Capitol Update: ‘Our state needs real revenue reform instead of passing the buck onto our next generation’

To keep our readers better informed about the state government actions that impact our communities, we feature an update column each Monday from one of northeast Johnson County’s elected officials: Rep. Barbara Bollier, Rep. Stephanie Clayton, Rep. Jarrod Ousley, Rep. Melissa Rooker and Sen. Kay Wolf.

Sen. Wolf submits this week’s update, and also sent in the explanation below of her decision to vote against the budget bill passed by the Senate late Sunday 21-17:

Kay Wolf
Kay Wolf

[My top four reasons for voting against the budget bill were] the tax lid on local government, expansion of the school scholarship program (vouchers) the sales tax exemption sunset and no inclusion of putting the LLC’s back on the tax roles. The tax lid and the sales tax exemptions never even had a hearing for public input and the Senate never had a tax package with the business inequity of not paying taxes included as part of the solution.

Wolf’s summary (filed Sunday morning) of the past week’s activity in the legislature is below:

The Legislature has prolonged the debate on budget and taxes to the point that we have now reached the 108th Day. It’s frustrating to say the least that not everyone in Topeka is willing to come to the table to find consensus on a common-sense plan.

Our state needs real revenue reform that stabilizes revenues for the long-term instead of passing the buck onto our next generation. Repeated sweeps of the highway fund, temporary tax increases and ongoing changes in the tax code are only short-term fixes that create instability for our families and our business community.

Taxes

Senators have worked 15 straight days through the weekends debating various tax packages as legislative leaders seek to find a package that the Senate, House and Governor can all agreed upon. There are essentially three schools of thought in the Legislature on how the remaining $400 million budget shortfall should be addressed:

  • Some believe the budget gap should be filled through additional spending cuts;
  • Some favor changes to the Governor’s 2012 income tax cuts by either putting a hold on the racheting down of individual income tax rates or placing LLCs back on the tax roles. Under the 2012 cuts, businesses that are structured as LLCs no longer pay income taxes; and
  • Some would like to see the state take a “consumption” approach, which involves increasing the state sales tax and an overall shifting of state government to rely more heavily on sales versus income tax.

If you have been following along online, the tax packages continue to be housed in House Bill 2109. Senators have debated and voted on a wide range of ideas, including:

  • Increasing the state sales tax
  • Lowering the sales tax on food
  • Freezing individual income taxes at the current rate levels
  • Eliminating most sales tax exemptions for nonprofit organizations and nonprofit hospitals
  • Forgiving penalties and interest for taxpayers with certain delinquent taxes
  • Correcting a technical error from the 2012 tax bill that impacts Christmas tree farmers
  • Requiring local elections for property tax increases
  • Revising the Low-Income Student Scholarship Program to limit scholarships to $8,000 per child and allow certain private schools in Wichita to receive funds through this program

None of the tax proposals put to a vote so far have garnered the votes needed as legislators work to find the right combination for a plan that will fill the budget shortfall. To date, I have not voted for any of the tax packages. My belief is, at a minimum, the 2012 income tax cuts need to be frozen and LLCs should be placed back on the tax roles. We all want lower taxes but not at the expense of services, education and a state revenue deficit. We have cut too much too fast and we are now trying to play “catch up.” There is some momentum in both chambers to freeze the income tax rates. However, the idea of placing the LLCs back on the tax roles has been met with fierce opposition by large lobbying organizations that influence many legislators on how they vote.

Budget

The Senate and House have both passed a budget bill. The Legislature is now waiting to finalize the budget proposal until a tax plan is in place. In order to balance the budget, it’s critical to know going into the process how much revenue is available to spend before deciding how much to spend. I am optimistic that once consensus is found on a tax package, that the budget can be wrapped up in relatively short order.

Furloughs

The pending furlough of public employees was of major concern this week. With the state’s fiscal year coming to a close, the lack of an approved budget and tax plan created uncertainty about whether the state would be authorized to make employee payroll for the 45,000 Kansans who work for our state agencies. It’s disappointing that the Legislature has not reached agreement on the budget, but it’s even more disappointing that our public employees and their families were put in the middle of this budget battle. I supported a plan that ensures the state will remain open for business and that public employees will continue to be paid for their work while this battle is resolved. The Governor signed that bill into effect on Saturday and public employees throughout the state were notified at that time that the furloughs would not be necessary. SB 11 passed 39-0. I voted yes.

Other Bills of Interest

The Senate has voted on several other bills and conference committee reports during this portion of the Veto Session, including:

Scrap Metal Theft Reduction. The Senate passed a plan to deter scrap metal theft in Kansas. This has been a growing problem in many communities as the value of certain scrap metals is on the rise. HB 2048 makes changes to the state’s scrap metal dealer registration laws and updates criminal provisions related to metal theft. HB 2048 passed 37-1. I voted yes.

MCO Taxes and TANF Withdrawals. The Senate passed HB 2281, which increases taxes for certain health care companies from 1% to 3.31% of premiums. The conference committee report also contained a provision that grants authority to the Department of Children & Families to increase the amount of ATM cash withdrawals that recipients of Temporary Assistance for Needy Families (TANF) may make using TANF assistance dollars. Although I voted for the original TANF bill, HB 2258, it was my understanding the $25 ATM cash withdrawal limit would be corrected to allow for a $60 withdrawal limit. This was the language in the bill prior to the amendment. Instead the change only grants DCF the authority to make a change rather than actually making the change. HB 2281 passed 28-11. I voted no.

In Closing

Thank you for allowing me to serve you. As always, I appreciate your questions, feedback and ideas on these bills and any other bills being considered by the Legislature. Please contact me at kay.wolf@senate.ks.gov.