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Estimates mean tax debate isn't over

4/23/2013

Sometimes no surprise is the surprise. Remember last week, when we told you that a certain group of intense legislative-watchers were awaiting the pronouncement of the state's top fiscal gurus of the Consensus Revenue Estimating Group assessment of what last year's massive tax cuts would do for the state budget?

Sometimes no surprise is the surprise. Remember last week, when we told you that a certain group of intense legislative-watchers were awaiting the pronouncement of the state's top fiscal gurus of the Consensus Revenue Estimating Group assessment of what last year's massive tax cuts would do for the state budget?

Well, we all wore clean shirts and were ready, but that pronouncement -- key to wrapping up spending and taxing bills this legislative session -- yielded essentially no surprise.

No appreciable rise in state revenue, no plummeting state revenue, just about what the CREG predicted in November, and on which Gov. Sam Brownback based his budget for the fiscal year that starts July 1.

Last November, CREG predicted the drop in income taxes that would occur as a result of last year's tax cut bill. It was dramatic, all told about $1 billion less than was received in the previous fiscal year. Dramatic, but last fall's estimate was essentially confirmed by last week's estimate.

It's apparently too early to tell whether those tax cuts mean expansion of the state's economy, more jobs and more wage-earner income taxes flowing into the state treasury. It might happen in the next year or two, but lawmakers have to put together a budget and tax plan by mid-May for the fiscal year that starts July 1.

So, no real news (oh, about $20 million more revenue expected, but in a $5.5 billion state general fund budget, $20 million is chump change) for lawmakers to react to when they reassemble May 8 to wrap up the budget and tax policy.

And the no-surprise estimate means that the battle over continuation of the penny sales tax -- which expires June 30 and the death of which is computed into the CREG estimate -- will continue.

Had revenues been down more than expected, the sales tax might have been seen as the only way to balance the budget without a new round of severe spending cuts. Had revenues risen significantly, Brownback would have been applauded, and ironically, his sales tax continuation might have lost steam. But, it's still too early to tell just how this tax cut business will work out, and so the governor wants the sales tax and legislators who campaigned on letting it expire don't.

So, no news is news in that the end-of-session tax/spend battle continues with little in the way of new information for each side's bargaining strategy. It means that what might have been a simple wind-down to the year's Legislature won't happen.

That means that every issue that involves dollars and every issue that relates to the governor's continued effort to reduce income taxes continue, and everything from K-12 spending to higher education spending to social services to how much money can be pulled from the Kansas Department of Transportation is still in play.

The news: That nothing has changed.

Look for a tough wrap-up session.

Syndicated by Hawver News Co. of Topeka, Martin Hawver is publisher of Hawver's Capitol Report. To learn more about this nonpartisan statewide political news service, visit www.hawvernews.com.

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