Kansas Lags Fiscally Again
By Karl Peterjohn, Kansas Taxpayers Network
Kansas is once again falling behind. The growth in state tax receipts has allowed the legislature to increase state spending. This revenue growth could also provide some much needed tax relief to try and make this state’s fiscal climate more competitive.
This is an urgent priority that is coming home to folks in Topeka as a recent major employer in Topeka, Payless ShoeSource Inc., announced a distribution center will close and that will cost that community as many as 550 jobs. Businesses restructure all the time but losing all of these jobs at one time should get the attention of this state’s leaders. This loss hurts.
Triple taxation of business revenue and assets by the state helps make Kansas an uncompetitive state. Business property taxes, business income taxes, and taxes on assets through the state’s business franchise tax are all significant burdens. Governor Sebelius has proposed cutting the state’s franchise tax by $7 million or about 15 percent. In addition, she has also proposed a small reduction in the state corporate income tax that would be paid for by eliminating some corporate income tax credits.
A surprisingly unified Republican caucus on Valentine’s Day had all house Republicans and about a 1/4 of house Democrats voting for a bill that would cut the business franchise tax by over $15 million and begin a three year phase. In three years, Kansas would join the other 30 some states without this tax. A number of legislators are also looking at trying to reduce property taxes and the tax burden on the elderly so broad based tax relief is provided too.
Kansas tax law discriminates against seniors receiving social security and private pensions. Kansas personal income taxes are owed by Kansans receiving social security and private pension income. Government pensions for federal, state, and local government employees are exempt from the state income tax.
This is unfair. This is another way that Kansas treats government and government employees better than taxpayers and private pension recipients. Bills are pending in both the house and senate tax committees that would add social security payments to the tax exemption. State Senator Peggy Palmer, R-Augusta, and Rep. Judy Morrison, R-Shawnee, are leading the push for this tax reform. A large number of their colleagues have joined them as co-sponsors in pushing for this $18 million tax cut.
Senate leadership has been telling legislators not to pass more than $15 million in tax cuts this year. That’s only about 5 percent of the revenue growth. The bipartisan senate leadership under Senate President Steve Morris, R-Hugoton, that got a huge $466 million state school spending hike enacted last year, wants to limit tax cuts.
Fiscal conservatives in the Kansas legislature want at least $60 million or 20 percent of the windfall revenue created by growth in the state’s economy returned to taxpayers.
Making the Kansas economy competitive is a critical, but tax reform is also a regional issue too. Democratic Governor Mike Beebe of Arkansas has just forced through that state’s Democratic controlled legislature a $319 million package of individual and business tax cuts to make Arkansas’ economy more competitive. Arkansas recently passed Kansas in population and is projecting a large $840 million state surplus this year.
The Republican Governor of Nebraska is pushing for over $240 million in across the board income tax cuts and an end to state death taxes to make Nebraska more competitive. This would follow in the footsteps of the large income tax cut and death tax abolition enacted last year by Oklahoma’s Democratic Governor and Republican legislative leadership in Oklahoma. Last year Texas with Republican Governor Perry and that state’s GOP controlled legislature passed over $11 billion in mainly property tax cuts.
Our neighbors are serious about becoming fiscally competitive. In Kansas, it looks like all too many leaders including the Democratic Governor and Republican Senate President are concerned about growing spending and throwing a few small crumbs to taxpayers. There is a real need at the statehouse to focus on this state’s economy by enacting significant tax cuts that will improve this state’s dismal fiscal climate.