TOPEKA — With a conservative Legislature to support him, Gov. Sam Brownback laid out an aggressive agenda in his State of the State speech Tuesday, asking lawmakers to shift the tax burden from income tax to sales taxes.
The governor also proposes to change the way Kansas selects its Supreme Court and appellate judges — and to strip the courts of authority to tell the Legislature to spend more on schools.
He also wants to merge the state Highway Department and the Kansas Turnpike Authority into a single transportation agency.
“In an era where many believe America has lost its way, Kansas knows the difficult path that the nation must take,” Brownback said. “It is the well-worn sod tracks of hard work, thrift, patience, perseverance, faith, sacrifice and family that will get us to where we want our country to be. And as has been our tradition since before statehood, our place, Kansas, will not be timid in doing what is right, even if much of the nation takes another way.”
The vastly outnumbered Democrats in the Legislature accused Brownback of bringing national politics to Kansas. They accused the governor of pushing for irresponsible tax and education cuts that will harm the state for years to come.
“Two years of failed policies, internal Republican Party bickering and misguided values have left our state nearly bankrupt,” said Sen. Anthony Hensley, D-Topeka, in the Democratic response to the governor’s speech. “The state of Kansas stands with its toes hanging over its own fiscal cliff. The decisions we make in the next five months will determine whether Kansas steps forward onto sturdier ground, or crashes into a financial abyss.”
Brownback didn’t unveil many specifics of the bills and fiscal impacts tied to his vision, saving those details for the unveiling of his recommended budget Wednesday morning.
The key points in the governor’s plan:
• Tax rates: After lowering the state’s top income tax rate from 6.45 to 4.9 percent last year, Brownback now proposes lowering it again, to 3.5 percent. However, the trade-off is that an emergency increase in the state sales tax, passed three years ago and due to end in part this year, will become a permanent feature of the tax landscape.
Senate President Susan Wagle, R-Wichita, said lawmakers may be reluctant to keep sales taxes high, but she said the governor’s pledge to drive income tax rates to zero changes the political landscape.
“I think that’s a good trade,” she said.
House Speaker Ray Merrick, R-Olathe, called Brownback’s plan “a tough sell.”
Many House Republicans campaigned against the temporary sales tax increase, and many promised to let it expire.
“A lot of people said a promise is a promise, and I don’t know how you change that thinking,” he said.
• Education: Facing a recent court ruling that says Kansas education funding is unconstitutionally low, Brownback asked lawmakers to define what suitable funding is, a move that may require a public vote as early as this spring. And he said he’d back a plan to hold back third graders who can’t pass reading exams.
Barb Fuller, a Wichita School board member and former teacher, said she disagreed with the governor that the courts shouldn’t be involved.
“Bottom of line is he’s forgetting the three branches of government and the purpose for it,” she said. “It’s the checks and balances. They’ve been checked. They didn’t follow the rules, and they’ve been caught. They’ve been caught with their underwear down.”
• Spending: Even while cutting taxes, Brownback pledged to increase overall school funding – though not necessarily schools’ operating funds – and provide essential services for the neediest. Again this year, Brownback said he’d leave the state with a 7.5 percent ending balance, although it’s unclear how he’ll do that with deep reductions in revenues caused by tax cuts. Details are not scheduled to be released until a series of budget briefings Wednesday.
• Smaller government: Brownback gave few details of potential budget cuts, but he said he wants to somehow merge the Kansas Department of Transportation and the Kansas Turnpike Authority because they are an example of duplication in government. Historically, most state roads have been funded from tax monies while the turnpike has been supported by tolls. It was unclear whether the governor intends to tap turnpike income for other state highways.
• Judiciary: Brownback assailed the current “merit-based” process for selecting appeals and Supreme Court judges. He called on lawmakers to approve a plan to have judges for the high-level courts either elected directly by the people or appointed by the governor with Senate confirmation. “Either (system) passes the democracy test that the current system fails,” he said.
At present, the appeals-level judges are nominated by a committee made up of five lawyers elected through the state Bar and four non-lawyers appointed by the governor. The system was instituted in 1958 after an outgoing governor engineered his own appointment to the Supreme Court. Changing the system of selecting the Supreme Court would require a constitutional amendment and public vote, while the appellate court selection process could be changed by an act of the Legislature.
Brownback said he would create a “glide path to zero” on income taxes without cutting funding for education and public safety, a move that would please the Kansas Chamber of Commerce and small-government allies.
“This will create jobs and opportunities in our state that the current generation has left for Texas or Florida to find,” Brownback said.
That comes as the state is still trying to figure out how to accommodate the tax cuts approved last year, which included a full exemption from state income tax for farms, sole proprietorships, limited liability companies and corporations organized under Subchapter S of the federal tax code.
Lawmakers face a $267 million gap between the cost of funding current services and reduced revenues, and that’s assuming the state spends down its reserves. Extending the sales tax hike, as Brownback proposed at the outset of the legislative session last year, could generate $262 million per year.
Skeptics, including Democrats and some moderate Republicans, say Brownback’s expectations for big-time economic growth and smaller government gloss over the fact that reckless income tax cuts last year created a self-inflicted budget crisis that may force the state to leave its neediest behind.
And they say Brownback is putting the state on course for more deterioration after years of recession-spurred cutbacks and conservative reforms that have booted poor Kansans off the welfare roles and violated the state constitution by leaving schools underfunded.
“Governor Brownback has brought us to the edge of our own fiscal cliff,” Senate Minority Leader Anthony Hensley, D-Topeka, said in an early release of his planned response to Brownback’s speech.
Tax cuts Brownback already signed into law eliminated food sales tax rebates that give 380,000 qualified elderly, disabled and single-parent Kansans an average of a $156 rebate for taxes paid on food; homestead property tax refunds that give some renters an average refund of $302; and child care tax credits that gave an average of $132 refund to help care for kids.
Under existing tax cuts, someone making $250,000 a year will see a significant tax break, Hensley said, but someone making less than $20,000 could lose hundreds of dollars because of elimination of those tax deductions and credits.
“The governor is fond of saying that our state’s tax policy shouldn’t pick winners and losers,” he said. “But that’s exactly what his tax plan does.”