Saturday, June 1, 2013

Revenue Secretary Jordan says income tax cuts are key to budget deadlock

By SCOTT ROTHSCHILD, The Lawrence Journal-World

TOPEKA —  Kansas Secretary of Revenue Nick Jordan on Friday urged House Republicans to stay focused on reducing state income taxes even if that means increasing the state sales tax.

“We’re part of history here this session,” Jordan said. “The country is watching what we are doing in Topeka,” he said.

Jordan repeated the assertions of his boss, Gov. Sam Brownback, who has said cutting state income tax rates will spur the economy and create jobs.

But to do that, Brownback has proposed keeping the state sales tax at 6.3 percent when it is supposed to decrease to 5.7 percent on July 1. And Brownback has proposed phasing out itemized and standard tax deductions.

So far, plans proposed by Republican House and Senate tax negotiators would increase taxes by as much as $857 million over five years.

Democrats oppose any sales tax increase, saying that hits low- and moderate-income Kansans the hardest. Many Republicans in the House also have been hesitant to vote for a sales tax increase.

Several proposals to reduce the sales tax on groceries have been made to try to win votes in the House, but Jordan warned Republicans against that. He said that if legislators reduce the sales tax on groceries, they will face annual battles over whether to continue reducing that rate or to reduce income tax rates.

As far as the sales tax hitting the poor, Jordan said Kansas spends $3.5 billion per year on safety net programs for low-income families.

Legislators continued negotiating a tax plan in an effort to end the session, which surpassed its 98th day. Earlier this year, GOP leaders said they could wrap up the session in 80 days.

But compromise has been elusive on tax and budget issues.

The House today may start debate on a proposed $14.5 billion state budget that would reduce higher education funding.

Under the proposal, Kansas University would face a 4 percent budget cut over two years and the KU Medical Center would face an 8.2 percent cut, according to figures provided by KU and the Kansas Board of Regents.

The cuts come in the form of 1.5 percent across-the-board reductions for each of the next two fiscal years, plus a cap on salary expenses.

For KU-Lawrence, the cuts total $5.5 million over 2 years, and for KUMC, $8.3 million.

Gov. Brownback had called for no cuts to higher education, but legislative leaders said the schools could absorb the cuts.

In addition, House Appropriations Chairman Marc Rhoades, R-Newton, said legislators want to do an in-depth study of higher education funding before the next legislative session.

He said that would include tours of the schools.