Generally we think of budgets as a tool to manage or prioritize our resources. When we establish priorities we are making value judgments on the relative importance of the items we wish to spend our tax dollars. Budgets then are expressions of our values. That being the case the legislature must have very different values than what I believe are shared by most Kansans. Our state has always placed a high degree of importance in caring for our seniors, in providing a safety net for the poor and uninsured, and being a leader in educating our young people. We want families to be able to afford to send their kids to college and believe in extending a helping hand to the disabled. We want good roads and safe communities and value being good stewards of our great state.
How then does the House justify a budget that:
- Has no new funding for public education;
- Cuts higher education by $29 million;
- Robs the state highway fund of $300 million;
- Cuts $49 million from the Department on Aging services for seniors;
- Cuts $6 million for early childhood programs.
These cuts fly in the face of those values long held by the vast majority of Kansans and represent only the beginning of the further cuts that will be necessary due to the Governors tax cuts to the rich and businesses.
If all those budget cuts were not enough, the Senate is proposing that taxes on middle and low income families need to go up to balance the budget. The Senate bill would make the temporary sales tax increase permanent, and reduce the amount of deductions tax payers can use from their Federal Taxes.
The state sales tax rate is currently 6.3% and is set to reduce to 5.7% on July 1. The tax plan passed by the Senate would make the 6.3% permanent. The legislature made a promise when the rate was increased in 2010 to let the rate rollback at the end of this fiscal year. Many legislators who voted against the 2010 increase have now done an about face and are supporting letting the rate become permanent. The sales tax is a regressive tax that hurts low income and seniors on fixed income the hardest.
Relative to the individual income tax, a number of changes would be enacted to Kansas itemized deductions. The deduction for certain gambling losses would be repealed altogether. All itemized deductions, with the exception of charitable contributions, would be reduced by 24% in tax year 2013; 41% in tax years 2014-15; 65% in tax year 2016; and 94% in tax year 2017 and thereafter. The most controversial of these reductions are the mortgage interest, and property tax deductions. Those have produced the greatest objections by middle class homeowners.
All totaled the tax increases approved by the Senate would total $783 million over the next two fiscal years. The sales tax provision would increase taxes by $559 million and the loss of itemized deductions would increase revenue by $224 million.
House and Senate negotiators have been meeting with no compromise so far on the tax and budget bills. The Governor and the Senate tax committee chairman are adamant that the sales tax has to be extended in order to make up for the fact that 191,000 individuals will no longer have to pay income tax. Those exemptions were part of the tax bill that Governor Brownback pushed through last year.
The House is opposed to extending the sales tax and has proposed a more cautious approach that reduces the income tax rate only when total revenue exceeds a 2% growth cap. If the House leadership cannot convince the House to accept the Senate position we will have to wait until early May to find out which side will prevail. In any case total taxes on the middle and lower income families will have to go up.
HB 2400 sub for SB 22 would have created a tax credit program for Kansas corporations that donate to a Scholarship Granting Organization (SGO). Under this proposal corporations will receive a $70 reduction in income tax liability for every $100 given to the SGO. This proposal carries a fiscal note of up to $100 million per year. Continue reading
New life was given to the Reading Initiative Bill previously believed to be dead for the 2013 session. Following a motion to reconsider in the Senate Education Committee HB 2140 was amended to allow for a greater role for the parents in the decision to hold back a student.
Once amended, the bill passed the Senate Education Committee. In the Senate the bill was further amended to assess reading competency following first grade, rather than 3rd grade. Proponents of the amendment argued that remedial measures should begin sooner rather than later. The amendment passed, and the Senate then gave approval to the bill.
The first bill signed into law during the 2013 legislative session gives the Governor greater power in the appointment of judges to the Kansas Court of Appeals.
The previous merit-based model required a non-partisan nominating commission comprised or legal professionals to submit a slate of nominees to the Governor to make a selection. Now, the Governor has the ability to appoint judges that then must pass Senate approval.
Kansas will now politicize the judicial branch much like the federal system.
Late into the session a bill to exempt private health clubs from local property taxes was passed by the Senate. The bill was chiefly sponsored by the Genesis Health Clubs in Wichita. The proponents contend that they are at a competitive disadvantage to the YMCA and that they should not have to pay property tax as compensation.
The bill was never considered in the House yet there was an attempt to include the Senate version in a conference committee report. The House and Senate conferees decided that there was not enough support in the House to pass the conference report so it was left out of their deliberations.
There was considerable criticism of the way the bill was passed so late into the session when deadlines for bill consideration had passed. Others were critical that Genesis had contributed over $40,000 to political candidates this year, including most of the committee members in the Senate that originally passed the bill. Others also noted that due to the tax bill passed last year the owners no longer have to pay income taxes on their business earnings.