A Kansas Senate committee Thursday junked proposals from its chairman to increase taxes on alcohol and homeowners before he declared that work on closing a budget shortfall was “going down a dead-end street” and cut off its discussions.
The Assessment and Taxation Committee started with a plan from chairman Les Donovan to raise $520 million during the fiscal year that begins July 1, more than enough to cover the projected budget shortfall. His plan would have increased the state’s sales tax, as well as taxes on income, property, liquor, tobacco and gasoline.
Donovan, a Wichita Republican, repeatedly pushed his GOP-dominated committee members to forward his plan to the full Senate, telling them they still could “throw grenades at it” later. Fellow Republicans kept proposing changes instead.
“Obviously, we’re going down a dead-end street,” Donovan said. “We’re adjourned.”
But Senate Majority Leader Terry Bruce, a committee member, said the discussions represented progress.
“We’re just closing certain doors,” said Bruce, a Nickerson Republican.
The state’s budget problems arose after legislators slashed personal income taxes in 2012 and 2013 at Republican Gov. Sam Brownback’s urging to stimulate the economy. Lawmakers cut rates, dropped the top rate 29 percent and exempted the profits of 281,000 business owners and 53,000 farmers from income taxes.
Brownback wants to preserve the exemption for business owners and farmers, but Republicans are split. Donovan’s plan would have repealed the policy, replacing it with a less lucrative income tax credit based on a business’s total payroll.
The House Taxation Committee approved a plan Wednesday to raise the sales tax to 6.85 percent from 6.15 percent while lowering the rate on food to 5.9 percent. The House plan also would eliminate all personal income tax deductions, except for charitable contributions, property taxes on homes and interest on home mortgages.
Donovan said his plan is designed to spread the revenue-raising burden across multiple taxes and to avoid such a large sales tax increase. His plan would have boosted the sales tax to 6.5 percent and taxed food at 6 percent.
His plan also would have increased a tax paid by consumers on packaged liquor to 10 percent from 8 percent and per-gallon wholesale taxes on alcohol, so the per-gallon tax on beer would have doubled to 36 cents.
The committee stripped out those proposals at the urging of Sen. Julia Lynn, an Olathe Republican.
“This is going to hurt our constituents at home that are working people,” Lynn said.
Donovan’s plan also would have eliminated a partial exemption that homeowners receive from a state property tax that helps fund public schools. The tax is $2.30 for every $1,000 of a home’s appraised value, but the state exempts the first $20,000 of value.
Under Donovan’s plan, the owner of any home worth $20,000 or more would pay $46 more a year in property taxes, regardless of the home’s total value.
The committee removed the property tax increase from Donovan’s plan at the request of Sen. Mary Pilcher-Cook, a Shawnee Republican.
“I think that really hurts our senior citizens,” she said.
The committee also rejected proposals not in Donovan’s plan to impose a $3-an-acre tax on land and to levy the state’s sales tax on farm machinery, which is now exempt.
The proposals were backed by senators from Johnson County. Rural lawmakers opposed them, and the debate exposed a potentially acrimonious rift among Republicans.