Monday, June 3, 2013

Republicans approve tax, appropriations bills to conclude legislative session

By SCOTT ROTHSCHILD, The Lawrence Journal-World

Republican legislative leaders mustered majorities to push through a $777 million tax increase and a state budget that cuts funding to higher education and corrections before adjourning the 2013 session early Sunday morning.

The actions ended the session after 99 days of sometimes contentious wrangling within Republican majorities.

On the tax issue, the Legislature sent Gov. Sam Brownback a bill that would set the state sales tax at 6.15 percent instead of allowing the rate to fall to 5.7 percent on July 1, as was required by law when a temporary sales tax rate was enacted in 2010. The Senate approved the measure 24-13, and the House, 69-45.

The tax package, which received support only from Republicans, would also cut itemized deductions by half, reduce the standard deduction, and ratchet down income tax rates.

"It is an absolute tax cut," said Gov. Sam Brownback, who endorsed the plan. But after five years, the bill will increase taxes by $777 million, according to legislative staff.

Senate President Susan Wagle, R-Wichita, and House Speaker Ray Merrick, R-Stilwell, said the reductions in income tax rates would drive economic growth.

"People are going to look at this all over the nation," Wagle said.

But Democrats said raising sales taxes and lowering deductions to support income tax rate cuts shifted the tax burden onto low- and middle-income people to benefit the wealthy.

Some legislators said not allowing the sales tax to drop to 5.7 percent represented a broken promise to Kansans.

Under the tax bill, charitable contributions will still be an allowed deduction.

The standard deduction would be cut from $9,000 to $5,500 for head of household and $7,500 for married, filing jointly. The plan would reduce over five years the top income tax rate from 4.9 percent to 3.9 percent, and the bottom rate from 3 percent to 2.3 percent. After 2018, state revenue growth over 2 percent would go toward further income tax rate reductions.

On the budget, the measure called for cutting higher education by approximately $66 million over two years. The plan included a 1.5 percent across-the-board cut for each of the next two years, and a cap on salary expenses.

And for the next school year, the budget provides flat funding for public schools despite a court ruling that says the Legislature should increase school funding by approximately $500 million. The state has appealed that decision to the Kansas Supreme Court.

The state budget received the minimum required 63 votes in the House after Speaker Merrick kept the roll open for about 20 minutes and six Republicans switched from voting against the budget to voting for it. No Democrats voted for it. In the Senate, the budget got the minimum required 21 votes, again with only Republican support.

Some legislators criticized the budget for cutting $6 million from the Kansas Department of Corrections. State Sen. Greg Smith, R-Overland Park, said the cut would make Kansans less safe. "We are putting people's lives in jeopardy with this budget," Smith said.

During the budget debate, one of the major disputes was over a plan by the Brownback administration to place the long-term care of those with developmental disabilities under KanCare, the state's new Medicaid program that is administered by for-profit companies.

Many parents of children with developmental disabilities have opposed that move, saying they believe the assistance their children receive will suffer under KanCare.

Advocates for those with developmental disabilities wanted to "carve out" long-term care services from KanCare, but GOP leaders wouldn't allow that in the budget.