Light dim at end of revenue tunnel

The third week of the so-called veto session starts today with, from Rep. Kent Thompson’s respective, less than abounding hope that a $406 million Fiscal Year 2016 shortfall will be resolved anytime soon.
“I don’t see an end in sight,” Thompson told the Register Monday afternoon. The stumbling block is being able to convince 63 representatives, a simple majority, to vote for some combination of tax increases. He said the more conscientious have dismissed additional spending cuts as a solution.
A small but vocal bloc of ultra-conservatives have pledged not to vote for any tax increase and repeatedly have given notice they intend to remain steadfast. Also, moderate Republicans and Democrats — from whom accord is necessary to reach the magic 63 number — as a group are reluctant to right the fiscal ship.
Today or tomorrow, Thompson is uncertain when, the House Tax Committee, of which he is a member, is expected to consider an array of revenue enhancements.
Thompson shared some details.
Near the top of the list is a proposal to remove business income tax exemptions in a manner that would generate an additional $101 million. Thompson said the tax cut was expected to benefit about 191,000 small businesses. Instead, 330,000 businesses, including 53,000 farmers, were affected.
An increase in the state sales tax is also on the table. The House proposal would put the state portion at 6.45 percent, compared to 6.15 now, and raise nearly $141 million.
Thompson said raising the sales tax to 6.5 percent, a mere one half of 1 percent more, was too much for many legislators, but many could swallow the 6.45 percent rate.
Another point is phasing out mortgage deductions for homeowners on state income tax. In the upcoming fiscal year that would mean an additional $97 million.
Yet another income tax consideration is freezing the rate at 2.7 percent, to raise $23 million. ????
Bumping up the tax on tobacco, by 46 cents on a package of cigarettes, would mean an additional $39 million. Meanwhile, few House members look favorably on increasing the tax on alcohol products.
Giving amnesty to taxpayers who owe past due taxes would bring in $30 million. Capturing a portion of reimbursements on increased federal Medicaid payments would generate $48 million.
If all those things were to fly, revenue would increase nearly $465 million, which would leave the state with an ending balance of $59 million — little more than a pittance in comparison to general fund expenditures of $6.5 billion for Fiscal Year 2016.
Two House proposals would immediately find favor with Gov. Sam Brownback, who touted tobacco and alcohol tax increases early in the session and more recently has leaned heavily toward a consumption tax — generally known as sales tax.

“THE SENATE came up with something at the end of last week and I don’t know what is in it,” Thompson said. Consequently, he doesn’t know how well it meshes with what is being discussed in the House.
Thompson concluded with a disclaimer: While what currently is before the House Tax Committee meets the shortfall of the next fiscal year, he has no illusion that it will be neatly packaged and meet muster on the House floor, or even that it will survive scrutiny in committee.
Many pieces covering a spectrum of political leanings have to come together, an outcome that has failed to materialize through the full session and two weeks of additional meetings, Thompson cautioned.
Also, he pointed out, Fiscal Year 2017 is poised to face an $800 million deficit unless revenue suddenly increases by a substantial amount. The current $406 million challenge may pale in comparison, when the short-term gimmicks used to shore up the 2016 budget dissolve.

Thompson represents the 9th District, which contains most of Allen and Neosho counties, including Iola, Humboldt and Chanute.