Industry groups, ex-budget director urge Kansas lawmakers to reject alcohol tax increase

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TOPEKA, Kansas — Republican Gov. Sam Brownback's plan to raise alcohol taxes to help balance Kansas' budget is so unpopular that even one of his former budget directors publicly urged state lawmakers to reject it Wednesday.

Former Budget Director Steve Anderson joined business owners and beer and liquor industry lobbyists in opposing the measure during the first of two days of hearings by the House Taxation Committee on proposals from Brownback to boost both alcohol and tobacco taxes. The hearing came shortly after House Speaker Ray Merrick said he opposed the tax increases.

Brownback's proposal would raise the tax on packaged alcohol sold at liquor stores and to club and restaurant owners to 12 percent from 8 percent. It's included in a bill that also would raise the cigarette tax to $2.29 a pack from 79 cents.

The state faces a projected shortfall of nearly $600 million in its budget for the fiscal year that begins July 1 after legislators aggressively cut personal income taxes at Brownback's urging in 2012 and 2013 to stimulate the economy. Anderson, who served as Brownback's budget director from January 2011 until August 2013, backed the income tax cuts.

"First, we should look at cutting spending, and I don't think we have done enough on that," said Anderson, who was representing the Kansas Policy Institute, an anti-tax, small-government think tank that's influential with GOP legislators.

Merrick, a Stilwell Republican, took the same tact during a brief interview in expressing opposition to the governor's proposals — or any tax increases. Brownback's proposal to raise alcohol taxes also is opposed by the Kansas Chamber of Commerce, the state's largest business group.

The alcohol-tax increase would raise about $27 million during the next fiscal year, and boosting tobacco taxes, about $81 million, for a total of $108 million. The Kansas Association of School Boards offered a limited endorsement, saying it backed plans to raise new revenues for public education.

The only other support for the alcohol-tax increase during the hearing came from former House Taxation Committee Chairman Richard Carlson, now the legislative liaison for the state Department of Revenue.

Carlson said Brownback's proposals would help balance the budget while keeping taxes on "productivity" — income — relatively low. He said Brownback's administration will work with the GOP-dominated Legislature on "the compromises we need to."

But critics of the alcohol-tax increase said it would hurt both consumers by raising their prices and businesses by increasing their costs. They predicted that in the Kansas City metropolitan area, consumers would flock to Missouri businesses.

"We have a lot of loyal customers," said Jennifer Vogel, who with her husband owns two liquor stores in Kansas City, Kansas. "But I feel like there's only a certain level you that you can push them to stay loyal, compared to pricing."


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