By KHI News Service, January 11, 2010
TOPEKA — State government has cut budgets as much as it can the past two years and now must raise taxes to preserve quality schooling, assure services for the poor and needy, and close a projected $400 million budget gap.
That was the main point of Gov. Mark Parkinson's State of the State message delivered Monday evening to a joint session of the Kansas House and Senate.
"I have spent scores of hours studying these programs in search of that $400 million more that we can cut," Parkinson, a Democrat, said. "I'm here to tell you that it simply is not there. If you can find it, I'm open to your input. However, as a person who is fiscally responsible and as a person who has cut more out of our state budget than any Kansan in history, let me repeat - there isn't $400 million left that we can responsibly cut. Now is the time to stop cutting education, public safety and aid to the elderly and disabled."
That line drew applause from fellow Democrats and a handful of Republican legislators but support for the idea of a 1-cent sales tax increase, which is what the governor called for, seemed thin among members interviewed after the speech.
Budget officials said the governor's proposed sales tax increase would raise $308.2 million of the $400 million needed to keep the state in the black. The Kansas Constitution requires a balanced budget, so lawmakers don't have the option of deficit spending.
Republicans leaders were quick to criticize the idea.
"A sales tax is regressive in the best of circumstances," said House Speaker Mike O'Neal of Hutchinson. "It's a multiplier of regressive in a recession."
He also disputed the governor's insistence that state programs have been cut "to the bone."
"What we're talking about is cutting back some of the huge (spending) increases that have been built into the system over the years," O'Neal said.
Living within means
"His first concern seems to be how do we protect government bureaucracy," said Rep. Kevin Yoder, the Overland Park Republican who heads the House Appropriations Committee. "Kansas families have to live within their means during a recession. The governor doesn't want to live within our means."
House Majority Leader Ray Merrick of Stilwell went so far as to call the governor's plan "unconstitutional" because it didn't spell out how to balance the budget within the confines of existing law.
Even the governor's leading House ally conceded support was lacking for a sales tax increase, at least for now.
"Right now, I don't see 65 votes in the House or 23 votes in the Senate for a tax increase," said House Democratic Leader Paul Davis of Lawrence. "But then I don't see majority support in either chamber for cutting another $400 million, either."
The governor's speech, delivered without notes or a teleprompter, was essentially a 25-minute sales pitch to legislators and the public soliciting support for a plan that would raise the state sales tax 1 percent before dropping to 2/10 of a cent after three years. The current state sales tax is 5.3 percent. The proposed increase would take it to 6.3 percent.
The governor also called for increasing state taxes on cigarettes from 79 cents to $1.34 per pack and also for raising levies on other tobacco products. He said the collateral benefit would be a drop in teen smoking. Budget officials said raising tobacco taxes would mean $69.5 million more for the state treasury.
Parkinson also made passing mention of three other initiatives: He called for a statewide public smoking ban free of "loopholes" and he said Kansas should continue its efforts to become a national leader in wind energy.
"Seventy-five percent of Kansans want a real smoking ban and I'm asking you to give it to them," Parkinson said.
He also urged support for a proposed constitutional amendment that would require the state to set aside reserves in years when revenues were up to help stabilize the budget when inevitable bad times ensued.
Reversing Medicaid cuts
Among other things, the governor said his plan to raise taxes would allow the state to roll back its recent 10 percent cut in rates paid to Medicaid service providers.
Various Republicans said they supported that idea, just so long as it didn't involve a sales-tax increase.
O'Neal said he thought Republicans would give some consideration to instead closing sales tax exemptions, an idea being pushed by Revenue Secretary Joan Wagnon, who has said it could increase state revenues by $200 million a year.
O'Neal said he had heard her describe the plan in a Wichita speech and that she has been invited to talk about it more Wednesday with members of the Republican House caucus.
Sen. Jeff Colyer, R-Overland Park, said he and other legislators were already looking for various ways to roll back the Medicaid cuts, which Parkinson said he had reluctantly ordered because there was no other way to keep the budget in balance. The cuts became effective Jan. 1 and are expected to save the state about $23 million this fiscal year.
"That could have been structured differently and less painfully," Colyer said of the cuts, noting that they will also cost the state about $70 million in lost federal Medicaid dollars. "This is a giant cut. If we're cutting $25 million, let's only cut $25 million rather than $100 million."
Davis said he agreed with the governor that the only way to rollback the Medicaid cuts was to increase state revenue.
"I do think the Medicaid cuts have made a pretty strong impact on the public and legislators who kind of saw that as a final straw, a realization that we have cut too far," Davis said. "I don't see that they go away without some kind of additional revenue."
The governor was scheduled to meet privately with legislative leaders on Tuesday to further discuss his budget report, which this year for the first time was not published in traditional bound volumes but only posted online on a Kansas Division of Budget Web page.
The governor's speech drew praise from Kansans for Quality Communities, a coalition of school and social service groups that have joined to fight deeper budget cuts. It was rebuked by the Kansas chapter of Americans for Prosperity, an anti-tax group whose officials said taxpayers "shouldn't be burdened with solving government's spending problem."