Gov. Mark Parkinson proposed a $380 million tax increase Monday night during his State the State address to the KS Legislature. This includes a 1 cent increase in the state sales tax and an additional $69M in tobacco taxes. If these tax increases are implemented, the sales tax would go from 5.3% to 6.3% for the next 3 years while the tobacco taxes will shoot up 55 cents to $1.34 per pack. After 5 recent budget cuts of over $1B, the Governor stated that there is no other way to make up for an estimated $400M shortfall without drastically impacting services such as education, safety and aid to the elderly and disabled.
The last increase to the sales tax in Kansas was back in 2002. There was also an expiration on that increase which the legislature voted to ignore. Chances are slim that this proposed tax increase would be allowed to expire by future lawmakers. With regard to the tobacco taxes, any increase would lead more Kansans to cross the border into Missouri where taxes are significantly lower or to purchase their tobacco products on Indian reservations.
Any tax increases are going to be a tough sale in the Republican led legislature. “Raising taxes in a recession is exactly the wrong policy,” said Sen. Jeff Colyer, an Overland Park Republican. At the urging of educators in the state, many Democrats favor closing exemptions and reversing previous tax breaks as an alternative to raising taxes.
Given the sharp drop in revenue that the state is experiencing, the budget is expected to be the primary focus this legislative session.