The Legislative session continues. We are approaching a record long session with no apparent solution in sight. The longest session on record was in 2002 with 107 days. That session was also about raising taxes as the economy had softened significantly because of the terrorist attacks in September of 2001. This time, the cause is much different.
The Legislature truly is in gridlock over taxes. There does not seem to be any clear consensus for resolution on the revenues. The budget is agreed to and has passed the House. The Senate is holding the budget until a tax package is passed. A large tax cut, approximate id="mce_marker"B per year, was enacted in 2012. Since that time, revenues from the remaining sources have risen modestly and some fairly significant budget reductions have occurred. However, the Legislature is still about $400M short even with the large KDOT transfers.
I have explained those points before but just wanted to remind everyone. There are factions, including the Governor, who want to raise sales taxes (they call it consumption taxes) as much as necessary to close the gap. To raise only sales tax would require a State sales tax in the neighborhood of 6.9%, but a few other adjustments could make the rate 6.65%. The current rate is 6.15%. There are others that would like to reverse the income tax reductions of 2012. The personal and business income tax reductions are responsible for nearly all of the 2012 reductions in revenue. Another group would settle for a mix of the two. And the final group is resolute in not voting for any kind of tax increases.
That is where things stand at this point. Several outside groups are advocating hard for no tax increases and I have even heard radio ads to that effect. Obviously these are well funded groups, but their opinions are not universal. Other groups are not so well funded but their opinions are just as important.
Obviously there are many different ideas about what to do and more than a few ideas on how to solve this. Even more, getting a consensus in either the House or Senate to fix the problem seems unlikely. What may be possible to pass in the House may not be possible to pass in the Senate and vice-versa. That’s why I said we truly are in gridlock over taxes with only small movement to resolve the issue.
We voted on the Judiciary budget Monday. There is policy and an allocation of money in that budget. Mixing policy and funding is being done more often but is a poor idea. The block grants for schools passed some time ago, so both the Judiciary and school budgets are already in place. A vote on the Governor’s tax proposal was made in the House Thursday but failed miserably.
Payroll planning for State employees starts on June 7, so if the Senate passes the budget soon, furloughing of state employees may be avoided. It just depends on if the Senate and Governor move the budget along as well or try to hold it hostage for political purposes. Procedurally, it really does not matter if the budget or tax plan passes first but the Constitutional requirement for a balanced budget remains in place.
I still appreciate hearing from any of you regarding Legislative issues. We need to finish our work but there is no predictable end. Some type of breakthrough will be made at some time. Our assistants have not been here since first adjournment early in May, so if you wish to contact a Legislative member e-mail is the best way to do that. You can find those e-mail addresses on the Kansas Legislature website.