View Full Version : Local Brownback screws pooch again on tax plan

01-22-2012, 03:59 PM
Governor’s tax proposal draws new questions from lawmakers

Eagle Topeka bureau

Published Wednesday, Jan. 18, 2012, at 5:28 p.m.
Updated Wednesday, Jan. 18, 2012, at 11:24 p.m.


TOPEKA — New estimates on the cost of Gov. Sam Brownback’s tax proposal have some lawmakers questioning which projections they can trust.

Projections now show the plan, which decreases individual income tax rates while axing many deductions and credits, would cost nearly $90.million in the 2013 fiscal year. That seems to challenge the notion Brownback embedded in his State of the State address a week ago that it would not cost much, if anything, and would fully fund the 2012 budget.

The new figures also spoil Brownback’s insistence that his budget would lead to a 7.5 percent surplus next year.

The projected surplus, according to new figures compiled by the Legislative Research Department, is now 6.2 percent at the end of the 2013 fiscal year. That’s an improvement from most years in recent memory, but it’s below the 7.5 percent surplus lawmakers mandated in a 1990 law that has gone largely ignored in the past decade.

The changing figures stirred discussion in the Senate Ways and Means Committee, where Revenue Secretary Nick Jordan presented and defended the governor’s tax plan Wednesday.

Sen. John Vratil, R-Leawood, said the numbers raise questions, and he requested detailed projections on the impact of Brownback’s proposal that he said would help him analyze the plan.

“I’m concerned with the information that’s coming out of the governor’s office," he said after the committee meeting. “Last Wednesday at the State of the State, the governor said his proposal was revenue neutral. He put that in writing in his budget document. And then a few days later we learn that they had made some mistakes and there was a $60.million fiscal note to his proposal. And yesterday we learned it wasn’t $60.million, it was $90.million. My concern is where is it going to stop? And what kind of credibility does the governor’s staff have and what can we believe?"

Jordan maintained that the plan still cuts taxes for thousands of Kansans and would promote economic growth while making Kansas more competitive among neighboring states.

Brownback spokeswoman Sherriene Jones-Sontag said the tax proposal isn't part of the proposed budget – it's an addendum. She defended the surplus figures.

“Those who passed a budget that left Kansas with less than $1,000 – $876.05 to be exact – in the state’s checking account have no credibility on this issue," she said.

A building away, Wess Galyon, president of the Wichita Area Builders Association, urged members of the south-central delegation to fight Brownback’s plan to eliminate the mortgage interest deduction. He said homeowners consider that deduction essential and that eliminating it could push some potential buyers to rent instead at a time when Wichita’s housing market is trying to recover.

“I’d hate to see a policy that essentially over the long term pushes more people toward rental occupancy rather than ownership occupancy,” he said.

Jordan has said homeowners still would get most of the value of that deduction from the federal portion of their taxes. He said most Realtors would benefit from the elimination of non-wage income taxes for small businesses.

Sen. Carolyn McGinn, R-Sedgwick and chairwoman of the Senate Ways and Means Committee, said lawmakers still have a lot of questions about Brownback’s plan and how it would affect everyone from needy families to businesses.

Brownback’s plan would keep in place a sales tax increase lawmakers approved as temporary in 2010 when faced with budget deficits.

The tax is slated to end in July 2013. McGinn has called for it to end in January 2013 because the state has climbed out of a deficit with higher-than-expected tax revenue.

“There seems to be a lot of legislators who are interested in keeping the promise about the sales tax ending," she said. “I think it’s important that the Legislature keeps its promise. And that promise was that they would use a temporary sales tax that everybody pays at all income levels until we got through a difficult recessionary time and that it would end."

McGinn is among several senators who have been targeted by the Kansas Chamber of Commerce, in part for their support of the temporary 1.percent sales tax increase. The chamber, meanwhile, has backed Brownback’s tax plan, which would keep that tax increase in place.

Kent Eckles, vice president of government affairs for the chamber, said the benefits of income tax reductions outweigh the burden of the sales tax.

“We thought (the sales tax) was unnecessary and there was no trade-off,” he said. “We got nothing out of it, like reducing income taxes."

The tax debate is expected to continue Thursday when Arthur Laffer, a former champion of President Reagan’s supply-side economics and current consultant to Brownback, discusses tax policy with House and Senate tax committees.

Read more here: http://www.kansas.com/2012/01/18/2180580/governors-tax-proposal-draws-new.html#storylink=cpy

01-22-2012, 04:01 PM
Analysis: Gov.'s PR effort fails with tax plan
Posted: January 22, 2012 - 3:43pm
By John Hanna

Kansas legislators have plenty of policy objections to Gov. Sam Brownback’s plan to overhaul the state’s individual income tax code, but efforts to sell the package also have been hampered by questions about how his administration has spun its proposals.

The Republican governor said for weeks that his tax plan would be “revenue neutral,” meaning it wouldn’t reduce the state’s overall tax collections. The administration kept using the phrase last week, even after its own figures showed revenues would drop nearly $90 million during the fiscal year that begins July 1.

Brownback drew applause during his State of the State address from many Republicans when he said his proposed budget for the next fiscal year would leave Kansas with healthy cash reserves of $465 million at the end of June 2013, exceeding guidelines set in Kansas law. But the calculation didn’t account for the effects of his tax plan, and an adjustment dropped projected reserves below the legal target.

His aides and fellow conservatives in the GOP-controlled Legislature shrugged off the resulting discontent among Democrats and some moderate Republicans, but the administration’s spin had created extra issues. The package appeared to be sinking as critics questioned the credibility and competence of Brownback’s team and wondered whether more surprises were coming.

“When is it going to end?” said Sen. John Vratil, a moderate Leawood Republican.

Brownback’s plan would cuts rates, starting for 2013, so married couples would face a top rate of 4.9 percent instead of the current 6.45 percent. The plan would exempt 191,000 operators of partnerships, sole proprietorships and other small firms from paying any taxes on their business earnings. The standard deduction for heads of households would double to $9,000.

To offset potential revenue losses, Brownback proposed eliminating numerous credits and deductions, including ones for charitable contributions and interest payments on home mortgages. He would also keep the sales tax at 6.3 percent, rather than dropping it to 5.7 percent in July 2013, as scheduled by law. He would eliminate a credit for poor workers and their families.

Some critics dubbed the plan “Robin Hood in reverse” after state Department of Revenue figures showed that, as a group, filers with adjusted gross incomes of $25,000 or less would see a collective increase in their income tax burden while filers with incomes exceeding $250,000 saw the largest percentage cut as a group.

Brownback pitched his plan as a way to make the tax system simpler and fairer, and it promised to boost social services spending by more than any additional collective tax burden for poor workers and their families. Many Republican legislators have embraced the governor’s argument that lower income tax rates will stimulate economic growth.

Brownback sought to make the plan revenue neutral because, Revenue Secretary Nick Jordan told the budget-writing Senate Ways and Means Committee, the governor didn’t want the plan “to bust the budget.” Even after the release of Department of Revenue figures showing a projected decline in tax collections, the administration insisted the plan still was nearly revenue neutral.

While Democrats were bothered by the budget gap — “It shows up $90 million short,” said Sen. Laura Kelly, of Topeka, the ranking Democrat on the budget-writing Senate Ways and Means Committee — conservative Republicans weren’t.

House Taxation Committee Chairman Richard Carlson, a conservative St. Marys Republican, said legislators must reconcile any tax plan with spending anyway.

The projected cash reserves in Brownback’s budget were a bigger issue for the governor’s critics because he made so much of the issue publicly.

“That’s just an indication that these guys just don’t get their facts straight,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat.

State law sets the reserves at 7.5 percent of the total spending financed with the state’s general tax dollars, but legislators can suspend the rule from year to year, and they often have.

Brownback’s projected $465 million in reserves equated to 7.6 percent of projected spending. But, as the Legislature’s research staff noted, with the tax plan factored in, projected cash reserves dropped to $375 million, far better than they have been in recent years, but only 6.2 percent of projected spending.

Asked why the administration didn’t do such relatively simple math, Brownback spokeswoman Sherriene Jones-Sontag said, “Our tax plan wasn’t part of our proposed budget. It was an addendum.”

She also said Brownback’s detractors had no room to criticize, having engineered policies that left the state with only $876 in reserves when he took office. But that’s an argument nearly every governor has made for years given that Kansas has rarely had two consecutive administrations of the same political party since 1965.

It isn’t surprising that Hensley criticized the administration’s tax plan or that moderate Republicans like Vratil have misgivings. But their blocs together control the Senate and can act as a counter to the conservative-led House, and questions about the administration’s rhetoric created an additional drag on the governor’s tax plan.

01-22-2012, 04:02 PM
I don't care whether you're a Republican or Democrat or Independent, this guy's staff is completely incompetent at making policy. It's just been blunder after blunder with them.