Gov. Sam Brownback calls for a sales tax increase to balance the Kansas budget

Here is Gov. Sam Brownback’s statement Saturday on the 100th day of the Legislature as he tries to find a path forward for lawmakers to balance the budget:

Topeka – Governor Sam Brownback today acknowledged the accomplishments of the Kansas Legislature and unveiled his proposal for a tax policy that promotes economic growth and balances the budget. The Governor issued the following statement as part of that proposal.

“I greatly appreciate the work of the Legislature this year. It has been a year of historic and positive accomplishments by the Legislature: they moved swiftly to balance the 2015 budget and they sent legislation to my desk protecting the unborn, strengthening our Second Amendment rights, helping our nation’s veterans, and protecting our state from federal overreach.

“The time has come to conclude the final action item for this legislative session: balancing the budget.

“The Legislature worked very hard this year to hold the line on government spending by addressing our three major expenditure drivers: education, Medicaid, and KPERS. For the first time ever, Kansas is putting more than $4 billion into K-12 education. That is a record investment.

“Our tax policy is working. The proof of that can be seen in the number of working Kansans, our low unemployment rate and the fact that working Kansans have more money in their pockets to save or spend as they see fit. Seventy-one percent of the cost of the 2012 tax cuts went to reducing personal income taxes and only 29 percent of the cost went to reducing the tax burden on small businesses;

“After many meetings and discussions with legislators, policy experts and citizens from across the state of Kansans, I have concluded the following:

· To be fair, if we are going to exempt small businesses from income taxes, an equally significant effort must be made to reduce income taxes on low-income Kansans.

· What many people may not recognize is that 71 percent of the cost of the 2012 tax cuts went to reduce personal income taxes and that only 29 percent of the cost went to reducing the tax burden on small businesses;

· Most Kansans prefer consumption taxes over income taxes and want no increase of burden on property taxes. Some want both income tax and consumption tax policies to be used to help balance the budget;

· Finally, we must balance the budget now, and now is the time to do it.

“I have carefully considered all of this and now humbly offer this plan

· Eliminate income taxes for 388,000 low-income Kansans.

· Treat guaranteed payments of Limited Liability Corporations as wage income.

· Tax cigarettes by an additional 50 cents.

· Implement general sales tax at 6.65%

· Simplify the tax code by eliminating various itemized deductions.

· Continue rate reduction on income taxes for all Kansans.

“The plan outlined here will leave a projected ending balance of approximately $81 million in FY 2016 and $255 million in FY 2017. One-third of the revenue generated by this plan comes from closing loopholes in the income tax. The remaining two thirds is from consumption taxes. This is the kind of balanced approach many legislators – and most Kansans – prefer.

“My Roadmap for Kansas cited two objectives to demonstrate the success of our economic policy, and which demonstrate its success: increasing per capita personal income; and growing private sector employment.

“Between January 2011 and February 2015, Kansas added 75,000 private sector jobs. At the same time, median annual income levels in the state have grown by more than $2,000. Per capita personal income has increased 2.4 percent since 2012, beating both the regional average of 1.6 percent and the national average of 1.3 percent. Within the Missouri counties of the Kansas City Metropolitan Statistical Area, average personal income grew by 8.7 percent from 2010-2013. In the Kansas counties, it grew 12.2 percent. The Wichita MSA experienced equally robust average personal income growth of 13.2 percent during the same timeframe.

“Those statistics are good news for all Kansans, but additional metrics show even more positive signs for small businesses. In 2014, our state set a record with 15,780 new business filings, up from 13,646 in 2011. The median income for self-employed small business owners in Kansas exceeded national averages in 2013.

“I stand ready to work day and night until the budget is balanced and Kansas has a tax system in place that continues to promote economic growth.

“Together we can create a better state and economy for all Kansans.”