Advocates and their lobbyists, dead set on preserving programs, scurried about the Kansas Capitol Wednesday and will for some time to come after Gov. Sam Brownback cast a wide net Wednesday to find revenue for the current fiscal year and those to come.
The well-documented fiscal concerns are a $342 million shortfall this fiscal year, which ends June 30, and an anticipated funding gap for existing programs of $1.1 billion through fiscal 2018. The current shortage is for six months of tax revenue — income, sales and property — and could become more desperate in the months ahead.
Here’s what Gov. Brownback proposed:
— Remove from income tax protection rental income for 330,000 farmers and business owners, and increase their state filing fees from $40 to $200. Revenue growth was put at $74 million a year. On Monday a measure was introduced in the House to repeal all income tax exemptions for the taxpayer group retroactive to Jan. 1, with anticipated revenue of $260 million. Brownback has held fast in opposing such a tax repeal, and could be expected to use his veto should it pass House and Senate.
— Increase taxes on cigarettes, by $1 pack to $2.29, and from 8 percent to 16 percent on beer, liquor and wine. The alcohol tax increase is estimated to generate an additional $52 million a year. An estimate was not made for tobacco, but could be in the neighborhood of $100 million a year. An immediate reaction will be such taxes would drive Kansans out of state to make such purchases, a concern likely overstated.
— Sell upcoming proceeds from the 1990s tobacco settlement, earmarked all along for children’s programs. The state receives $55 million to $60 million a year. Sale would net the state about $530 million.
— Scale back state contributions to the Kansas Public Employees Retirement System and sweep more from Kansas Department of Transportation coffers. What might come from these two sources was not defined.
— Close out long-term investment of tax and fees idle funds, established in 2000. Current value is $317 million. Brownback proposed making “loans” from the fund to education, social services, public safety, etc., with the intention of reimbursement at some time in the future.
OUR IMMEDIATE reaction to the sin taxes — tobacco and alcohol — is cautious acceptance. Anything to reduce tobacco use is of advantage to Kansas and Kansans, particularly by reducing medical costs. Tobacco use has been proven time and again to be harmful. Alcohol use can have some of the same outcomes if abused.
We think the so-called LLC (businesses and farmers) exemption should be repealed altogether, and not be used partially as a bone Brownback tosses to legislators hungry to fulfill promises made leading up the Nov. 8 election. Removing income tax obligation from LLCs while taxing employees is deeply flawed.
KDOT’s reserves already have been robbed to the bone, and scaling back KPERS payments would be an intrusion on the $1 billion borrowed to ensure its solvency into the years ahead. Part of that arrangement was to invest borrowed money and repay the loan from proceeds. The outcome would be the state filling a current hole by digging a deeper one in years ahead.
Sweeping long-term investments would leave the state with even less of a cushion, a condition with which it unfortunately has become accustomed.
AT SOME point soon we must face reality, and that may become even more to the point when the Supreme Court makes known its order on state aid for public school districts.
Meanwhile, the 2012-13 tax cuts are the root cause of the state’s fiscal dilemma, no matter how differently anyone wants to color the analysis.
Of course declining agriculture and energy prices have had an effect, but they are far from being at fault for this year’s shortfall or the estimated deficit in the years ahead. Truculent defiance by Brownback is not borne out by fact.
Legislators are in Topeka to do what is best for Kansans.
Among those responsibilities are to arrive at a fair and balanced funding formula for public schools, as well as those of post-secondary education; protect vulnerable Kansas citizens, those impoverished or otherwise in need; provide a safe environment from all perspectives — physical and social; build and maintain a comprehensive system of highways; the list goes on.
Our plea to those occupying seats in House and Senate: Find the avenue to provide for the public good and then follow it unerringly.
— Bob Johnson
