Delay is key tactic in debate on proposed canceling of Kansas sales tax cut

05/12/2013 12:25 PM

05/20/2014 10:44 AM

Stalling is an important tactic for the Kansas Senate's top leader as she tries to push a reluctant House toward stabilizing the state budget by canceling most or all of a scheduled decrease in the state's sales tax.

Senate President Susan Wagle and House Speaker Ray Merrick are negotiating on tax issues, rather than leaving the talks to the lawmakers they've appointed to resolve differences between the two chambers. Gov. Sam Brownback also is a key player, of course, but Wagle and most fellow GOP senators are backing his proposals.

The Republican governor and many members of the GOP-dominated Legislature want to follow up on massive personal income tax cuts enacted last year and position Kansas to phase out the tax. However, the state also must avoid budget shortfalls, and the sales tax is the year's biggest and most contentious issue.

The Senate approved Brownback's proposals for additional cuts in personal income tax rates over the next four years and to keep sales tax at its current rate of 6.3 percent. The House passed legislation allowing the sales tax to drop to 5.7 percent in July as planned while making less aggressive income tax cuts.

Wagle said last week that she expects lawmakers to pass tax legislation close to what the Senate approved. During an interview, the Wichita Republican said resolving the tax impasse requires time to talk to individual House Republicans to educate them about fiscal issues and persuade them that canceling the sales tax decrease won't have dire political consequences.

She and her allies are counting on the passage of time to pressure legislators. Republican leaders had promised publicly that lawmakers would finish the year's business by Monday, and at least a few have said they have trips, family events or other personal and professional business looming.

“A lot of legislators will become very restless,” Wagle said.

The House and Senate's appointed tax negotiators are waiting for word of a deal from Wagle's and Merrick's private talks before reconvening public meetings. Another group working on the next state budget also isn't meeting until a tax compromise emerges, and without a completed spending plan for state government, the Legislature cannot wrap up business for the year.

“The governor is optimistic that a deal can be reached soon,” Brownback spokeswoman Sherriene Jones-Sontag said in a statement last week.

But Republican leaders now acknowledge that the Legislature will remain in session possibly through this week. Rank-and-file members will feel a pinch soon because their seasonal secretaries won't return after Monday unless individual legislators use their campaign funds to pay them.

But Merrick, a Stilwell Republican who previously served in the Senate, dismissed the notion that Wagle and her allies can simply wait him out.

“I really don't have a breaking point,” he said.

Democrats aren't party to the private tax talks because their leaders don't expect any of them to vote for any compromise that emerges. They've criticized last year's income tax cuts as reckless and oppose the GOP's goal of shifting most of the burden of funding state government to the sales tax, because poor families tend to pay a higher percentage of their incomes to that tax than do wealthy ones.

Wagle, like other Republicans, believes eliminating income taxes will spur economic activity. She said Kansans are more likely to see general prosperity if the state taxes consumption through the sales tax rather than earnings through income taxes.

Merrick and his fellow Republicans in the House agree, yet many of them still want to let the sales tax drop.

Legislators boosted the sales tax three years ago at the urging of Brownback's predecessor, then-Democratic Gov. Mark Parkinson, promising that most of the increase would be temporary. Rep. Scott Schwab, a conservative Olathe Republican who mocked that promise, said he'd lose credibility with his constituents if he voted to keep the full increase in place.

Also, legislative researchers project that keeping the sales tax at 6.3 percent will raise almost $1.5 billion over the next five years – something critics call a massive tax increase. Schwab contends that no matter how hard Wagle and her allies push, the House is not going to pass the Senate's proposals or anything close to them.

“She's not looking for a tax negotiation,” Schwab said. “She's looking for a tax capitulation, and that's not going to happen.”

But Wagle and Brownback note that without the additional sales tax revenues, the state cannot pursue additional income tax cuts and sustain its current budget past mid-2015, according to legislative researchers' projections. Thus, Wagle said, resolving tax issues requires time and sharing information while the private talks continue.

“At this point, we haven't made as much progress as I would have liked to have seen,” Wagle said.

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