KS Senate drops tobacco tax hike from budget proposal
The 55-cent per-pack tobacco tax increase is out.
Kansas Senators have retooled a tax hike package ahead of a key floor debate aimed at erasing the state’s $500+ million budget deficit.
Last week, the Senate Ways and Means Committee endorsed a $434 million tax package that contained a 1-cent state sales tax increase, the tobacco tax hike, and the elimination of the business tax deduction.
The new tax package has a smaller price tag - $350 million in new revenue.
Last month’s terrible revenue collections - $65 million below estimates – prompted lawmakers to take a second look at the tax package and its accompanying budget. But politics were just as much a reason: the Senate is looking to craft a tax package that has some hope of passing – not just in the Senate but in the House too.
Getting rid of the tobacco tax could help win support of lawmakers living along the border, worried that tobacco shoppers will head to Missouri (or Oklahoma) to enjoy lower taxes. Lowering the overall size of the tax hike helps too.
So if the state’s deficit is even bigger, how did the Senators reduce the size of the tax package? Because their plan now relies on more federal funds - $185 million worth, including new funds for Medicaid.
Look for the full Senate to take up the budget and tax increases perhaps Wednesday.
Lawmakers in the House expect to debate their own budget proposal later today.
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