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Kan. governor proposes sales, tobacco tax hikes

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TOPEKA, Kan. (AP) — Kansas Gov. Mark Parkinson on Monday proposed raising taxes on groceries, clothing, cigarettes and other consumer goods to eliminate a projected budget shortfall.

In his State of the State address, Parkinson asked legislators to increase the state’s sales tax to 6.3 percent from 5.3 percent, but only for three years, starting in July. Kansas imposes the tax when consumers buy food, clothing, household items and most products, but not on gasoline or services.

The Democratic governor also asked the Republican-controlled Legislature to boost tobacco taxes to national averages. Kansas’ cigarette tax would increase by 55 cents a pack, from 79 cents to $1.34, while tax on other tobacco products would quadruple to 40 percent.

Those changes would raise $378 million during the fiscal year beginning July 1, almost enough to cover a projected budget shortfall approaching $400 million.

Other changes and shifting of funds around state government would allow Kansas to restore some previous cuts in aid to public schools, higher education and social services. The state also could reverse a 10 percent cut Parkinson imposed in November in payments to health care providers for services under the Medicaid program.

“Now is the time to protect what we have,” Parkinson said in remarks prepared for a joint session of the Legislature. “Now is the time to stop cutting education, public safety and aid to the elderly and disabled.”

Parkinson’s proposals are likely to face strong opposition. Many Republican legislators argue any tax increases will hurt struggling families and businesses — and slow the state’s economic recovery.

House Speaker Mike O’Neal, a Hutchinson Republican, called raising taxes “shortsighted and counterproductive.”

“We do not intend to raise taxes on individuals or businesses already struggling under the economic downturn,” O’Neal said in the GOP’s response to Parkinson’s address, prepared before the speech. “Raising taxes now, in the middle of a severe recession, would mean losing taxpaying businesses that are already struggling to survive.”

Democrats and advocates for education and the needy had focused on reversing business tax breaks granted in recent years and eliminating exemptions to the sales tax. No specific proposals had emerged, but items exempted include bingo games, Kansas Lottery tickets, farm machinery and supplies purchased by religious groups.

Parkinson told legislators he is “open to all ideas.”

“What I am not open to are crippling cuts,” he said. “Our ancestors worked too hard to build what we have. Now is our turn. It is a fight worth waging.”

Under Parkinson’s sales tax proposal, the levy would drop from 6.3 percent to 5.5 percent in 2013. Money raised from the 0.2 percentage points of extra tax that remains would go to highway projects.

Parkinson and other Democrats have said for weeks that the state did enough budget-cutting in 2009.

The state expects to spend $651 million less in general tax revenues in its current budget than in it did two years ago, a drop of nearly 11 percent.

Federal stimulus funds helped some, but belt-tightening occurred across state government. Kansas closed three minimum-security prison units last year and cut back on highway maintenance. Public schools had 3,700 fewer teachers and other staff this fall. The state recently stopped paying for dental care for some seniors.

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Associated Press Writer John Milburn contributed to this report.

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On the Net:

Kansas governor: http://www.governor.ks.gov

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