Rep. Terry Calloway (R-Pittsburg) has rarely been as upset as he was after a House Tax Committee meeting on Monday.



During that meeting, the committee advanced on a voice vote a Republican tax plan that involves taking a $320 million “loan” from the state transportation funds and reducing the number and size of many tax credits in order to reduce state income taxes.

Rep. Terry Calloway (R-Pittsburg) has rarely been as upset as he was after a House Tax Committee meeting on Monday.

During that meeting, the committee advanced on a voice vote a Republican tax plan that involves taking a $320 million “loan” from the state transportation funds and reducing the number and size of many tax credits in order to reduce state income taxes.

“It chaps me to think about this,” said Calloway, who said he ensured that his vote against the plan was recorded. “We can’t put a budget together that can support a transportation program, but harp that we can’t touch other things. Highways are the economic end for Southeast Kansas.”

The plan which passed through on Monday is a take off of Gov. Sam Brownback’s tax reform plan.

According to information from the Associated Press, the plan would reduce the state sales tax to 5.7 percent from 6.3 percent in July 2013, a promise that lawmakers made in 2010 when the rate went up to balance the state budget, but that Brownback had been proposing to keep to offset other state tax cuts.

Brownback’s plan would have made certain earnings from small businesses exempt from income taxes. The tax plan that emerged from committee would phase in that change over six years.

Revenue figures reported by the Associated Press on Thursday indicated that the only group of taxpayers that would see an average increase in their income taxes under both plans would be those with an adjusted gross income of under $25,000. Furthermore, revenue estimates say the plan could cost the state more than $850 million over the next five years, potentially creating future budgt issues.

Rather than eliminate certain tax credits and deductions, the House plan reduces the size of many of them. The earned income tax credit, which goes to poorer workers, would be cut in half under the House plan.
Some of the more controversial aspects of the House plan involved amendments and how to pay for the income tax cuts.

Calloway, for example, is upset that the tax plan raids the funding for T-WORKS with a promise to pay it back. In effect, the plan calls for freezing the funds (which come from a 0.4 percent sales tax, for two years at 2013 levels, which would mean taking $351 million out of the project, to support spending on other projects. The plan calls for repaying the plan by $50 million for every year past that until the end of the program.

“It starts putting the money back as a promise where they say we’ll take out $150 million over two years, then we’ll put back $50 million over each year’s budget. We’re borrowing from the transportation fund,” Calloway said. “We can’t expand the industrial park without access to the transportation funds. This is ridiculous to continue to look at these plans that nibble away at the most vital ingredients we need to boost Southeast Kansas.”

Rep. Caryn Tyson, R-Parker, said she attached an amendment to the bill that would eliminate refundable tax credits.

“It’s an amendment to all refundable tax programs so they are now not refundable,” Tyson said. “People can’t get back more than they paid on.”

As an example, a worker due a credit of $500 with a tax liability of just $100 normally receives a $400 refund. That would no longer be the case under Tyson’s amendment.

She said that her amendments would likely save close to $97.5 million, which she believes could be put back into the transportation coffers. But no amendment was made, she said, as to what to do with the additional revenue created by her amendment.

“The tax bill that came out, there were some amendments that made it somewhat improved, but it still has controversial sections. I think will be addressed on the House floor,” said Tyson, another member of the Tax Committee, who did not have a recorded vote on moving the tax plan out of committee.

The plan now goes before the Kansas House as a whole, and Tyson said she hopes that the opponents and proponents of the plan can come to some sort of agreement.

“We need Highway 69,” Tyson said. “I know how inportant that portion of U.S. 69 is, and I hope we can work with them, and that they have the resources that they need, provided that it doesn’t break the back of taxpayers. Hopefully, something can be worked out between the two groups.”

Andrew Nash can be reached at andrew.nash@morningsun.net or by calling 231-2600 ext. 140.