have embraced larger tax cuts, moderate Republicans and Democrats are pushing for a smaller plan. They are urging Brownback to veto the larger cut.

The Kansas NAACP called on Brownback to veto the measure, saying the legislation would “bankrupt our state.”

The group added, “While the people who feel the adverse cuts of these programs will see their tax burden increase, the wealthiest among us may actually see their fiscal contribution to society lessen. This hardly resembles economic justice.”