Kansas Fiscal Battle Continues

Published May 1, 2004

Elected officials in Kansas have spent the first months of the 2004 session trying to put the state’s fiscal house in order. As of this writing, no end to the tug-of-war is in sight.

The state senate voted 14-25 against Governor Kathleen Sebelius’s tax hike proposal on February 26, and on April 1 it rejected two proposals to raise taxes for school finance. But on March 26, the Kansas House passed on a 72-52 vote a large package of tax hikes and provided much broader local property tax authority for local school districts.

On March 30, the Lawrence Journal World reported, “House and Senate negotiators agreed on a budget that trims state spending by three-tenths of 1 percent [from last year], settling dozens of small issues but leaving big ones unresolved. Leaders expect decisions on those services [education and transportation spending] to be made just before the session ends in early May.” Tax increases are still on the table in Kansas.

Sebelius sought an increase of 10 percent in the state’s property tax for schools, a 5 percent income tax surcharge on personal incomes, and an increase of .7 cents in the state’s permanent sales tax rate of 5.0 percent. The current, temporary statewide sales tax rate is 5.3 percent.

Business Leaders Comment

Business leaders in Kansas joined tax policy analysts nationwide in recommending against the Sebelius proposal.

“Regrettably, there are unfortunate financial implications for the economy of Kansas if this proposal is ever funded in the manner that has been suggested,” warned Lew Ebert, president and CEO of the Kansas Chamber of Commerce. “Consequently, the Kansas Chamber of Commerce will resist the increase in sales taxes, the increase in property taxes, and the increase in income taxes contained in this proposal.”

Ebert urged lawmakers in early February to take whatever actions were possible to lower the cost of doing business in Kansas and improve the state’s climate for new and expanding businesses. Increasing income, property, and sales taxes, Ebert said, would hurt citizens in general and small businesses in particular.

“Instead of raising taxes, Kansas should be taking the initiative to become a competitive leader among states in the fight for jobs,” Ebert said. “We can improve our competitive position. We must improve our competitive position. We are in a fight for new jobs and to keep the jobs we still have in Kansas.”

Paul Gessing, director of government affairs for the Washington, DC-based National Taxpayers Union, echoed Ebert’s concern for the state’s economy.

“When fully implemented, [the governor’s] tax increase would have a $450 million annual price tag,” Gessing noted. “The tax hikes would cost Kansas more than 3,700 jobs and would reduce its gross state product by more than $200 million, thus reducing investment and income in the state as well.”

The state legislature is scheduled to adjourn its 2004 session in early May. But before it can do so, it must get a budget passed … and the final budget document is not expected to be ready for debate before the end of April at best.

Karl Peterjohn is executive director of the Kansas Taxpayers Network. His email address is [email protected].

For more information …

visit the Web site of the Kansas Taxpayers Network at http://www.kansastaxpayers.com.