Gov. Sam Brownback said he will sign a tax-cutting budget he says will add jobs, but opponents warn it will result in a $270 million deficit by 2014.
“It will create tens of thousands of new jobs, and combined with spending restraint, will help to reverse a decade of declining employment,” Brownback said in a press release issued after the House adopted a tax-cutting bill on May 9.
The plan cuts individual tax rates, eliminates income taxes for some Kansas businesses and allows a six-tenths of a cent sales tax to expire next year.
Rep. Mike Kiegerl, R-Olathe, voted for the plan, which he called “controversial.”
“We had some real fireworks in the House here,” Kiegerl said.
Both the Senate and House scurried on May 9 to beat the other legislative branch in passing separate budget legislation. More conservative members of the House prevailed passing the budget with a rarely-used parliamentary procedure that made the Senate’s continuing budget deliberations moot.
Speaker Mike O’Neal cut off debate forcing an immediate vote to concur on an old tax cut bill the Senate passed as a starting point in negotiations.
In a statement, O’Neal said the action will ensure Kansas’ income tax policy moves in the right direction.
“The Senate made it clear they do not want to reform taxes this session, and we hope this will encourage them to reconsider giving the tax conference committee report further consideration,” O’Neal’s statement read.
Joan Wagnon, Kansas Democratic Chair, called the narrowly-passed House tax plan “fiscally reckless.”
“Gov. Brownback and Speaker O’Neal chose to stand with big business and the wealthy, passing income tax breaks at the expense of working Kansans and school children,” she said in a statement. “The tax plan forwarded to the Governor’s desk will create huge deficits and strip funding from our schools.”
The Kansas National Education Association also expressed concerns about how the tax cuts would affect schools. In a press release, the KNEA said the impact on education will be the equivalent of shuttering the Pentagon.
“I urge policy makers to find some means to rescind the actions of the House, return to a reasoned discussion, and allow the voices of Kansans to be heard through the legislative process rather than railroaded through the autocratic manipulations of a few to the benefit of only a handful of wealthy Kansans,” KNEA President Blake West said.
The bill that passed the House on May 9 will not be the final product, according to Kiegerl.
“It’s a game of chicken right now,” he said.
The bill will allow the Governor some leverage as the two chambers and the executive work to reach a budget compromise, he explained.
“I like the tax cuts, but there are some other things that need to be done,” Kiegerl said. “We need to make some structural changes (to the tax code).”
As it currently stands, the bill reduces income taxes by $847 million in 2014, and eliminates income taxes for 191,000 Kansas businesses. It creates a 3 percent income tax for the first $15,000 of a single filer’s income, and the first $30,000 for a married couple. Income above that would be taxed at 4.9 percent – instead of the existing rate of 6.45 percent.
Gov. Brownback said he is prepared to sign the bill.
“But I encourage legislators to continue their work on reforming our state’s tax policy and to consider some of the alternatives I proposed in my original pro-growth tax reform to off-set the cost,” Brownback said in a statement.