State approves huge tax increase with budget

In the longest running annual session of the Kansas Legislature (113 days), the resulting new state budget approved will include one of the largest tax increases in the state's history.

State legislators on Friday, June 12, approved a bill to raise the state's sales tax to one of the highest rates in the nation (from 6.15 percent to 6.5 percent).

State legislators also approved a bill to increase the special extra tax on tobacco products (from 79 cents per pack of cigarettes, for example, to $1.29 per pack).

The new state revenue plan approved also contains a small tax increase to an estimated 281,000 business owners and 53,000 farmers who stopped paying income taxes on their profits under a 2012 policy promoted by Gov. Sam Brownback. The tax increase represents just about 11 percent of the tax break package they received, it was reported.

The two bills approved closed an estimated state budget gap of about $384 million for the new fiscal year starting July 1. It is estimated that Gov. Brownback will still be required to cut about $50 million from the state's projected expenditures to balance the budget.

The income tax cuts for an estimated 330,000 Kansas businesses, many of them limited liability companies, championed by Gov. Brownback since 2012, will continue mostly intact for another year, it was reported, despite the mounting state budget deficit that has resulted as the governor's predictions of an economic boom for the state has failed to occur so far.

Future income tax rate cuts, that were also part of the Brownback economic plan, were slowed down by the Legislature this year but not ruled out completely and could be restored if state revenues grow.

The tax agreement submitted to Brownback will alter state law designed to gradually shrink the state income tax to zero. The legislation freezes current rates for two years, drops the rate a bit in 2018 and makes future adjustments contingent on state tax revenue increases.

Overall, the state's nearly $15 billion budget is expected to increase by about $430 million, it was reported.