DALLAS – Kansas legislative negotiators have postponed talks on resolving differences between competing two-year budget bills until the release next month of the official state revenue estimate for fiscal 2014 and 2015.
The reconciliation committee of six lawmakers met briefly Monday but won’t begin working out the differences until the Consensus Revenue Estimating Group meets in early April to revise its official revenue outlook for the next two fiscal years.
The House and Senate adopted separate budget bills last week. The spending plans differ in how to cut the state income tax and whether to let a temporary sales tax expire as scheduled.
Each annual budget provides for $14 billion of spending funded with $6 billion of state general fund revenues and $8 billion of other revenues and federal aid.
The House budget allows a temporary 1% state sales tax to drop to a lower rate July 1 as scheduled, but the Senate plan continues the full tax indefinitely to help pay for a series of annual cuts in the state income tax rate.
The Senate’s plan to keep the sales tax at the full 6.3% rate to avoid cuts in state services will prevail in the budget negotiations, Senate President Susan Wagle, R-Wichita, said.
“Budget reality will set in at some point,” she said.
The state sales tax rate was raised to 6.3% from 5.3% by the 2010 Legislature to bolster the general fund as revenues fell in the recession. The tax was to drop to 5.7% at the beginning of fiscal 2014, with the remaining 0.4% of the 2010 increase dedicated to a 10-year highway program financed in part with $1.1 billion of revenue bonds.
The House rejected a proposal by the taxation committee to divert for two years the sales tax revenue earmarked for Kansas Department of Transportation’s effort.
The diversion was rejected by the House with a voice vote after Transportation Secretary Mike King said the loss of $382 million of anticipated revenues would cause significant delays in the highway program.
The Senate budget would keep the sales tax rate at 6.3% to bolster revenues as the top income tax rate is whittled to 3.5% in fiscal 2017 from the current 4.9% as proposed by Gov. Sam Brownback.
Unlike the specified annual tax cuts in the Senate bill, the House tax cut plan links reductions in the income tax rate with increases in state revenues. Rates would decline only if tax collections are up 2% in the previous fiscal year.
The Senate budget expects surpluses of $430 million at the end of fiscal 2014 and $310 million in fiscal 2015. The House bill sets the ending surpluses at $500 million in 2014 and $420 million in 2015.
The proposed budgets are based on the revenue panel’s official November 2012 estimate of $5.46 billion in fiscal 2014 revenue, down from $6.17 billion in fiscal 2013 with the expiration of the higher sales tax rate and tax cuts by the 2012 Legislature.
