Both House Speaker Ray Merrick of Stilwell and Majority Leader Jene Vickrey questioned whether Brownback’s sales tax measure is viable. The governor wants to cancel a decrease in the sales tax scheduled for July, and the proposal is a key part of a larger tax overhaul that the governor is pushing.
Brownback seeks to follow up on massive income tax cuts enacted last year by phasing in a second round of reductions in individual income tax rates over the next four years, then position the state to gradually eliminate personal income taxes. But he and legislators also must stabilize the state’s $14.4 billion budget over the next few years, which must remain balanced under the Kansas Constitution.
The governor wants to freeze the sales tax at its current rate of 6.3 percent and to eliminate two popular income tax deductions for homeowners. His plan would net the state more than $1.1 billion in new revenues over the three years beginning in July, before taxpayers saw the bulk of the benefits from the next reductions in income tax rates.
“Right now, I don’t see a lot of appetite out here to retain the sales tax,” Merrick told reporters. “There are a lot of variations that can be done to get where we need to go, and that’s what we’re working on.”
The Senate Assessment and Taxation Committee has endorsed most of Brownback’s plan, and the full Senate could debate its legislation next week. The House Taxation Committee still is reviewing potential alternatives.
Brownback has said he’s flexible about the details of any tax plan from legislators.
“There are lots of variabilities in tax policies,” he told reporters Thursday.
Senate Minority Leader Anthony Hensley of Topeka and House Minority Leader Paul Davis of Lawrence said during a joint news conference Friday that fellow Democrats are working on their own proposals but weren’t specific about the contents.
Hensley said Democrats will offer a plan as an amendment during Senate debate.
Davis added: “We’re going to provide some alternatives here, but we are the minority party, and the majority party, I think, is going to have to figure out which approach it wants to take.”
House GOP leaders also haven’t detailed the alternatives they’re pursuing on tax policy. They and other Republicans have repeatedly said they’d like to reduce spending.
Merrick also said Friday that he’s open to eating into the state’s cash reserves as well, though Rhoades was less enthusiastic.
The sales tax is scheduled to drop to 5.7 percent in July. Lawmakers boosted the tax three years ago to balance the budget at the urging of Brownback’s predecessor, Democratic Gov. Mark Parkinson, but he and legislators promised that most of the increase would be temporary.
Keeping the sales tax at its current rate raises about $867 million over the next three years, helping to prevent budget shortfalls, even if lawmakers pursue Brownback’s proposals to reduce individual income tax rates further. Allowing the sales tax to drop as scheduled would force legislators to consider significant cuts education funding and government programs, or to look for alternative revenue-raising measures.
But some legislators in both parties don’t want to break the promise to reduce the sales tax.
“It’s not a component that makes sense in the House,” Vickrey told The Associated Press during an interview. “It’s going to take a combined effort — budget, tax policy.”