TOPEKA — The Senate taxation committee voted Tuesday to endorse legislation containing an array of state tax increases to generate $495 million annually in new revenue to close a projected budget deficit in the upcoming fiscal year.
The bill would repeal a business income tax exemption favored by Gov. Sam Brownback, raise the state’s general sales tax to 6.5 percent, boost cigarette taxes 50 cents per pack, increase the motor fuel tax 5 cents per gallon, freeze income tax rate cuts and speed shrinkage in the value of itemized deductions.
It would replace the business tax break with a payroll tax credit and net the state $81 million next fiscal year. Other big sources of fresh revenue: sales tax, $134 million; itemized deductions, $97 million; fuel tax, $81 million; tax amnesty, $30 million.
Meanwhile, a majority on the committee agreed to endorse development of a bill halting all legislative pay on Friday.
Prospects of gaining sufficient votes in the 40-member Senate for the tax legislation remain dim, but pressure on lawmakers to demonstrate a degree of progress on the deficit has been mounting. The 2015 Legislature on Saturday reached the 90th day, which is the target for closure of the annual session.
“Everybody is waiting for us to do something,” said Sen. Les Donovan, a Wichita Republican and chairman of the Senate Assessment and Taxation Committee. “Most importantly, the public is waiting for us to do something. It’s our job.”
The Senate committee voted to advance House Bill 2109 to the full Senate after struggling for weeks to move a package capable of addressing the projected $406 million deficit in the fiscal year starting July 1.
Lawmakers are on a quest for spending cuts or tax increases to counter revenue surrendered after the GOP-led Legislature and Brownback agreed in 2012 to eliminate the state income on 330,000 businesses and to substantially diminish individual income tax rates. The deficit erupted after state government burned through a $500 million reserve fund.
Senate Majority Leader Terry Bruce, a Hutchinson Republican responsible for setting the floor debate calendar, made the motion to approve the committee bill. He was joined by five Republicans, but neither Democrat endorsed the nine-element bill cobbled together during a series of committee meetings that frustrated legislators and lobbyists.
“My sense is that a motion to move the bill as it is to the floor ‘without recommendation’ might be in order and might get some traction,” Bruce said.
Senate Minority Leader Anthony Hensley, D-Topeka, said the committee’s offering was flawed because it unfairly burdened low- and moderate-income Kansans by emphasizing regressive consumption taxes.
He declined to endorse a state sales tax of 6.5 percent, up from 6.15 percent, despite a plan to set the rate on food purchases at 6 percent. He rejected the higher gasoline tax and escalation of tobacco taxes.
“We all know the boogey man in this process is the fact income taxes have been cut entirely too much,” Hensley said. “Until the Republicans and the governor admit that they made this colossal mistake, we’re going to continue down this path.”
The House overwhelmingly rejected Friday a bill that proposed closure of the deficit by leaning heavily on consumption taxes, including adoption of a 6.85 percent state sales tax.
The House Taxation Committee met Tuesday to consider alternative legislation to produce more state revenue.
Senate and House budget committees haven’t prepared a list of options for reducing spending to address the deficit. Hensley, the Senate Democrat, said it could require a 6 percent across-the-board cut to hit the target.