Budget battle or playing into Brownback’s plan

Ultra conservative Kansas Gov. Sam Brownback isn’t the little engine that thought he could. No, he’s the diesel locomotive barreling down the tracks at full speed.

So when Brownback, in his State of the State speech last January, presented his budget plan that included sweeping and dramatic changes in the state’s tax code, he likely thought the tracks ahead of him were clear of all legislative clutter given the fact conservatives control the Kansas House and are just a few seats shy of controlling the Senate.

For years, conservatives fought, and usually lost to, moderate Republican and Democratic governors in trying to create legislation to diminish government and pass conservative agenda items. And now, finally, standing before them was a governor wanting to shrink government, reduce spending, reduce taxes, improve the business climate especially for small businesses, and put money back into the pockets of Kansans.

Brownback is the kind of governor conservative legislators have wanted in office for years.

But instead of blindly supporting Brownback’s budget plan, a large number of House and Senate conservative leaders instead raised their eyebrows and now just aren’t trying to slow the Brownback Express down but actually derailing it on several issues. Brownback’s proposal would make permanent the sales tax hike of two years ago to 6.3 percent. Legislation by the House Friday, Feb. 13, would allow the “temporary” hike designed to raise money for public education and social services to expire and drop to 5.7 percent on Jan. 1, 2013.

Brownback, who wants the state to be revenue neutral, also wants to immediately redo the state’s tax system, which includes eliminating special tax breaks such as the mortgage interest deduction as well as reducing income taxes. His plan would be $90 million short of his revenue neutral goal.

The House version would be $41 million short of revenue neutral but would continue many of the current tax breaks, including the mortgage interest deduction, and instead of getting rid of an earned-income tax credit for the working poor of the state, the House plan would reduce it by half in 2014.

Next week, the Senate Tax Committee will work on its own reform package. One concern of several senators is the governor’s plan to limit growth in state government expenditures to 2 percent a year. It’s a plan along the line of the TABOR Law passed in Colorado in 1992 and later repealed. They say such a plan, which is endorsed by the House, would eliminate flexibility and cause reductions in crucial state programs.

TABOR (a taxpayers bill of rights), limits the amount of money that state legislators can spend to the sum of inflation plus population growth. Inflation is measured by the consumer price index. A TABOR’s growth limit applies to the previous year’s allowed spending or tax revenue collections, whichever is less. Any revenues collected that exceed the TABOR limit must be refunded to taxpayers. State lawmakers can’t raise tax rates or add new taxes without voter approval.

For example, if inflation increases by 3 percent then the state needs 3 percent more dollars to have the same kind of purchasing power of the previous year. And if the state’s population increases by 3 percent, then, theoretically, the government would need an extra 3 percent in revenue to service the increased population.

After more than a decade, Colorado revoked its TABOR after it found that although TABOR did limit government growth, the public sector’s share of the overall economy declined sharply as well and the people still demanded that government to fund all the programs they had become accustomed despite having less revenues.

TABOR did result in more than $3.25 billion being returned to taxpayers between 1997 and 2001 as a result of tax revenues collected in excess of TABOR limits. But during an economic downturn, the fact TABOR was required to return all the money and not put a part in a rainy day fund, created a budget havoc for the state in trying to fund public education and social programs.

In 10 years, it caused Colorado’s ranking in teachers’ salaries to plummet from 30th to 50th, funding for higher education dropped 19 percent, and saw low-income children without health insurance to increase 15 percent.

It will be interesting to see what kind of budget comes out of this session. I think it will be one of the most conservative budgets to come out of Topeka in several years. Perhaps asking for the moon and settling for a solid conservative budget for fiscal year 2013 is what Brownback planned all along knowing that what he was asking would be more than what his ultra conservative colleagues would give him.

So instead of derailing the Brownback Express, they could be increasing its power for next year.

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