Legislature left with poor choices

Income tax cuts contribute to shortfall

By The Mercury

It’s good that Gov. Sam Brownback is increasingly aware that the income tax cuts he and the Republican-dominated Legislature approved last spring will contribute to acute funding problems in the coming year.

Less good, however, are indications that the governor will try to persuade lawmakers to revisit the proposal of keeping the statewide sales tax at 6.3 percent.

The Legislature raised that tax from 5.3 percent to 6.3 percent under Gov. Mark Parkinson’s leadership. The three-year increase was an emergency measure to generate money to keep vital state programs and services from suffering deeper funding cuts as a result of the economic downturn.

Legislators from both parties now are cool to the idea of extending the tax, as they should be. The state should honor its promise to allow the tax to drop to 5.7 percent in July.

The trouble is, Gov. Brownback and fellow Republicans, in their zeal to cut income tax rates on Kansans and to exempt the owners of 191,000 businesses, have painted themselves — and the state — into a corner.

Simply put, they cut income taxes too much too quickly. The tax cuts, which are to begin taking effect next year, are projected to be worth $4.5 billion over six years. The cuts will contribute to a projected shortfall of $295 million by July 1. The governor already has told state department heads to pare their budgets by as much as 10 percent. Unlike the shortfalls during the economic downturn, which were the result of economic conditions, this shortfall stems directly from the recent tax cuts.

Keeping the statewide sales tax at 6.3 percent would generate about $250 million, offsetting most of the projected shortfall. But allowing the sales tax, whose burden falls disproportionately on the less well off, to protect income tax cuts whose benefits will fall mainly on the well off, is fundamentally unfair.

Rather than cancel the promised drop in the sales tax or expect state departments whose budgets still haven’t recovered from the worst of the recession to further trim their spending, the governor ought to be lobbying legislators to either reduce or postpone the income tax cuts. They are what is causing the projected shortfall and that is where lawmakers should begin to address it.

That will be a hard sell, in part because the governor wants to continue to reduce individual income taxes and ultimately eliminate them. That would be fine as long as the state can get along without the revenue. But as the immediate shortfall demonstrates, rather than accelerate the cuts, Gov. Brownback should slow down a little.

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