On March 7, the Senate debated for several hours on the governor’s tax proposal. The governor requested a “full and fair airing” of his tax plan after he vetoed HB 2178 last month. The governor’s proposal lacks support in the Senate, and the Senate Tax Committee had trouble getting the bill out of committee even without any recommendations for passage. A motion to amend the governor’s bill, which allowed for losses to be carried forward, was proposed and approved. The Senate then chose to debate the bill in five separate pieces, requiring us to debate and vote on each piece separately. On a voice vote, the Senate voted down the first three provisions. Before the Senate could debate and vote on the final two provisions, there was a motion to “strike the enacting clause,” which killed the bill. The motion passed, 37-1.
His proposal consisted of:
• Increasing the tobacco tax by $1.
• Increasing the liquor tax from 8 percent to 16 percent.
• Freezing the bottom tax rate at 2.7 percent.
• Increasing the annual report fee for all for-profit business entities from $40 to $200 in FY 2018 and requiring anyone who owns 5 percent or more of the business to pay a $200 fee.
• Requiring LLC’s to pay taxes on passive income from rents and royalties.
Even with the above provisions, this bill would not have raised enough revenue to pull the state out of its current deficit.
The governor’s proposed bill again relies on Band-Aid fixes for an ongoing long-term revenue problem. His proposal to use the tobacco settlement for a one-time fix would jeopardize our early childhood developmental programs and is unacceptable to the Senate. The state receives approximately $50 million a year from the tobacco company’s settlement. This program is the most efficient state program. For every dollar we spend, we receive $12 in return.
As I have mentioned in the past, the majority of the Senate and I feel we need a structural fix. The Senate will continue to work to produce a budget that provides stability and predictability for all Kansans.
The rescission bill will be debated this week. The rescission bill is necessary to balance the 2017 budget, which had a projected deficit in November of $350 million. Revenues have come in ahead of projections for the last several months and the projected shortfall is now approximately $280 million. There are only two ways to handle the rescission bill, with cuts or borrowing money from the state’s investment pool. A rescission bill has passed the House that will rely on borrowing from the investment pool.
Rick Billinger, R-Goodland, represents the 40th District in the Kansas Senate.