The Associated Press

TOPEKA, Kan. — A debate over raising taxes appears inevitable next year for Kansas legislators because of the state’s ongoing budget problems.

It’s most likely to focus first on eliminating exemptions to the state’s 5.3 percent sales tax, then on rolling back tax breaks legislators granted in previous years. It’s possible the debate could broaden further.

The Republican-controlled Legislature will reconvene in January after a year of spending cuts and other adjustments to keep the budget balanced. Democratic Gov. Mark Parkinson is promising to make nearly $260 million in changes by the end of this month to prevent a deficit for the fiscal year ending June 30.

But legislators will have to approve a budget for the next fiscal year, and they’re already having to close a projected shortfall for fiscal 2011. Even lawmakers who strongly oppose tax increases — and question whether revenue-raising measures can pass — don’t believe the debate can be avoided.

“I think you’re going to have to have the discussion,” said Senate Ways and Means Committee Chairman Jay Emler, a Lindsborg Republican.

Four previous rounds of cuts and other adjustments this year have left the state with a current, fiscal 2010 budget that includes $5.6 billion in spending financed with the state’s general tax revenues.

But state officials issued a new financial forecast last week that projected state revenues at only $5.4 billion, requiring Parkinson’s fifth round of adjustments. Furthermore, the same officials predicted the state’s total general revenues would drop to less than $5.2 billion in fiscal 2011.

Federal stimulus dollars temporarily have lessened some of the state’s woes, but even with that help from Washington, the state faces trimming aid to public schools and reducing spending again in other parts of the budget.

Educators are one obvious potential source of pressure on legislators to raise new tax dollars. Aid to public schools consumes a little more than half the state’s general revenues. The state has backed away from commitments it made only three years ago — under pressure from Kansas Supreme Court rulings — to boost education spending each year.

“Most of what we’ve added in terms of funding in recent years, that’s now at risk, was put in to drive student achievement, and, unfortunately, if we have to reduce dollars, that’s where it’s going to come back out of,” said Mark Tallman, a lobbyist for the Kansas Association School Boards. “We’re going to be advocating raising revenue.”

But Parkinson — whose active support is crucial if any proposal is to pass — has sent mixed signals.

He said during an Oct. 30 news conference that Kansas had to avoid “crippling” budget cuts and was “very close” to being forced into considering higher taxes. But five days later, he told the Lawrence Journal-World that he hopes to get through next year without a tax increase.

Last week, Parkinson spokesman Seth Bundy declined to discuss whether Parkinson will propose revenue-raising measures in January.

But others already are floating ideas, and they start with closing at least some of the dozens of exemptions to the sales tax.

The most far-reaching proposal is from Ed Hammond, president of Fort Hays State University, who pitched the idea of overhauling the state’s tax system during a late-October tour of the state. He argued the state should eliminate all exemptions — a move that would have Kansas adding the sales tax to services, utility bills and prescription drugs — to raise money. But he’d offset those changes with others, such as lowering the overall sales tax rate and eliminating the corporate income tax, to keep Kansas business-friendly.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said the state needs to review its exemptions. He said some should stay, specifically those for utility bills and prescriptions, but argued that advocates for others should be forced to justify them. Even Emler, who’s wary of raising taxes, said legislators ought to examine the exemptions to see if a few amount to luxuries.

Supporters of closing exemptions argue that such a step isn’t a tax increase because it doesn’t raise the sales tax rate but only closes loopholes.

But other legislators are skeptical, noting that many exemptions were designed to help nonprofit groups such as the Girl Scouts or stimulate business activity.

For example, Senate Majority Leader Derek Schmidt noted that farmers don’t pay the sales tax on new equipment. Eliminating the exemption means a farmer buying a $400,000 combine would owe the state more than $21,000 in sales tax.

“That’s going to look remarkably like a tax increase, because it is,” said Schmidt, an Independence Republican.

Hensley and some fellow Democrats also have pointed to a myriad of tax breaks legislators approved starting in the 1990s, when the economy was more robust. Over time, they note, those breaks have saved Kansans at least several billion dollars, with the bulk saved by businesses.

But House Speaker Mike O’Neal said such tax breaks also stimulated economic activity, which created jobs and generated revenues for the state. He said the state may be only months away from starting an economic recovery and shouldn’t tinker with its tax codes.

“We just need to hunker down and see this recession through,” said O’Neal, a Hutchinson Republican. “Then our businesses can rebound.”

And O’Neal and his fellow legislators already are marshaling their arguments for a debate on tax issues because they sense they can’t avoid it next year.