Tuesday, May 28, 2013

Another tax increase bites the dust in the House; Democrats call for end to session

By SCOTT ROTHSCHILD, The Lawrence Journal-World

The Kansas House on Tuesday rejected an $857 million tax increase, throwing the overtime session into further turmoil.

Moments before the vote, House Republican leaders urged their super majority caucus to approve the bill.

House Speaker Ray Merrick, R-Stilwell, told the caucus if the measure fell, "Look to be here a long time. We start at ground zero."

The Legislature has already been in session 95 days, which is five days longer than it was supposed to meet and 15 days longer than Republican leaders had vowed they would meet.

But a bipartisan group in the House rejected the tax bill, on a 42-71 vote. And no tax or budget conference committee meetings were scheduled for the remainder of the day.

Democrats, outnumbered 92-33 in the House and 32-8 in the Senate, said the Legislature and Gov. Sam Brownback should end the session.

"Time to pass a budget and go home, thus driving a wooden stake through the heart of Gov. Brownback's so-called 'grand experiment,' said state Sen. Tom Holland, D-Baldwin City.

Brownback wants to make permanent the 6.3 percent state sales tax, which is scheduled to fall to 5.7 percent on July 1, phase out itemized income tax deductions, slash standard deductions and lower income tax rates.

The House voted on a plan to set the sales tax at 6 percent. Over five years, the bill also would have reduced itemized deductions, such as charitable contributions, mortgage interest and real estate property taxes, by half and slashed the standard deduction from $9,000 to $5,000 for head of household, and $6,500 for married filing jointly. Over five years, it would also reduce the top income tax rate from 4.9 percent to 3.5 percent and the bottom rate from 3 percent to 2.3 percent.

After five years, the package would have increased taxes $857 million.

But state Rep. Scott Schwab, R-Olathe, said that setting the sales tax at 6 percent when it is now 6.3 percent was a tax cut. "When rates go down, I don't see how you can say that is a tax increase," he said.

But state Rep. Nile Dillmore, D-Wichita, said, "This can't be faked. You can't go home and say, 'Oh it's progressive. Oh, it's dynamic. Nope, it's just a straight-out tax increase."

Despite pleadings from Republican leaders, many GOP legislators rejected the plan, including numerous freshmen who were elected on an anti-tax platform.

After the vote, Speaker Merrick tried to put a positive spin on it, noting that 42 votes for the plan was a lot more than the five votes for an alternative plan that was rejected by the House on Friday.

It probably didn't help supporters of the newest proposal that last week Senate Majority Leader Terry Bruce, R-Hutchinson, said freshmen House members were having difficulty understanding tax policy since they "spent half the session trying to find out where the bathrooms are."

State Rep. Blaine Finch, R-Ottawa, who is chair of the House GOP freshmen caucus, wrote a letter to Bruce, saying, "To lay the present impasse in tax negotiations at the feet of this freshman class is incorrect and unfair. There were no freshmen in the private negotiating sessions between the Governor, the Senate President and the (House) Speaker, and there are no freshmen on the conference committees for tax or budget. We were not in the building last year when the tax plan was passed without the 'pay fors' that are now so hard to find. It was not us who promised the public a temporary sales tax that we are now told needs to be made permanent to the vexation of many citizens and legislators."

Senate President Susan Wagle, R-Wichita, said the next step may be to focus on the budget and have the House vote on an appropriations bill that was agreed to last week by House and Senate GOP leaders.

But that measure is sure to face strong opposition since it includes cuts to higher education and the prison system. Meanwhile, the wrap-up session, which started May 8 after a monthlong break, lurches on at a cost of about $45,000 per day.