By Barbara Hollingsworth, Topeka Capitol-Journal, March 14, 2010
The legislative spotlight this week will shine brightly on tax increases.
Senate committees this week will tackle tax bills aimed at bringing millions in new revenue to the state in an attempt to close a budget shortfall that exceeds $400 million. And while House committees already have taken up many of the issues - and dismissed at least some - there may be more willingness to consider raising taxes in the Senate.
Senate President Stephen Morris has already said he believes the state will need to come up with $300 million in new revenue before the session is over. No one wants to raise taxes, he said, but lawmakers also don't have an appetite for further cutting schools or programs that aid Kansans with disabilities - programs that account for the majority of state spending. And yes, he said, he knows lawmakers who are adamant the state can cut its way out of the fiscal hole.
"I don't see how," Morris said.
So, the Senate Taxation Committee will launch its second week of talks on controversial tax increases with votes expected Thursday on bills that would raise the cigarette and tobacco tax, the sales tax and taxes on alcohol. There is even a bill that would tax sugary drinks.
Meanwhile, the Senate Ways and Means Committee will consider eliminating some sales tax exemptions for many nonprofits and fundraisers while slapping the state's sales tax on residential utility bills.
Sen. Les Donovan, chairman of the Senate Taxation Committee and a Republican, lamented tax increases throughout hearings last week. Donovan hails from Wichita, among areas of the state hardest hit by unemployment, and he owns a General Motors dealership that has seen better days.
As convenience store and tobacco shop owners told Donovan's committee last week that a tax increase could put them out of business and drive customers across state lines or to the Internet, Donovan commiserated.
"I understand the impact of things that are outside your control and how devastating it can be to a business when you have invested - in my case millions and millions of dollars into facilities and infrastructure and people," said Donovan, who counts himself lucky that he hasn't laid off any workers.
But, Donovan told the crowd, it is going to be difficult to escape without bringing in new revenue.
"Hopefully, this recession will end someday," he said.
The current budget troubles are unlike anything seen by even the most tenured of lawmakers. The state is in the midst of its third consecutive year of declining state revenues with numbers expected to continue sinking in 2011. Before the current slide, such declines happened just three times in about 40 years - none consecutively.
For many lawmakers, that is the perfect reason not to raise taxes.
Rep. Scott Schwab, an Olathe Republican, suggests that the state should cut and paste budget figures from 2007 and use them in 2011, which he said would balance the budget.
"Why is there such a deficit?," he asked. "Because we spent it as fast as we made it. It's poor business, and it's poor government."
Schools and organizations that work with the disabled say they already have absorbed cuts that will have long-term effects.
"The simple fact is that Kansans are suffering due to budget cuts and, if more cuts are imposed, that suffering will increase," said Mark Desetti, a lobbyist for the Kansas National Education Association.
If lawmakers agree, the question that may begin to be sorted out this week is who picks up the bill. Curt Diebel, president of the cigar shop Diebel's Sportsmens Gallery, last week worked to make the case that his customers already pay their fair share. He said he has very real concerns about going out of business at his Overland Park shop.
"Putting small businesses out of business to placate bureaucrats and nonprofits is real," he said. "Put a tax on the stones and those who throw."
Barbara Hollingsworth can be reached at (785) 233-7470 or barbara.hollingsworth@cjonline.com and tweets at twitter.com/CapJ_Barb.