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Kan. gov-elect’s tax plan aims to lure outsiders

SHARE Kan. gov-elect’s tax plan aims to lure outsiders

TOPEKA, Kan. — States often dangle tax breaks to lure companies from other states. Kansas' incoming governor said Tuesday that he's working on "aggressive" proposals to do the same thing for individuals.

Gov.-elect Sam Brownback said during an interview with The Associated Press that he's working on a plan to exempt people from state income taxes for 10 years if they move from another state to a Kansas county that has lost population over the past two decades.

He also said he's working on a plan to have the state and its counties buy down the student loans of college graduates moving to shrinking communities.

The incoming Republican governor said he'll outline the details of both proposals after Jan. 10, when the Legislature convenes its annual session. His transition team has started working on proposals for overhauling state's Medicaid program, which covers health care for the poor and disabled, in hopes of containing its costs, Brownback said.

Brownback has said previously that he believe the state needs to reduce individual income taxes to improve its economy, but he acknowledged Tuesday that ongoing budget problems will prevent broad cuts during his first year in office. Instead, he said, he'll propose targeted tax relief to help rural communities.

"It's what I believe we need to do grow our state and grow the population of Kansas, particularly in these areas that have seen huge declines," Brownback said.

Brownback made his comments the same day outgoing Gov. Democratic Gov. Mark Parkinson's administration announced a $45 million package of incentives for Hawker Beechcraft Corp. so that it won't move aircraft manufacturing operations from Kansas. Also, the U.S. Census Bureau released figures showing that while Kansas' population grew over the past decade, 32 other states had higher growth.

The Republican-controlled Legislature's top two leaders were immediately receptive to the income tax proposal. Senate President Steve Morris, of Hugoton, said lawmakers haven't discussed such an idea but deemed it "very interesting."

And House Speaker Mike O'Neal, of Hutchinson said, "I like the idea."

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said the idea is worth considering but added, "At first blush, I'm not sure how effective it will be."

O'Neal already has said the House is likely to debate tax proposals next year, and he and other Republicans have talked about using tax cuts to stimulate the economy. A few Republicans have advocated the repeal of a sales tax increase approved this year at outgoing Democratic Gov. Mark Parkinson's urging to prevent further budget cuts.

But legislative researchers have said the gap between projected revenues and existing spending commitments is approaching $500 million for the fiscal year that begins July 1. Brownback said the need to balance the budget will prevent more than targeted tax initiatives next year, though he still hopes for broader tax cuts in the future.

The governor-elect argues that giving people who move to Kansas an income tax break doesn't cost the state anything because those individuals aren't paying taxes in the Sunflower State now. He said his plan will allow counties to opt out, acknowledging that people who already live in Kansas may have some heartburn with it — just as Kansas companies are sometimes frustrated with incentives used to lure businesses from other states.

Brownback said he thinks the people most likely to take advantage of the incentives are people who grew up in the state but moved away and are looking for reasons to return.

"It's more based off of states that have no state income tax, and how much they attract people," Brownback said.

He acknowledged that his plan to buy down outsiders' student loans if they move to Kansas will come with a cost that he'll propose to share between the state and counties. But he said it's designed to attract younger talent.

"This is how we settled the state," he said. "We told people, 'Here's 160 acres. If you're person enough and have got enough courage, go out and get it.'"

Brownback was less specific in discussing his ideas for changing Medicaid, which states administer under federal rules, with the federal government providing a majority of funds. He said options include having individuals have their own health savings accounts and moving away from the traditional model of paying health care providers fees for the individual services they provide.

Governors and legislators in both parties often have been frustrated with rising Medicaid costs, which spike when the economy slumps. They've argued that federal rules limit how far they can go in cutting benefits or limiting eligibility for coverage — even if they could find the political will to do it.

The spending of the state's tax dollars on Kansas' social services has jumped 58 percent in the past decade to more than $1.2 billion, even with federal economic stimulus funds helping support those programs.

"We're going to be working on Medicaid," Brownback said. "I want it, at the end of the day, to have a customer who is happier with the changed structure at a reduced cost."


Kansas governor-elect's office: http://www.brownbacktransition.com/

Kansas Legislature: http://www.kslegislature.org