By Andy Marso

The House’s first attempt to approve a tax increase to close the state budget hole failed on a voice vote Friday, ensuring legislators will work overtime.

The chamber’s fractured Republican supermajority was on display during the debate on Senate Bill 270, which sought to find about $400 million in new revenue mostly by raising the state sales tax.

Rep. Marc Rhoades, a Republican from Newton who is one of the chamber’s foremost fiscal conservatives, spoke for the bill as the best of a host of unsavory options.

Rhoades said he favored raising consumption taxes rather than revisiting a 2012 plan that diced personal income tax rates and exempted about 333,000 businesses from paying any tax on “pass-through” income. He also warned that, with nothing going on in the Senate, if the House didn’t create some movement on taxes, the Legislature likely would be in session for another week — well past the 90-day mark.

“The longer we wait, the more people get tired and people get grumpy,” Rhoades said. “And when people get tired and grumpy, they don’t make the best decisions.” An amendment to include a rollback of the income tax business exemption also failed, after its proponents said they couldn’t support the underlying bill’s sales tax increase.

The debate on the tax plan soon tumbled into a disagreement among Republicans over whether taxes should be raised at all. That mirrored a discussion the party had in caucus earlier this week, with hardline anti-tax House members insisting that more could be cut from the state budget. “Our problem is not a tax problem,” said Rep. Mike Kiegerl, a Republican from Olathe.

“Our problem is a spending problem.” Other conservative Republicans said the budget committees had done the best they could to cut costs. Rep. John Rubin, a Republican from Shawnee, said he had told voters he would not vote to raise taxes except in an emergency. “I think we’ve reached that emergency this year,” he said.

Rep. Craig McPherson, a Republican from Overland Park, said it was clear there was not enough consensus on what to do with the tax plan.

He suggested sending it back to the tax committee until the solution became more apparent — and until the chamber knows the status of a fee increase on health maintenance organizations that has yet to pass.

That plan was expected to bring in about $60 million for the state by levying a fee increase on the three companies that administer the state’s Medicaid program and then using federal matching funds to repay them.

But the fee increase has been stalled in a health conference committee, where Sen. Mary Pilcher-Cook has declined to take it up because of concerns about the federal government and the increasing costs of Medicaid.

Sen. Jeff Longbine, a Republican from Emporia, said Thursday that to try to break the logjam, the fee increase proposal had been sent to the Senate Financial Institutions and Insurance Committee he chairs.

“I’m waiting on leadership to tell me what to do with it,” he said. In the absence of that bill, there was uncertainty in the House about just how much the tax proposal debated Friday would leave in the state coffers as a cushion for next year.

But McPherson’s motion to send the bill back to committee failed after Rep. Steve Brunk, a Republican from Wichita, said further House discussion would be useful to see where members stand, even if the bill did not pass. After it failed, House Speaker Ray Merrick, a Republican from Stilwell, called it “the process at work.” “Our job is to find a proposal that will gain support from 63 members, and that takes time, deliberation and consensus building,”

Merrick said in a statement released by his office. “We are going to find a solution, and solutions to difficult problems don’t come easily.” The legislative session began Jan. 12 and can only end if lawmakers pass a balanced budget. Ninety days later, that has not happened. In the past, each extra day of session has cost taxpayers about $35,000.

Rhoades said Friday the failure of the sales tax increase proposal would ensure that legislators work at least through next week and that some lobbyists were predicting a session that lasts until June 15 because of disagreements over tax policy. “It’s like everybody’s standing around the edge of a big round building,” he said, “and nobody’s willing to step into the middle.”

 

Andy Marso is a reporter for Heartland Health Monitor, a news collaboration focusing on health issues and their impact in Missouri and Kansas.