There have been few big plans to fill the state’s immediate
$400 million budget shortfall. But one idea, first mentioned
in 2010 and quietly revived recently, was to bring back the
state sales tax on utilities. Depending on the amount of levy
and its application, a tax on residential water, electric, and
natural gas bills might generate $170 million or more annually.
It is also likely to generate heat. We have been without a
sales tax on utilities for 36 years because citizens had grown
weary of it; abolishing the levy was important for John
Carlin’s successful campaign for governor.
*
THREE MONTHS after taking office, on April 17, 1979,
Gov. Carlin signed into law the bill that removed the state’s
three percent sales tax on utility bills, saying he was pleased
that the state treasury permitted him to carry through on a
campaign pledge.
Carlin had won a close race against incumbent Republican
Gov. Robert Bennett, helped in no small way by making high
utility costs an issue. Carlin promised to remove the tax on
utilities, and Bennett wouldn’t. In short order, Bennett came
to be seen as permitting – if not favoring – high utility bills
by declining to remove the tax on them.
Carlin, a Democrat, had come under sharp criticism from
Republicans because he declined to ask for removal of the
tax in his January address to the Legislature. The governor
said he was not convinced that the treasury could stand to
lose the estimated $22 million generated by the tax. He
changed that position as state revenues continued to exceed
the estimates, and by March decided that the state could
afford to remove the tax.
The bill met scant resistance in the Legislature once Carlin
had given it his blessing. It went to the governor’s desk on
April 7.
*
THE ACT was significant, coming at the time of America’s
first energy crisis and the after-shock of an OPEC oil embargo;
fuel prices and energy costs continued to escalate. The
bill meant a universal lowering of bills for electricity, natural
gas, water and telephone use. A news story about the bill
signing noted that if costs for the four utility services totaled
$100 a month, it meant a $3 tax break; for a $200 bill, $6 in
tax relief – a lot, in an era when $3 was worth nearly $10 in
today’s economy.
Inflation since 1979 is more than 225 percent, and we
spend much more for utilities today, especially electricity,
as consumers snatch up more power-consuming appliances,
devices and toys.
Moreover, the Kansas’ 6.15 percent state sales tax is
double the rate in 1979, compounding the cost of resurrection.
Six percent of, say, $500 in bills for gas, electric, water
and phones, is $30. Over a year, $360 – nothing to sneeze at.
Especially in Kansas, where weather is often extreme, and
summer can bring bills of $300 or more for air-conditioning
alone.
*
WHEN HE signed legislation removing the tax, Carlin said,
“This bill signifies an awareness by both the governor and
the Legislature that our energy problems, specifically the
high cost of energy, will be with us for a long time and that
we must take whatever action we can to alleviate the economic
burden felt by energy consumers.
“By removing the sales tax on residential utilities, we will
be addressing the problem in a small but very significant
way,” Carlin said. “It will mean a direct and immediate
reduction in the utility bills which Kansans pay, and will
remove one of the regressive elements in the Kansas tax
structure.”
And someone wants to bring it back?
– JOHN MARSHALL
