Kan. gov says his sales tax plan fits with budget

TOPEKA, Kan. (AP) -- Gov. Sam Brownback said Thursday that Kansas' "budget reality" will push lawmakers toward approving his proposal to cancel a scheduled decrease in the state sales tax.

The Republican governor said he'll consider "anybody's proposal" as the GOP-dominated House and Senate negotiate the final version of tax legislation. But Brownback also said legislators have limited options for stabilizing the budget while seeking further cuts in individual income taxes.

Brownback and most Republican legislators want to follow up on massive income tax cuts enacted last year with another round of reductions in personal income tax rates. Last year's cuts created a budget shortfall, and Brownback has promised to protect important programs such as education funding and social services.

Meanwhile, the state's 6.3 percent sales tax is scheduled by law to drop to 5.7 percent in July, the result of a budget-balancing agreement in 2010 that temporarily boosted the tax to its current level. Legislators in both parties don't want to break the pledge, but some are willing to do it with the promise of future income tax cuts.

"There's just the budget reality," Brownback said. "I think it's coming across to people that you've got to get your resource package somewhere. The budget doesn't work without the tax piece of it."

The Senate approved tax legislation embracing Brownback's proposals to keep the sales tax at its current rate while guaranteeing cuts in individual income tax rates over the next four years. The top rate would drop for 2017 to 3.5 percent from 4.9 percent.

The House passed a tax plan that allows the sales to drop and cuts income tax rates less aggressively. The House plan would decrease personal income tax rates each year if overall state revenues grew more than 2 percent. The top rate for 2017 would be 4.88 percent, according to legislative researchers.

Three senators and three House members are negotiating tax issues. They planned to resume talks Monday, when lawmakers return from a long weekend for a five-day push to finish most of the year's business.

House GOP leaders contend a proposal to keep the sales tax at its current rate can't pass their 125-member chamber.

"The governor couldn't convince me to do it, and I've been pretty good about voting with the governor on stuff," said Rep. Scott Schwab, an Olathe Republican and one of the tax negotiators. "I don't know how you get there. I'm not sure he's got 20 votes."

Critics of Brownback's push toward phasing out personal income taxes note it would force the state to rely most heavily on its sales tax to finance government. Poor families tend to pay a higher percentage of their incomes to that tax than do wealthy ones.

The governor and many GOP lawmakers argue that phasing out personal income taxes will help all taxpayers by boosting the economy and creating jobs. Schwab said Brownback should trust that last year's cuts ? worth nearly $850 million during the fiscal year beginning in July ? already will boost the economy enough for the House plan to provide sufficient, future reductions in income tax rates.

Also, Schwab noted that the House and Senate are negotiating the final version of a proposed $14.5 billion budget after making significant changes from Brownback's spending proposals.

"The governor needs to understand that his budget has been altered by both chambers," Schwab said. "I don't think we need to raise taxes to pay for his budget if we're not going to pass his budget."

A key difference between the governor and legislators concerns higher education spending. Brownback proposed flat spending on universities, community colleges and technical colleges flat, while both chambers are seeking cuts.

"We're going to fight for our budget," Brownback told reporters. "You're going to need to collect revenue to run the state somewhere."

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Follow John Hanna on Twitter at www.twitter.com/apjdhanna

Source: http://news.yahoo.com/kan-gov-says-sales-tax-133224407.html

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