By Gene Meyer
March 31, 2010

(KansasReporter) TOPEKA, Kan. – Many Kansas lawmakers have “reluctantly agreed” that some form of a tax increase will be needed to balance the state’s budget, Gov. Mark Parkinson declared Wednesday.

Even so, he conceded that there remains strong resistance to tax increases in the Kansas House, where Appropriations Committee Chairman Kevin Yoder, an Overland Park Republican, and Republican House leaders have proposed to freeze education spending at current levels without replacing $172 million in federal stimulus dollars that will end next year and to make deep selective cuts in other areas of government without raising taxes.

But that approach would hurt schools, Medicaid and other programs that already have been savaged by what is becoming four years of declining state revenues, the governor said.

“In my view, that would be irresponsible,” he said.

House Speaker Mike O'Neal, a Hutchinson Republican, said many legislators remain adamant in their view that raising taxes in a faltering economy would hurt Kansas. O'Neal and other leaders say the state's problem is a spending problem and that recession requires bringing that spending in line with revenues, not raising taxes.

"I'm disappointed that the Governor thinks we need more taxes," O'Neal said Wednesday.

"There is still a great deal of interest in funding a budget without raising taxes," he said. "Some conservative Senators are looking at some of the things we've done too,"

Parkinson, a Democrat, initially ran into strong opposition in January when he first proposed a temporary one-cent state sales tax increase and higher taxes on tobacco and alcohol products to avoid further cuts to schools and other programs during the fiscal year beginning July 1.

Senate budget writers since then have been drafting outlines of an approximately $13.8 billion budget proposal that would require an estimated $364 in tax increases, but none of those have won majority votes of the committees studying them.

Efforts to resolve an impasse between the two approaches have gone nowhere since January and, for the first time in memory of long time Capitol veterans, Kansas legislators adjourned shortly after midnight Wednesday morning for a month-long recess without agreeing on a budget plan of any kind. Debate resumes when lawmakers reconvene April 28.

“That leaves us a very heavy workload when we come back,” said Senate President Steve Morris, a Hugoton Republican.

The problem, said Morris, is that some 85 percent of the state’s budget, or all but about $800 million is devoted to education or Medicaid programs that cannot be cut.

Slicing an expected $300 or $400 million to balance the budget out of what’s left, “would kill the government,” Morris said Wednesday. “I think the majority realizes what has to be done.”

Both sides say the issues will clarify April 16, when the state’s Consensus Revenue Estimating Group releases its next set of revenue projections that lawmakers and the Governor have agreed to work from.

Expectations are that those numbers may show an approximately $500 million hole to plug. That estimate is based on a combination of state revenues that the Kansas Legislative Research Department calculates trail previous projections by $122 million plus a $368 million spending increase for 2011 contained in the budget Parkinson proposed in January.

How much the $368 million increase might be shaved is difficult to say.

About $118 million of the increase is money Kansas is required to spend to participate in Medicaid and other federally supported human caseload programs, Legislative Research analysts reported when they crunched numbers for the House Appropriations proposed budget. Another $36 million of the increase is needed to pay interest on Kansas debt and to maintain the best credit ratings the state can get.

The remainder – a proposed $172 million increase in school funding to replace stimulus money and $55 million now to reduce the cost of public workers pension fund obligations much later – may be potential tug-of-war fodder between the competing House and Senate plans.