by Andy Marso, KHI News Service
The House is expected to vote on a plan to return some 330,000 Kansas businesses back to the income tax rolls, possibly as soon as Friday afternoon.
A tax conference committee made up of House and Senate negotiators agreed to push the measure forward for a floor vote as the Legislature tries to close a budget gap, adjourn the session and head back to the campaign trail.
Rep. Mark Hutton, a Wichita Republican who joined the conference committee for the specific proposal, has pushed for more than a year to make the business income taxable again. It was exempted in 2012 as part of a tax package Gov. Sam Brownback spearheaded that also included large reductions in individual income tax rates.
Hutton said the latest proposal would be a “structural change” that would restore fairness to the tax code and break the state out of a cycle of low revenue collections and budget deficits.
But he and the other negotiators admitted that passage would not eliminate the tough decisions the Legislature and Brownback face in fixing the immediate budget crisis, because the business income would not become taxable again until Jan. 1, 2017.
“It isn’t going to unilaterally solve our situation, no,” said Rep. Marvin Kleeb, an Overland Park Republican who chairs the House Taxation Committee.
But Kleeb said it could serve as a “hybrid” solution that combines increased tax revenue with immediate spending cuts.
The Brownback administration has outlined three budget-balancing options for legislators that include taking almost $200 million from highway projects and then selling an ongoing tobacco settlement, postponing payments to the public employee retirement fund or making across-the-board spending cuts to state-funded areas, including education and Medicaid.
Brownback has threatened to veto any rollback of the business tax exemption. Sen. Les Donovan, chairman of the Senate Assessment and Taxation Committee, said he would meet Friday afternoon with the governor to discuss that and other issues.
The Kansas Chamber of Commerce, a preeminent lobbying force in the Statehouse, also has opposed any effort to scrap the business tax exemption. Mike O’Neal, the president of the Chamber and one of the orchestrators of the tax cut when he was House speaker, said Friday that position remained firm.
Donovan, a Republican from Wichita, said the Senate negotiators accepted what has become known as the “Hutton plan” for rolling back the tax exemption on the condition that the House vote on it first.
“Our folks are OK with your proposal,” Donovan said. “We know it puts the burden on your shoulders to get it passed.”
Rep. Tom Sawyer, a Democrat from Wichita, said he would support the bill as the top Democrat on the tax committee but couldn’t speak for the rest of his caucus.
An exchange he had with Donovan during the negotiations presaged concerns some House members have about voting for a tax increase only to see it die in the Senate.
“If the House does pass it, what are its prospects in the Senate?” Sawyer asked.
“We will vote on it,” Donovan replied.
Kleeb said the bill probably has less chance of passing in the Senate, but if the House votes it through decisively that might influence the other chamber.
Regardless, he said representatives on both sides of the issue might relish a chance to cast a vote on it before the August primary and November general elections.
Those who favor the bill can tell their constituents they tried to include the business tax as part of the budget-balancing measures, and those who favor leaving the exemption in place can burnish their pro-business bona fides.
“We need to have that vote on the House floor,” Kleeb said.
he nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.
– See more at http://www.khi.org/news/article/house-expected-to-vote-on-bill-reversing-business-tax-cuts#sthash.4Q6kB40T.dpuf