This article first appeared in the June 2, 2015 edition of State Tax Today.
After weeks of pleas from lawmakers and policy groups, Kansas Gov. Sam Brownback (R) offered some more insight May 30 on the kinds of budget provisions he's willing to support amid threats to veto any efforts to undo his business tax cuts.
The Legislature is in its third week of overtime, having failed to find a way out of a $400 million hole before the end of the 90-day session mandated by the state constitution.
Thus far, lawmakers have brought a variety of bills to the floor, relying in large part on sales tax increases and rollbacks of recent tax cuts to balance the budget, but they have all fallen far short of the support needed to pass.
But many lawmakers have apparently been unwilling to risk upsetting constituents to support tax increases that might be vetoed anyway, and they have been asking the governor for guidance on the kinds of proposals he would like to see and what he is not willing to accept.
Those pleas were largely ignored for weeks, as the governor's spokesman said that Brownback would respect the legislative process and allow lawmakers to find their own way.
But after a third major proposal failed to win passage and the Senate overwhelmingly rejected a bill (SB 270) that merely called for a tax amnesty projected to raise $30 million, Brownback issued a statement Saturday laying out several proposals to address the budget hole.
The next day, The Wichita Eagle reported that Revenue Secretary Nick Jordan went a step further, saying that any effort to roll back Brownback's signature tax break -- a full exemption for passthrough income -- would be vetoed.
The only exception to that would be a change to treat guaranteed payments from limited liability companies as wage income, one of several components of Brownback's plan. The governor also asked for the following changes:
- eliminate income taxes for single filers with up to $10,250 in income;
- raise cigarette taxes by 50 cents per pack;
- increase the sales tax to 6.65 percent; and
- eliminate most itemized deductions.
The governor said his plan would close the budget hole and leave the state with an ending balance of $81 million for fiscal 2016 and $255 million for fiscal 2017.
Dave Trabert of the Kansas Policy Institute said he was still waiting for lawmakers to take a serious look at addressing the budget by reducing spending but he was pleased that the governor was finally willing to offer lawmakers some guidance on what he's looking for.
"For the governor to come out and say he will veto anything that goes backwards on his tax plan, I think that was very helpful," Trabert said.
He said that should give lawmakers more direction and make it easier to find votes for a final bill, though he said there is still a contingent of lawmakers "who are determined to try to go backwards on the tax plan."
"It's unclear whether anything has the minimum needed. If I were just guessing right now, it would be probably likely that something along the lines of the governor's plan will gain favor, partly because of his threatened veto," Trabert said. "That really raises the stakes on the number of votes they have to have."