House postpones debate on tax-reduction plan

Today’s expected House vote on a plan to reduce income taxes and cap state spending has been rescheduled to Tuesday.

Speaker Mike O’Neal, R-Hutchinson, said the change in plans didn’t mean GOP leaders were having trouble rounding up votes for the plan. He said the debate was delayed to give Republicans more time to discuss the measure in caucus and to give the Appropriations Committee time to work some pressing budget bills.

“We did not have a great deal of time to caucus on the taxes this morning,” O’Neal said. “We wanted to make sure everybody had time to ask some questions.”

A similar measure passed the House last year but stalled in the Senate. Because O’Neal doesn’t want to see history repeat itself, several amendments will be offered to make the House bill more palatable to moderate Republicans in the Senate.

“Our overall goal is to get a bill into conference,” O’Neal said. “And what it looks like at the end of the day may be part of what the House wants, part of what the Senate wants, part of what the governor wants.”

The bill – House Substitute for Senate Bill 177 – reduces income tax rates for individuals and for certain types of small businesses. It also limits state revenue growth to 2 percent a year. Whatever revenue is collected above the cap would be used to continue to reduce income tax rates in future years.

Responding to criticism from moderate Republicans and Democrats, O’Neal said amendments would be offered to raise the spending cap to 3 percent and to tweak the tax rates so that Kansans in the lowest income tax bracket would pay less. As now written, the bill would require many Kansans with adjusted gross incomes under $25,000 to pay more.

Republicans will resist attempts to eliminate the spending cap. O’Neal said a spending limit is essential if the ultimate goal is to eliminate personal income taxes.

“I think we need to be prudent that we allow for a reasonable amount of growth,” he said. “I know this is debatable, but we want everybody to understand that until we get those tax rates down the ability for us to grow and have more revenue to spend on programs is going to be limited.”

Critics of the measure say there is no evidence that so-called supply-side economics works to stimulate growth. They worry that putting a cap on state spending will lead to a permanent budget crisis and force increases in local property taxes.

If the measure becomes law but fails to stimulate the Kansas economy, it could cost the state more than $850 million in revenue over the next five years, according to Department of Revenue projections.

The House tax plan also reduces the size of many tax credits and reductions. The earned income tax credit, which applies to low-income workers, would be cut in half.

In addition, the plan would temporarily hold back money scheduled to be transferred to the state’s new 10-year transportation program known as T-WORKS. Supporters of the program say taking what amounts to a loan from the transportation fund will jeopardize promised projects.

Also on Monday, supporters of the Earned Income Tax Credit called a press conference urging lawmakers to retain the credit. Gov. Sam Brownback proposed eliminating it. House Republican tax plans also would eliminate it or scale it back.

“The EITC has been studied and studied and studied showing positive outcomes for families,” said Sister Therese Bangert, an advocate for the poor. “Low-and-moderate income working families pay a larger percentage of their limited incomes for taxes. The refundable earned income credit acknowledges this.”

“Without the EITC, I may never have received the opportunity to get up on my own two feet,” said Tosha Jansen-Conkey, a 31-year-old, single mother living in Topeka. “It is precisely because of the aid provided by the EITC that I can proudly say I am a working mother of two with an amazing job as a legal secretary.”

Jansen-Conkey said she had been living in a homeless shelter with her children until the credit provided her enough money to finish paying off a van and make a deposit on a mobile home.