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AP: Senate backs most Brownback tax ideas
Published 2/13/2013 in News : Politics
TOPEKA (AP) — Most of Republican Gov. Sam Brownback's plan for further overhauling Kansas' tax system cleared a state Senate committee Tuesday, but its members jettisoned one revenue-raising proposal that helps balance the budget and deferred debate on other potentially unpopular provisions.
The GOP-dominated Assessment and Taxation Committee spent less than 10 minutes discussing a bill containing the governor's plan, which aims to position the state to eventually eliminate personal income taxes. The committee's voice vote sends the measure to the full Senate for debate, possibly next week.
The committee endorsed Brownback's proposals to follow up on aggressive income tax cuts enacted last year by phasing in a second round of reductions in individual income tax rates over four years. The bill also promises rates would continue to drop in the future if the state experiences healthy economic growth.
But Brownback also proposed revenue-raising measures to stabilize the budget over the next few years. The committee backed his proposal to scrap a popular income tax deduction for the interest Kansans pay on their home mortgages and another measure to cancel a decrease in the state sales tax that is scheduled by law for July.
The committee rejected Brownback's proposal to eliminate a second income tax deduction, for the property taxes that Kansans pay on their homes. Senate Majority Leader Terry Bruce, a conservative Hutchinson Republican who serves on the tax committee, said many GOP senators didn't want to end two big tax breaks for homeowners at once.
Bruce, other legislators and groups watching the debate over Brownback's plan acknowledged that work on tax legislation is just beginning.
The final version is likely to emerge from negotiations this spring between the House and Senate after each approves its own measure.
"This just kicks the can down the road," said Luke Bell, a vice president and lobbyist for the Kansas Association of Realtors, which strongly opposed Brownback's proposals to eliminate the tax breaks for homeowners.
Bell's group continues to push hard to save both tax breaks. The realtors' association scheduled a Statehouse rally for late Wednesday morning and promised its members would spend the afternoon lobbying lawmakers.
About 372,000 individual income tax filers claim the deduction for the property taxes on their homes, according to the state Department of Revenue. About 315,000 take advantage of the home mortgage interest deduction.
Brownback is pitching his package of proposals as a five-year plan to put the state on a "glide path to zero" when it comes to individual income taxes. Revenue Secretary Nick Jordan, who attended the committee's meeting, said the governor remains flexible about how to accomplish the goal while stabilizing the budget.
"We think the Senate has made a good move," Jordan said after the committee's meeting. "We'll see how it progresses from here, but we're very, very pleased."
The House Taxation Committee doesn't plan to debate Brownback's proposals or alternatives until at least next week.
In recent days, Democrats have harshly criticized Brownback's plan for concentrating on raising new revenues in its first three years and delaying most of the benefits from cuts in individual income tax rates until the fourth and fifth years.
The bill endorsed by the committee nets the state $949 million in additional revenues over the three years starting in July, according to the Legislature's research staff.
Senate Minority Leader Anthony Hensley, a Topeka Democrat who also serves on the tax committee, said legislators who support the bill are supporting a massive tax increase in the short-term and can't be sure lawmakers won't renege on the scheduled reductions in income tax rates later.
"It's a huge gamble," Hensley said.
Most of the new revenue comes from keeping the sales tax at current 6.3 percent rate, rather than letting it drop to 5.7 percent in July. Legislators boosted the tax three years ago to balance the budget at the urging of Brownback's predecessor, Democratic Gov. Mark Parkinson, but he and lawmakers promised that the higher rate would be temporary.
Legislative researchers had estimated that scrapping the deduction for home property taxes would raise about $182 million over the next three years, but some legislators thought that the figure is overly optimistic.
Nevertheless, keeping the deduction for property taxes on homes could force legislators to rethink some of Brownback's budget proposals. Bruce said GOP senators believe they can tighten spending enough if their bill passes. "We're fine. We're happy," Jordan said.
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