Local legislators are looking toward taxes as the overshadowing issue during the spring session, but how the state will address a potential budget deficit is yet speculation.
The 2013 session will kickoff Monday.
The Kansas Legislature passed deep cuts in taxes in 2012 that could leave the state with up to a $295 million deficit for 2013, according to the Legislature’s research staff. The income tax breaks went into effect Jan. 1.
Dist. 73 Rep. Clark Shultz, R-McPherson, said he thought the state will spend down its ending balance first.
Much speculation has swirled around a 0.6 percent sales tax, which is supposed to sunset on June 30. Continuation of the tax could raise $250 million for the state’s coffers. There is talk the governor may try to block the decrease in the sales tax to offset cuts in income taxes.
“I think that will be hard,” Shultz said. “That was a promise to the citizens of Kansas that the sales tax would be closer to what had been previously. I think the governor may go through a tough time getting that passed through.”
Dist. 74 Rep. Don Schroeder, R-Hesston, echoed Shultz’s concerns about any attempt to block the sales tax’s expiration.
“A lot of legislators don’t want to go back on that promise,” he said. “Quite honestly, politics has a credibility problem as it is. To go back on a promise is not a good thing.”
Although attempts to repeal some of the tax exemptions have been shot down in the past, Schroeder said he still thought exemptions need to be addressed.
“When you try to do anything with exemptions, the people who receive the breaks, they come out of everywhere and say ‘No, you can’t do that,” he said. “There is a lot of pressure to keep them.”
Dist. 108 Rep. Steven Johnson, R-Assaria, who now represents Lindsborg, said he was unsure how the Legislature will resolve the budget issue, but he said it would be inappropriate to rely solely on economic growth.
“I think it would be dangerous to speculate on high growth and not do further planning,” he said. “If we would have growth of 8 to 9 percent, that would be enough, but we can’t plan on that type of outcome.”
Business leaders are telling Johnson they would prefer to see adjustments made to income taxes rather than property taxes, Johnson said. Property tax becomes a fixed expense, whereas businesses pay higher income taxes only when business is good.
Other issues in Topeka will revolve around the budget debate. Shultz said there may be an attempt to revise the school funding formula this session.
The governor has suggested being more targeted with state education dollars, but Schroeder said that may not make economic sense for many small school districts.
The state also will have to make some big decisions on how it will address the Affordable Care Act.
Shultz, who will be the chairman of House Insurance Committee, said the state needs to address the issue of health-care exchanges.
The committee also may address legislation that would allow insurance companies to offer more affordable, yet limited health policies.
“Perhaps if some of the requirements aren’t there, they can offer something more affordable,” Shultz said. “We have talked about it before. I think there is a decent move in that way.”
Sen. Jay Emler could not be reached for this story.