By The Mercury
December 13, 2016
It’s easy to find fault with a plan advanced last week by a coalition of entities to confront the state’s financial crisis, particularly if the proposals include tax increases.
The Brownback administration pounced quickly. No sooner had the Rise Up Kansas Coalition released its suggestions than Gov. Sam Brownback’s spokeswoman, Melika Willoughby, dismissed them as coming from “liberal special interest groups” and said they would harm low-income Kansans.
Even if that were true, the Brownback administration would be hard pressed to sell Kansans on all the progress the state has made in the last six years under the conservative special interest groups that have held sway over state policy.
The Rise Up Kansas Coalition consists of the Kansas Center for Economic Growth, Kansas Action for Children, the Kansas Organization of State Employees, the Kansas National Education Association and the Kansas Contractors Association. Some of these groups are more liberal than others, and they don’t always see eye to eye on state issues.
But they’ve come up with a plan — no, it’s not without flaws — that could raise $820 million a year beginning next July. Given the $350 million budget shortfall this fiscal year and the projection of a shortfall approaching $580 million next year, the coalition’s ideas ought to be welcomed.
Highlights of the plan include closing the income-tax loophole for LLCs, limited liability corporations, that has exempted more than 300,000 business owners and farmers from paying any state income taxes.
As Duane Goossen of the Kansas Center for Economic Growth, said, “We made a dangerous gamble on a tax plan without any evidence that it would work, and we lost.” Mr. Goossen is less partisan than most about tax policy; he was state budget director for 12 years, serving both Republican and Democrat governors.
Income taxes would remain the same for low and moderate-income Kansans. Residents earning up to $15,000 would continue to pay 2.7 percent, and those earning from $15,000 to $40,000 would still pay 4.6 percent. However, the plan would restore a third tax bracket; Kansans earning more than $40,000 (or couples earning more than $80,000) would pay 6.45 percent.
The coalition expects these changes to generate about $820 million a year. The coalition also calls for an 11-cent per-gallon increase in the motor fuels tax; that would generate almost $200 million for the highway fund, in part to offset money siphoned from that fund in recent years.
That’s defensible, certainly, but would be felt disproportionately by lower-income Kansans. To help soften that blow, the coalition also proposes trimming the sales tax on groceries from the present 6.5 percent to 5 percent.
The Rise Up Kansas Coalition’s proposals are no panacea, but they’re not intended to be. Their purpose is to help restore financial stability to the state general fund. Given the lack of other serious proposals, the very least they provide is a place to start the debate.