February 9, 2017
Members of the Kansas House and Senate are going to have some difficult decisions to make when it comes to shoring up the state’s budget.
The state is expected to be approximately $350 million short of meeting its budget in fiscal year 2017 — and that amount is expected to increase to about $580 million in FY 2018.
“We all recognize how serious matters are right now,” Sen. Tom Hawk (D-Manhattan) said Saturday in Junction City.
“It’s a monumental task,” Rep. Lonnie Clark (R-Junction City) added. “Someone hasn’t taken the shovel away; we’re still digging.”
When the Kansas House and Senate convened, Gov. Sam Brownback introduced a budget within the first week, but that was “primarily rejected.”
“There were a lot of concerns in that budget,” Sen. Jeff Longbine (R-Emporia) said. “There were a tremendous amount of transfers, selling off future payments and not making our payments.”
That included possibly selling off expected payments to the tobacco settlement fund (money that is used to fund pre-kindergarten reading programs and other children’s programs), as well as other possible work-arounds. Longbine said the legislature considered those for “like a minute and a half” before saying no.
Longbine said a package that was discussed earlier this week would include closing the LLC “loophole,” where individual Kansans who receive income through an LLC, self-employment, a farm or rental property pay no Kansas income tax, but people who receive a paycheck do owe tax. It would also increase some individual income tax rates by 0.3 or 0.4 percent.
“If we don’t make those structural cuts, then we are left with very few options in FY 2018,” he said. “We’ll end up with a negative trend and a negative balance in 2019 even with the tax package.”
Hawk expressed his support of a popular argument that the state needs to “reset to 2012” and bring back the three tax brackets.
The “Rise Up Kansas” initiative, introduced by the Kansas Center for Economic Growth, would do just that. It would reinstate the three-bracket system, close the LLC loophole, and also reduce the state sales tax on food by 1.5 percent. It would potentially bring $820 million to the state general fund.
Rep. Dave Baker, who also was in attendance Saturday, didn’t have much to add on the budget issue, being that he’s so new to Topeka. But he did say one of the first things we need to do is market ourselves.
“The biggest asset we have around here is our people,” he said. “If we don’t get more people living here and paying taxes, all of our other problems are irrelevant.”