Legislature's revenue plans not sitting well with business owners

Tuesday, February 9, 2010

Plans by the Kansas Legislature to generate revenue for the next state transportation system are not popular with some area business owners.

Brenda Elsworth, the chief operations officer for Pete's of Erie, Inc., which owns and operates stores in the Pump 'N Pete's franchise, said the proposals, which would raise about $4 billion over a 10-year period for the next CTP, could potentially be harmful for businesses and the economy.

"I'm not just concerned because I sell gas," Elsworth said. "I'm concerned for businesses and consumers in general."

An interim transportation study committee that consists of members of both legislative chambers, as well as some non-legislators, has forwarded two plans to the Kansas House and Senate that would raise money to fund the next CTP. Both plans involve changes to the state motor fuels tax and would not take effect until 2013.

The first plan cuts the motor fuels tax by 5 cents per gallon and applies the state sales tax to motor fuels. The plan also includes vehicle registration fee hikes of $20 for cars and $100 for large trucks such as semis. The fees would be phased in over two years. When combined with additional bonding that would begin this year, the plan could raise $4.4 billion.

The second plan raises the motor fuels tax by 7 cents, which would jump to more than 15 cents if inflation rises over a certain level. This plan, combined with the bonding, could raise $3.7 billion. Both plans would also index the motor fuels tax to bring it more in line with inflation.

Sen. Bob Marshall, R-Fort Scott, who is on the committee that offered the proposals, said committee members created the plan after looking at four funding proposals by T-LINK (Transportation -- Leveraging Investments In Kansas), a 35-member committee that traveled the state seeking input on the future of transportation in Kansas.

If approved, the increases in vehicle registration fees would take effect this year and would be staggered over a two-year period. The proposals for the motor fuels tax would not take effect until 2013, Marshall said.

The passage of either funding plan is dependent on the outcome of Gov. Mark Parkinson's recent proposal to increase the state sales tax from 5.3 to 6.3 percent for three years to help close a $400 million gap in the state budget, Marshall said.

"It depends on what happens with the governor's proposed tax increases," he said. "If the sale tax increase proposal goes through, we'll have a hard time getting it through the House and Senate this year. But we still have the process of going through and creating and funding a CTP even though we know there might not be one. We've still got to do the work."

Lawmakers have said that the state will fall $61 million short for the preservation of its current roads in 2011, without some type of added revenues to keep up the state's transportation system.

One concern that Marshall said he has with the funding plans is the possibility they would have a negative effect on business and economy in the region.

"I think it will hurt SEK more than the middle of the state," he said. "Fort Scott, Pittsburg, and along the border shared with Missouri. You'll have more people buying things in Missouri and it could make it worse."

In a letter to the Tribune, Elsworth said the proposals that would make changes to the motor fuels tax are unfair to consumers in that they would call for the addition of sales tax on every gallon of fuel purchased, resulting in "double taxation."

"Consumers currently pay Kansas fuel excise tax of 24 cents per gallon on gas and 26 cents per gallon diesel," she said in the letter. "The sales tax addition would be paid on the excise tax resulting in double taxation."

Marshall said he only views the proposals as "just additional taxes on motor fuels, not double taxation," and that the revenue would be used to fund new road and highway projects in the CTP and would create other benefits.

"The additional taxes would be for building new highway projects, not old road projects ... and it's a jobs producer," he said.