Rush, rush, ruin.

May 2, 2018 by

What’s the rush?

When it comes to tax policy, what’s the rush is indeed the question of the day.

Last night at a 9:00 tax conference committee meeting, Sen. Chair Caryn Tyson (R-Louisburg) was insistent that urgency was necessary, demanding that the committee return at midnight after giving the staff a couple hours to draft extremely complex amendments dealing with the repatriation of overseas profits for tax purposes. Corporations, many of which don’t believe they should have to pay taxes and are notorious for using “shelters” to avoid taxes, are determined to stop tax provisions that make them pay their fair share of the responsibility for funding services. Tyson is determined to do whatever corporations want. Hence, the urgency. Let’s pass something after midnight without giving anyone the time necessary to really review a proposal and determine its impact on the state budget both immediately and long-term.

Fortunately House members, led by Committee Chair Steven Johnson (R-Assaria), are trying to be more deliberative and resisted the call by Tyson to continue into the wee dark hours of the morning when everyone would be sleep-deprived and unable to do such important work thoughtfully.

We all know the quality of work done after midnight. The Kansas Legislature is known for waiting until the last minute to get down to work and often ends up very late at night or early in the morning frantically passing the most important bills of the year. And they end up making grave errors in the process. One need only look at this year’s school finance bill with an $80 million error.

It would appear that Tyson’s goal is to maximize the depression of revenue to the state. Perhaps she wants to demonstrate her commitment to exploding deficits as if that is a qualification for a member of Congress (she is a candidate for Congress). The problem, of course, is that, unlike the federal government, the state cannot deficit spend. Kansans know better than anyone what that means thanks to the failed Brownback tax experiment.

Since the budget is being built on the assumption that all of the revenue available or predicted to be available is there to be spent, the passage of tax cuts will push the budget under water, jeopardizing any progress being made on school funding or the restoration of other state services.

We would remind the Legislature of the 2013 lower court decision in Gannon when the State argued that they did not have the revenue to increase school funding or honor the promises of Montoy. Here’s what the Court said to that argument:

The State has argued and asked us to find the  coming limitation on the State’s resources require the Legislature to make difficult appropriation decisions. The State has proposed that we find “the Legislature could reasonably conclude adjustment of state education aid to the Levels demanded by the plaintiffs would have disastrous consequences to the Kansas economy and its citizens” (P. 34 of the State’s Proposed Memorandum and Order). However, at the same time that the States attorney was advancing that argument, the Legislature passed the income tax cut.  According to one of the States experts, Dr. Art Hall, the Executive Director of the Center for Applied Economics at the University of Kansas School of Business, the tax cut bill will cause a revenue reduction in the first year (2013) of $800,000,000 to$1,000,000,000. See TR: Arthur Hallat pp.2421-2424. While Hall was called by the State to present evidence of the disastrous effect a 1.2 billion dollar infusion of money in a single year for education would have to the State, the same reasoning should apply to an $800,000,000 to $1,000,000,000 reduction in State revenue.

It seems completely illogical that the State can argue that a reduction in education funding was necessitated by the downturn in the economy and the states diminishing resources and at the same time cut taxes further, thereby further reducing the sources of revenue on the basis of hope that doing so will create a boost to the states economy at some point in the future. It appears to us that the only certain result from the tax cut will be a further reduction of existing resources available and from a cause, unlike the Great Recession which had a cause external to Kansas, that is homespun, hence, self-inflicted. While the Legislature has said that educational funding is a priority, the passage of the tax cut bill suggests otherwise and, if its effect is as claimed by the State, it would most certainly conflict with the States Article 6 § 6(b) constitutional duties.

So it would seem to us – and to most reasonable people – that enacting large tax cuts at this time would be a bad decision. We believe that lawmakers should take a “wait and see” approach. Let’s see if the recovery from the Brownback disaster continues and what the real impact of the federal tax changes will actually be for Kansas.

The tax conference committee met or attempted to meet several times today without making any progress. Tyson was bitterly angry with the House members at the 9:00 meeting last night and again at the 8:30 meeting this morning. At 11:30 this morning she made an offer to the House that was seen as backtracking on some earlier Senate offers. When questioned by Johnson, she said, “Sometimes when you reject an offer the next offer might be worse.”

In response Johnson and the House members left, telling Tyson that if she wanted to meet again she could let him know. She immediately called out for a 12:30 meeting. At 12:30, we gathered for the meeting only to be told it was postponed until 1:30. At 1:30, it was postponed until 3:00.

As of this posting, the two sides continue to negotiate, but not much progress is being made.  We will continue to update you as negotiations continue.  It’s also important to be aware and ready to take action if and when we put out the call to do so.

 

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Senate to Vote on Tax Bill Tonight! Urgent Action Needed NOW!

May 30, 2017 by

Things are happening under the dome.  We’ll have a full recap tomorrow.  In the meantime, please read the following message from our coalition partners at Rise Up Kansas.  Then, TAKE ACTION!


Tonight, the Kansas Senate will vote on a bill to end the most harmful provisions of Governor Brownback’s failed tax experiment.

The bill, CCR for HB 2067, would be a MAJOR step in the right direction for Kansas. It closes the LLC loophole, repeals the March to Zero, and reinstates a third income tax bracket – three key policy components of comprehensive tax reform that are essential to putting Kansas back on a path to recovery.

But we need your help to make it happen. 

Click Here to take action now with our easy action alert tool!

After you take action, please share the link with your friends and family. The vote will happen tonight, so we need to share this alert as much as possible in the limited time remaining. 

The legislative session is already in overtime, and this might be our last chance for a good tax bill to pass. We can’t afford to throw away this shot.

Sincerely,

Rise Up, Kansas Coalition

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To tax or not to tax…

May 15, 2015 by

To tax or not to tax…

Whether ’tis nobler in the mind to suffer

The slings and arrows of outrageous fortune

Or to take arms against a sea of troubles

And by opposing end them.

 

With apologies to Shakespeare, this seems to sum up where the Kansas Legislature finds itself.

Hamlet’s soliloquy is a statement by a depressed Prince Hamlet as he considers his own demise. He speaks about the unfairness of life and the pain associated with life but still acknowledges the alternative might (in the end) be worse.  The Kansas Legislature finds itself in a similar position as did Prince Hamlet as he struggled with life and death; to tax and face political demise or not to tax and leave the state and its citizens foundering.

Today on the floor of the House the latest effort to solve the state’s financial woes (SB 270) was defeated on a voice vote after a relatively short debate. The topics debated on the House floor relative to taxes were a reflection of those discussed in the House Appropriations Committee during the veto session. Not to be outdone by their colleagues across the rotunda, similar verbal skirmishes have been held in the Senate Tax Committee. The state is firmly in a fiscal crisis.

Some legislators approach solving the crisis by stating “we just need the cuts to have time to have an impact on the state.” Other legislators believe that they should only raise consumption taxes and leave small businesses and others alone. Some do not want to increase consumption taxes. Some legislators do not want to raise property taxes (local governments will need to do that to survive). Some want to increase property taxes especially in rural Kansas. Some do not want to slow down the income tax cuts while others want to slow those cuts down or eliminate them. Some would rather continue down the path of cutting more government services. What is clear is that there are myriad competing agendas and opinions.

Finally, there are many deep political divisions regarding how to raise state revenues (taxes). The depth of these divisions when paired with “to be or not to be” question has brought this legislative session to a very literal halt.

 

In other news under the dome:

The Senate Ways and Means Committee cancelled their meeting this morning.

The House and Senate go back into session Monday morning.

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Committees & Discussion But Little Action Today

May 14, 2015 by

Very little action Under the Dome Today. Two committees in which we have interest did meet. After reviewing a variety of items within the Kansas Legislative Staff’s omnibus memo reports, the Senate Ways and Means committee chaired by Senator Ty Masterson had only a few moments of note.  Thirty million dollars in House appropriations for districts to make up for lower property appraisals was rejected after a motion by Senator Denning was passed by the committee.  Further consideration on those appropriations now moves to a conference committee.  Senator Fitzgerald questioned the availability of excess state resources and inquired if they could be used to help close a budget gap.

The Senate Assessment and Tax Committee met to develop a tax bill and send it to the floor of the Senate. The original bill included 13 points of revenue which included increasing the sales tax, liquor tax, dropping the Homestead Exemption, increasing the fuel tax among other taxes. The committee began amending the bill by taking out the increase in liquor taxes which passed. Senator Melcher then proposed amending SB 302 into the senate tax bill which would increase property tax for farmers and ranchers. That amendment failed. Another failed amendment by Senator Melcher would have instituted a sales tax on the sale of farm equipment. Time was running out for the committee because the Senate was due on the floor and the bill was still being debated in committee. Lastly, Senator Holland proposed an amendment to take out the increase in sales tax. That amendment passed. At this point Chairman Donovan said that “he could see where this bill was going.” He adjourned the committee meeting with no bill passing out. 

In the House of Representatives, there were no general orders today and no action was taken on their tax bill SB 270.

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Things Begin Moving Under the Dome

May 7, 2015 by

Tax talks

Thanks to Governor Brownback’s reckless income tax cuts of 2012 and 2013, the state faces a budget gap of about $800 million over the next two years. Filling that gap will require either raising taxes or massive cuts to services.

Legislative committees were briefed on the gravity of the situation as they returned from the April break and it’s taken until now for ideas to come forward other than the Governor’s proposal to raise tobacco and liquor .

There is little legislative interest in the tobacco and liquor tax proposal and no one in the Legislature or the Administration has yet proposed rolling back the income tax cuts that caused the problem. Instead, legislators are looking at “consumption taxes.” That’s just a fancy way of saying “sales tax increase.”

During the depths of the great recession, Kansas temporarily raised the sales tax from 5.7% to 6.3% to shore up a budget pounded by the economic collapse of 2008-09. The rate was set to return to 5.7% but to pay for the reckless tax cuts the Legislature, at the request of Brownback, reversed course and kept the rate at 6.15% where it is now.

A proposal gaining traction in the House is to raise the sales tax to 6.5% which would generate about $163 million in revenue. Sales tax increases are popular among legislators because they believe you won’t notice. They know that when you file your income tax, you actually see how much you’re paying. And when you get your property tax notice, you see exactly what you owe. Both of those can be large numbers. But sales taxes nickel-and-dime you. It’s hard to see just what you’re paying in sales tax because it is applied in small amounts here and there. One is tricked into thinking it’s not very much.

The Kansas tax system is one of the most regressive in the nation, thanks to our reckless tax cuts passed in 2012 and 2013.  Sales tax is the biggest culprit. It represents a large percentage of a low income earner’s salary. Since Kansas is one of only 14 states that imposes a sales tax on groceries, this makes the tax even more burdensome for the poor. To make matters worse, in order to soften the blow of his income tax cuts, Brownback also repealed the sales tax rebate on food that helped offset the burden for the poorest Kansans.

Overall, the poorest 20% of Kansans pay 11.1% of their income in taxes while the wealthiest 1% of Kansans pay only 3.6%. This is the hallmark of a regressive, unfair tax system – the more one earns, the less one pays in taxes as a percentage of income. This will only get worse with an increase in the sales tax.

 

This chart from the Institute for Taxation and Economic Policy (ITEP) shows the percentage of income paid in taxes by each quintile of taxpayers in Kansas. The wealthiest quintile is further divided into 15%, the next 4%, and the 1% of wealthiest Kansans. The data is for 2015. (http://www.itep.org/whopays/states/kansas.php)

KansasAll

 

This chart shows the impact in 2013 of the tax cuts enacted by Governor Brownback. (http://realprosperityks.com/kac/wp-content/uploads/2014/04/who_pays.jpg)

who_pays

 

AFP carpet-bombs Kansas with anti-tax mailers

Are you one of the many Kansans getting mail from Americans for Prosperity lauding certain legislators for promises to not raise taxes and urging you to call them and tell them to stick to the pledge?

AFP – an organization founded and funded by the Koch brothers – wants the Legislature to gut state services in order to protect the tax cuts that have benefited only the wealthiest Kansans.

While schools are having to close early and beg for some extra money from the SB 7 “extraordinary needs fund” and road projects are being set aside as the Legislature drains the highway fund of money, AFP is advocating that legislators do nothing to solve the revenue problem but instead focus on destroying state services.

 When is a dollar not a dollar?

The answer in Topeka is simple – when it’s a tax dollar returned to a corporation.

Last year the Legislature passed a tuition tax credit bill for corporations. In a move to begin the privatization of public education in Kansas, the Legislature passed a bill providing for a 70% tax credit for any corporation that would entice a child out of a public school by giving that child tuition money for a private school. They did put some limits on the bill, requiring that the student would have to be a low-income student from a Title I priority school.

If a corporation gave that student $8,000 in tuition money, the state would allow the corporation to cut $5,600 from their state tax bill. The $8,000 tuition bill would only cost the corporation $2,400.

Some legislators would like to expand this bill so that any student would qualify. Private schools could work with corporations to find the most brilliant students or the most athletic students and get their tuition paid. Private schools under this bill do not even have to be accredited – the state would be losing $5,600 in tax revenue for every student getting his/her tuition paid at an unaccredited school!

Supporters of this idea would have you believe this does not cost the state anything. In reality, it does. It costs the state up to $10 million in lost tax revenue that could be put to funding public education, reducing social service caseloads, or repairing roadways.

 

 

 

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