Senate Passes New Tax Plan

The Senate voted  24-15 Thursday night for a new tax plan that offset part of the income tax reductions approved this year, but also provides future income tax rate cuts through 2018.  Assuming state revenues grow at projected levels, the plan would slowly drop the state general fund ending balance from 10 percent this year to less than 1.0 percent in 2018.

The bill would impose a 6.25 percent sales tax rate beginning July 1, rather than dropping to 5.7 percent under current law, but would drop the sales tax on food to 4.9%.  It also phases out most income tax deductions. The original plan supported by the Senate and Governor kept the tax rate at 6.3 percent.  House negotiators have proposed 6 percent, but that has not actually passed the House.

Revenue projected under the bill would fund the budget agreement reached earlier this week for the next two years, Fiscal Years 2014 and 2015, which essentially provides level funding for school district state aid.  The budget projections assume the state will add $52 million to $54 million for school finance in 2016, 2017 and 2018, equal to about a 2.0 percent increase in the base budget per pupil at current enrollment levels.

The plan was placed in a House bill, HB 2084, which means the House could vote to concur in the Senate version, possibly today.  Or, the House could vote to "non-concur" and the send the bill to conference committee, where negotiations between the House and Senate leadership have stalled. Also, House Speaker Ray Merrick, R-Stilwell, could rule the bill "materially altered," and not subject to a vote to concur.

If the House approves the Senate plan - a major question - the final step could be a voting on the state budget, which has been placed in SB 171 and will be considered first by the House.  A background issue that continues to simmer is an attempt to block further implementation of the Common Core academic standards and Next Generation Science Standards.  A key factor may be the number of Legislators willing to link their vote on the budget based on action for or against the standards.

The House is to convene at 9:30 a.m. and the Senate 10:30 a.m.