DALLAS — After going overtime, Kansas lawmakers wrapped up their work Sunday with approval of a $14.3 billion budget for fiscal 2013 that cuts general fund spending by 3% from fiscal 2012.
The planned 90-day session was extended for more than a week as House and Senate negotiators worked out the differences in competing spending plans, reaching a compromise shortly before midnight Saturday.
Gov. Sam Brownback is expected to sign the budget bill, along with a tax-cutting measure that the Department of Revenue said would reduce state tax collections by $231 million in fiscal 2013 and up to $2.5 billion a year by fiscal 2018.
Brownback said he was pleased that the budget leaves the state with a $464.5 million surplus going into fiscal 2014. Recent budgets have not included the mandated 7.5% ending balance required by the state constitution.
“The 2012 Legislative session came down to a simple question — do we want to grow the government or grow the economy?” Brownback said. “We took a giant step in the right direction this year.”
The budget reduces general fund spending next year by 0.7% from fiscal 2012 and overall spending by 3%. The fiscal year will begin July 1.
Base state aid to school districts will grow $40 million, or an additional $60 per student.
The tax bill cuts the top individual income tax rate to 4.9% from the current 6.45% on Jan. 1, 2013. The measure eliminates the income tax liability of almost 200,000 small businesses.
The state sales tax rate will drop to 5.7% from 6.3% in July 2013. The sales tax was raised temporarily in 2010 to cover a potential revenue shortfall.
Lower taxes “will create tens of thousands of jobs, and make our state the best place in America to start and grow a small business,” Brownback said. The plan will create an additional 23,000 jobs in Kansas through 2020, he said.
Brownback and Republican leaders had originally endorsed more moderate tax cuts, but the governor said he would sign the current measure after the Senate declined to consider a compromise offered by the House.
Senate President Steve Morris, R-Hugoton, supported the budget but opposed next year’s income tax cuts. He said public education should have received more money. “If we can’t rectify some of the issues with that when we come back next year, there will be huge problems,” Morris said.
House Minority Leader Paul Davis, D-Lawrence, called the tax plan “reckless” and said it would upset the state’s financial stability. Massive cuts to education and other state services will be required as revenues decline, Davis said. The reduction in revenues will make the 2013 Legislature’s job even harder if the promised economic boost from the tax cuts does not materialize, he predicted.
“The moment Gov. Brownback signs his tax plan into law, Kansas will be on a collision course with a massive deficit, making this budget nothing more than an empty promise,” Davis said.