Saturday, March 30, 2013

Brownback wants to keep higher state sales tax; Democrats say that proves his income tax policy isn’t working

By SCOTT ROTHSCHILD, The Lawrence Journal-World

Democrats said Friday that Gov. Sam Brownback's call to make the 6.3 percent state sales tax permanent is a sign that his income tax cuts have endangered the state budget.

"The real budget reality is that this tax cut for the wealthy has put us into a situation where we can't finance some of the core obligations of state government," House Minority Leader Paul Davis of Lawrence said.

Last year, Brownback signed into law cuts in state income tax rates and elimination of income taxes for nearly 200,000 business owners. This year, he has proposed more income tax cuts with the goal being the eventual elimination of the Kansas income tax.

The cuts already enacted have led to an expected budget shortfall and a scramble for revenue as Republican legislative leaders try to negotiate final spending and tax plans.

"The budget reality — what we have is we have a hole for a couple of years," Brownback said, although he has argued the income tax cuts will improve the economy.

Brownback is pushing the Legislature to approve a bill that makes permanent the 6.3 percent state sales tax rate.

That rate was adopted in 2010 in the face of plummeting state revenue during the recession, but lawmakers made most of the increase temporary. Under current law, the rate will decrease to 5.7 percent on July 1.

Brownback said if the 6.3 percent rate isn't maintained, there may need to be further budget cuts. The higher sales tax rate would provide approximately $260 million more per year.

"Without some major cuts in a lot of places, I don't know how you else you do it," he said.

But Democrats said they don't plan on voting to repeal the scheduled decrease in the sales tax. They said that would be going back on their word to Kansans.

"We made a promise to the people of Kansas that it was a temporary tax and we are going to keep to that promise," Senate Democratic Leader Anthony Hensley of Topeka said.

Democrats said what they would like to see is a re-evaluation of the income tax cuts from last year, but they conceded that won't happen with Brownback in office and large conservative Republican majorities in the House and Senate

"The ultimate solution is in the hands of the voters," Hensley said.