State challenges lie ahead

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March 8, 2010 - 12:00 AM

Legislators “have spent the past two months wasting taxpayers’ money” by not dealing with state budget needs, Rep. Bill Otto said here Saturday afternoon.
Otto is eager to see revenue generated to restore Medicaid funding and keep the state’s public schools from having to make further cuts in budgets that have been cut drastically. Without restoration of full Medicaid funding, he fears some nursing homes will be forced to close and more physicians opt to not treat lower-income patients.
House leadership is to blame, he said.
“The leader (Mike O’Neal, R-Hutchinson) is hard-pressed to lead anything,” Otto said.
Also, many Republicans in leadership positions, including the chairman of the Taxation Committee, have signed pledges not to raise taxes, and “we’re in trouble,” Otto said, questioning whether there is any set of circumstances that would lead to new revenue for the fiscal 2011 budget.
Sen. Derek Schmidt has some hope.
“The Senate’s dynamics are different” from those in the House, Schmidt said. “We have more flexibility, although it is a challenge to get things through the (Republican) caucus, our chamber and then the House. We have to keep the 125 members of the House in the loop.”
Ultimately this year’s budget, facing another $71 million revenue shortfall from flagging February income, will be balanced as will the fiscal 2011 budget, which will authorize state expenditures from July 1 until June 30, 2011, he said.
“All we have to do,” he said with slight sarcasm, “is reach agreement that will get 21 votes in the Senate, 63 votes in the House and the governor’s signature.”
While offering a balanced budget for the fiscal year could be possible without a general tax increase, Schmidt said he thought the probability was that some combination of further cuts and tax increases and tweaks would occur.
Gov. Mark Parkinson, a Democrat, took legislators to task Friday and said he wasn’t agreeable to additional cuts in funding for K-12 or higher education, Schmidt said.
What may occur, Schmidt opined, is, “We will build consensus on the least bad options.”

SCHMIDT mentioned tax increases being floated by Senate Republicans that Parkinson embraced Friday:
— A raise in the sales tax of something less than the 1 cent Parkinson proposed in his State of the State address in early January.
— Reinstating the recently repealed estate tax.
— Reversal of past business tax breaks.
— Increases in tobacco and alcohol excise taxes.
— Elimination of sales tax exemptions.
Schmidt predicted no resolution likely would be reached until late in April and probably early May.
A sales tax increase would be close to a magic bullet, the legislators said, but cautioned those among the 40 who attended Saturday’s forum and expressed support for a higher sales tax that constituents statewide were fractured on the issue.
“My constituents are running two-to-one against it,” said Schmidt, whose district includes all of Chautauqua and most of Montgomery counties, which border Oklahoma and whose residents fear Oklahoma’s lower sales tax would erode business in the two counties.
The same is true in Johnson County, he said.
“About 25 percent of the sales tax collected in Kansas comes from Johnson County,” which is next door to what would be businesses with lower taxes in Missouri, Schmidt observed.
Otto, representing all of Allen and parts of Woodson, Coffey, Anderson and Franklin counties, said his constituents favored a sales tax increase by a four-to-one margin, “until the church tax issue came up.”
A proposal, which died about as quickly as it was offered, would have made churches liable for sales tax, and “when that happened support for a tax increase fell to about 50-50.”

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