TOPEKA — A session-long standoff between Gov. Laura Kelly and state legislators over changes in tax policy reached its inevitable climax Thursday when the governor vetoed a bipartisan tax plan as promised.
The Democratic governor will call lawmakers back to Topeka for a special session.
“I recognize that Kansans desperately need tax relief. I will be working with legislative leaders to come to a compromise, forging a bipartisan tax cuts plan that will responsibly provide tax relief for all Kansans without threatening our state’s future fiscal stability,” Kelly said. “Next week, I will be announcing the date of a special legislative session so we can deliver comprehensive, sustainable tax cuts. If we all work together, an affordable, bipartisan tax plan can be passed in less than a day.”
The governor had threatened from the start of the year to call a special session if lawmakers refused to pass a tax plan she endorsed.
Instead, Republican leadership tried and failed to impose a single-rate income tax, known as a “flat tax,” earlier in the year, but couldn’t override the governor’s veto. The plan would have gifted a windfall to the state’s wealthiest wage earners.
Republicans then pivoted to a more modest, two-tiered income tax rate — packaged with other income and property tax cuts favored by the governor — and won the support of House Democrats, who viewed it as the best deal they were likely to get for constituents during an election year.
But Kelly — jilted by GOP leaders’ unwillingness to consider Medicaid expansion and fearful of the costly ramifications of a big tax cut package — vetoed that plan, as well, and proposed her own package of tax cuts. Once again, Republicans ignored the governor and adopted legislation that was nearly identical to their previous failure.
So she followed through on her promise and vetoed Senate Bill 37.
“I have given the Legislature several roadmaps to fiscally responsible tax cuts since January,” Kelly said. “Instead, they played political games with reckless tax policies, and I vetoed them. I said irresponsible tax policies would lead to a special session.”
Senate President Ty Masterson, R-Andover, said the governor’s “shifting reasons for vetoing tax relief have now morphed into the absurd, especially when the state she governs is awash
with billions in surplus money.”
“She has opted for the ‘my-way-or-the-highway’ approach and is calling us in for a needless and costly special session,” Masterson said. “Rest assured, we will act as quickly as possible and give her yet another attempt to sign real tax relief.”
The governor also vetoed two other tax bills. House Bill 2097 would have provided about $16 million in annual tax credits for film development, nonprofit theaters and employers who hire National Guard members. House Bill 2096 resurrected a tax break long sought by Genesis Health Clubs, whose owner, Rodney Steven, is a major donor to Republican legislators. The Genesis tax break was bundled with property tax credits and income tax relief for veterans.
“To favor a specific business, a tax abatement scheme was floated to put taxpayer dollars into that business’ pocket at the expense of local government services,” Kelly said. “That’s wrong. Taxpayer dollars should not be diverted to political donors under the guise of tax cuts.”
Lawmakers now will have to suspend their reelection campaigns and return to Topeka to produce a plan the governor is willing to sign. They also could entertain other bills on any other subject matter, but it would mean starting from scratch with a new piece of legislation. All bills introduced over the past two years were voided when lawmakers adjourned the regular session.
Republicans are expected to try to hold the line on provisions included in SB 37, which cleared the House by a 108-11 margin and the Senate 25-9. But the prospect of another veto may force them to compromise with the governor.
