Lawmakers try again on tax plan despite veto

Despite Gov. Laura Kelly's veto of a previous effort, Kansas lawmakers sent her another tax reduction plan with many of the same provisions.

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State News

May 1, 2024 - 2:31 PM

Sen. Caryn Tyson, R-Parker, and Sen. Virgil Peck, R-Havana, discuss with House negotiators details of a tax reform bill adopted by the House and Senate and forwarded to Gov. Laura Kelly. Photo by Kansas Reflector screen capture from Kansas Legislature’s YouTube channel

TOPEKA — The Kansas Legislature passed a tax reduction plan early Wednesday that closely mirrors the package vetoed by Gov. Laura Kelly and includes property tax relief, elimination of sales tax on groceries, an income tax exemption for Social Security benefits, an increase in the standard deduction on tax filings, and transition to a two-bracket income tax system.

House Bill 37 would lower personal income tax rates below current law, but rate changes were slightly less generous than under a plan the Democratic governor had rejected. On Monday, the Senate refused to follow the House’s lead and override Kelly’s veto. On the rebound, the Senate voted 25-9 for the revised tax overhaul bill consuming a projected $2.3 billion in revenue over the next five years. The House expressed greater appreciation for latest plan and passed it 108-11.

On the final day of the 2024 regular session of the Legislature, weary Republican and Democratic legislators predicted Kelly would also find this bill unsustainable for the state treasury. In advance of that vote, the governor’s chief of staff warned she would veto the bill and call the Legislature back to Topeka in a couple weeks.

“This bill is not going to become law,” said Sen. Tim Shallenburger, a Baxter Springs Republican who voted for the latest incarnation of tax reform. “It’s time we go down to the second floor and try to figure out what in the world the governor will accept. If we can’t accept it, we go home and do nothing. If we can, we ought to do it.”

The governor has repeatedly vetoed tax bills presented by the GOP-led Legislature likely to create revenue problems for state government within three to five years. Those financial projections assumed legislators would sidestep the politically challenging task of adopting budget cuts.

Senate Minority Leader Dinah Sykes, a Lenexa Democrat who voted against the latest bill, said other packages floated in the Capitol during Tuesday’s marathon workday might have earned the governor’s signature. She said the bill passed by lawmakers guaranteed a special session in May dedicated to the search for common ground on tax policy.

“I think this has been an exercise in futility,” said Sykes, who cringed at the GOP’s interpretation of fiscal responsibility. “Republican leadership sent yet another plan to the floor that they knew was dead on arrival.”

‘For our constituents’

Kelly said the bill that she vetoed would carry a five-year price tag of $2.5 billion, which was too expensive — especially when combined with other tax legislation passed by the Legislature. She said it would be irresponsible for the state to burn through reserves and create a state revenue shortfall by 2029.

Sen. Caryn Tyson, a Parker Republican and chair of the Senate’s tax committee, said lawmakers ought to place interests of Kansas taxpayers above personal political considerations by accepting the $2.34 billion version.

“This is for our constituents,” Tyson said. “Not for the people in this building.”

House Minority Leader Tom Sawyer, D-Wichita, sought to rally House Democrats to the bill. He said the House and Senate negotiators made a good-faith effort to reduce the overall cost of the program and make effective use of the state’s surplus cash reserve.

With the clock ticking on the session, Senate and House Republicans scrambled to revise details of a tax bill while fully aware the governor could call them back to the Capitol during campaign season if they chose not to adopt sustainable tax cuts.

In the tax negotiations, Sen. Tom Holland, D-Baldwin City, confronted Rep. Adam Smith, the Weskan Republican and chairman of the House tax committee, about the state’s long-term financial outlook.

“When you look at the cost of the fiscal note in the out years, you feel comfortable that you can hit that on the budget?” Holland asked.

Smith said revenue was only one side of balancing the budget. The other option would be to slash expenditures, he said.

“If we force this tax relief into our state law, it forces us to be more responsible on the budget,” Smith said. “I wish I could guarantee more than that, trust me, but we need to manage our budget as well.”

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