ROME: The Republican-dominated Senate adopted by the thinnest margin the largest tax increase in state history to close a budget deficit exceeding $400 million in the upcoming fiscal year.
With the tally stuck at 20 votes in favor — one short of the required total — Olathe Sen. Julia Lynn voted “yes” to deliver the final margin that moved a bill containing $470 million in revenue increases to the House.
I know this is a very, very difficult vote,” said Sen. Les Donovan, a Wichita Republican and tax committee chairman who struggled to get much support for previous bills elevating state taxes.
Nine Republican senators broke no-new tax pledges to put the measure over the top 21-17. As anticipated, none of the Senate’s eight Democrats voted for the bill. Nine Republicans turned thumbs down on the bill.
Prospects of the legislation surviving the political gauntlet in the GOP-led House were unknown. Members of the House reconvene Monday after departing Topeka on Saturday after legislation was approved to block furloughs of 24,000 state employees.
Earlier Sunday, negotiators representing the House and Senate endorsed a compromise to erase the deficit with tax increases, slow the pace of individual income tax rate cuts and delete in four years many state sales tax exemptions unless saved by legislative action.
Senate President Susan Wagle, R-Wichita, said Gov. Sam Brownback was “fully supportive” of this proposal to extract state government from the budget crater in the upcoming fiscal year. In addition, Donovan said the governor promised to apply pressure on the House if the Senate rounded up the necessary votes for the bill.
The state burned through a massive reserve fund and developed a deficit as individual income tax rates were slashed and 330,000 businesses were awarded income tax exemptions in 2012. The supply-side economic firestorm of business expansion and job creation envisioned by Brownback and GOP allies in the Legislature failed to fully materialize.
The bill endorsed by the Senate proposes to address the shortfall by seizing $187 million with a hike in the statewide sales tax to 6.55 percent. The sales tax on food would drop to 4.96 percent in July 2016. The state would net $97 million by shrinking itemized deductions. The bill chips a $23 million sliver from Brownback’s business tax break and eliminates a $15 million food sales tax credit.
It would increase the state’s cigarette tax by 50 cents a pack to $1.29, establish an e-cigarette tax, authorize a $30 million tax amnesty program and weave in a $47 million tax increase on managed-care organizations in Kansas.
