Brownback and other Republican brass plead for tax hike to balance Kansas budget

Gov. Sam Brownback, tearing up and warning that the nation is watching Kansas, pleaded with Republican lawmakers Thursday to pass a tax hike to keep the state financially solvent.

House and Senate Republicans held a rare joint caucus meeting Thursday afternoon, hours after the House had rejected a Senate tax plan. Brownback and top administration officials warned GOP lawmakers that massive budget cuts would come Monday if lawmakers fail to pass a tax plan that fills the state’s $400 million budget hole.

“We’re at day 112” of a legislative session that usually wraps up in 90 days, Brownback said. “We’re at Thursday. By Monday, you have to come up with something.”

As darkness fell on the Capitol on Thursday night, a resolution remained out of view.

Jim Clark, the secretary of administration, told the meeting his department needs to start entering budget numbers into the state’s accounting system Monday to ensure that payments to agencies go out on time when the fiscal year starts July 1.

State law forbids an unbalanced budget. That leaves a limited set of options.

Budget Director Shawn Sullivan said the governor could veto all of the state’s $15 billion budget or he could use line-item vetoes to fill the state’s nearly $400 million shortfall.

For example, Sullivan said, issuing line-item vetoes for higher education would fill the shortfall, or the administration could proceed with a 6.2 percent, across-the-board budget cut that would cost Kansas public schools nearly $200 million.

Sullivan said all were horrible choices. He said that eliminating higher education funding was “not a permanent solution, obviously.”

Clark and Sullivan both warned lawmakers that the longer the tax and budget fight continued, the more likely the state would suffer a downgrade to its credit rating.

Hard sell

Brownback called on lawmakers to pass a tax plan to avert the budget slashing.

He told lawmakers they could move forward with the plan already passed by the Senate or one he unveiled two weeks ago. Either way, he said, they needed to move quickly.

“Now is the time you’ve got to act,” he said. “You’ve just got to act.”

Brownback began to tear up, noting that he called lawmakers from the hospital when his first granddaughter was born this past weekend to urge them to support the Senate plan.

Senate President Susan Wagle, a Wichita Republican who suggested the joint meeting, also stressed urgency.

“It’s a crisis,” she said. “We have not served Kansans well. And the time is short.”

Wagle called on Republicans, as the governing party with supermajorities in both houses, to act quickly and end the standoff Thursday evening.

“This is not Washington, D.C.,” Wagle said. “We cannot pass an unfunded budget. That is not who we are.”

Both the Senate’s plan and Brownback’s plan contain hikes to sales tax.

The Senate plan would raise the state’s sales tax from 6.15 to 6.55 percent on July 1. The sales tax rate on food would be cut to 4.95 percent the following year. The bill, as passed by the Senate, included the elimination of a food sales tax credit designed to benefit working-class families, a provision that House members balked at.

Brownback’s plan would raise sales tax from 6.15 to 6.65 percent. It would not include the cut to the sales tax on food, but it would eliminate income tax for about 380,000 low-wage workers. Some analysts say low-income Kansans would still end up paying more in overall taxes because of the sales tax hike.

Both plans would eliminate or cut all itemized income tax deductions. The charitable contribution exemption would remain intact.

House Speaker Ray Merrick had told House Republicans that a tax bill passed by the Senate was the last train out of Topeka on Wednesday night, but by Thursday morning that train had derailed.

House vote

The House overwhelmingly rejected a bill that coupled tax increases with a slew of policies by a vote of 95-20.

Rep. Barbara Bollier, a moderate Republican from Mission Hills who opposed the bill, said it failed to address what she sees as the cause of the state’s revenue problems: the tax cuts it passed in 2012.

“Starting in 2012, we put a tax plan in place that’s failing,” Bollier said. “And this in no way helped resolve that issue. It just prolonged the agony. So there was no reason to perpetuate bad policy. We keep saying we need real revenue reform. We might get it now.”

Rep. John Whitmer, a freshman Republican from Wichita, said his constituents had urged him to vote against the bill. Whitmer and other conservatives say lawmakers need to do more to curb spending before they move forward with any tax increase.

“For me, it’s just hard to ask the folks to pay more when I don’t think we’ve looked for enough cuts,” he said.

After the governor’s pitch Thursday afternoon, many Republicans remained unsold.

Rep. Pete DeGraaf, a Republican from suburban Wichita and a hard-line conservative, said he wouldn’t back any tax hike.

“The Legislature still has the option of producing a better budget,” he said. “The reality is, we haven’t cut enough.”

Brownback maintained that lawmakers had sufficiently cut the budget.

“We were starting out with an $800 million hole,” he said. “We’re now down below $400 million. That’s not small potatoes.”

But a large chunk of that represents fund transfers from the state’s highway fund and other one-time sources of money.

Brownback told lawmakers that there was no use pointing fingers at one another and that everyone shared in the blame for the situation, including him.

Yet Democrats are quick to point solely at the Republican governor and his 2012 tax cuts.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, called Brownback’s warnings of budget cuts a “threatfest.”

“It’s amazing that a governor who claims he’ll stand down and let the Legislature do their job is now dictating to the Legislature and saying, ‘You only have two options: It’s either my plan or the Senate plan,’” Hensley said. “Here’s a guy who has steadfastly refused to admit that because of his income tax cuts that’s why we’re in the shape we’re in.”

Exploring options

After Brownback’s speech, House members busily looked for a plan that could pass.

Sen. Les Donovan, a Wichita Republican and the Senate’s beleaguered tax chairman, said he was not optimistic the House would pass a plan in time to prevent budget cuts.

“When you think you have something so many times and then you’re disappointed after a while,” Donovan said, “you get burned out.”

This story was originally published June 11, 2015 at 9:00 AM with the headline "Brownback and other Republican brass plead for tax hike to balance Kansas budget."