Kansas House derails governor-backed tax legislation overwhelmingly approved by Senate

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Deal offered three-year, $1.4 billion in property, sales and income tax reductions

TOPEKA — The Kansas House on a voice vote decided Thursday to send a three-year, $1.4 billion tax cut package back to House and Senate negotiators, overriding a call from House Speaker Dan Hawkins to pass the bill and defying guidance of Gov. Laura Kelly.

Hours earlier the Kansas Senate seized upon the compromise bill in an attempt to resolve the most vexing issue of the 2024 legislative session by voting to pass a tax reduction package Kelly promised to sign into law.

The property, sales and income tax legislation was borne of behind-the-scenes talks among House and Senate Republican leadership and the Democratic governor’s office. House Bill 2036 cleared the Senate on a vote of 38-1.

Hawkins, a Wichita Republican, acknowledged that it wasn’t as good as the bill unanimously passed last week by House. But, he said, the House had to make a decision.

“Are we going to decide because it doesn’t come up to what we love the most, a week and a half ago, that we’re going to trash it and we’re gonna stop everything and we’re gonna go home without a tax bill?” Hawkins said.

The alternative, according to Hawkins, was to accept the House-Senate conference committee bill that would guarantee “pretty much everybody out there” received tax relief.

“I would bet before we put our heads down on our pillows tonight, if we send it back, you know what the headline is gonna be? House scuttles tax relief for Kansans. Yeah, you get to try to message that one. Because I know what the press does. They always use the most salacious headline that they can get,” Hawkins said.

House Minority Leader Vic Miller, a Topeka Democrat, said the House passed its plan 123-0 with the expectation that it would be treated with respect by the Senate.

“It was totally disrespected. It was never considered, it was never discussed. And we are entitled to at least have them act like they care what our position is,” he said.

Miller, who has filed to run for the Senate, then said: “Why anyone would ever want to serve in that chamber is beyond me.”

Rep. Stephen Owens, a Hesston Republican who made the motion to send the bill back to conference, said Kansans “deserve better” than the bipartisan compromise presented to the House and Senate. Kansans deserve “true savings in their pocket,” he said.

“Let’s be real. We heard that this isn’t a bad tax relief bill. We heard about making sure we get to go home. We heard about headlines,” Owens said. “Well how about this headline: House fights for more tax relief that Kansans deserve. Or, maybe it’s past time the House finally takes a stand. Folks, today is that day. Let us rise up and be united and send a message that Kansans deserve more.”

Senate lauds bill

In the Senate’s view, the tax-policy logjam created in January by the governor’s veto of the GOP’s tax bill had been resolved through negotiation on components of HB 2036. Part of that shift came about after Senate President Ty Masterson of Andover gave up on his strategy to move Kansas from a three-tier income tax system to a single-rate income tax system, a change criticized by Kelly and others as being overly generous to wealthy taxpayers.

Masterson said prolonging that debate could jeopardize passage of popular tax provisions such as exempting Social Security benefits from the state income tax and ending the state’s sales tax on groceries July 1 rather than Jan. 1.

“I don’t think there is anybody in this room who doesn’t know how much I value the single-rate structure. That is, by far, the best structure for our state,” the Senate president said. “However, I understand the process and where we are. I came to the realization there are at least 14 people in this chamber so committed to that (three-tier) tax structure they weren’t going to let the people have the Social Security piece. This truly is a compromise plan in every sense of the word.”

He concluded he couldn’t get the 27th vote in the Senate to override another gubernatorial veto of a single-rate bill. Pressure to reach a deal escalated as the clock wound down to Friday’s adjournment of the Legislature.

Democratic Sen. Jeff Pittman of Leavenworth said he voted for the bill because it delivered for constituencies across the state. He said the three-year plan offered $600 million in income tax relief, $300 million in property tax reductions, $400 million in tax benefits for elderly residents, $54 million in tax credits for child and dependent care as well as $67 million in relief by terminating the state sales tax on food six months early.

“This is fiscally responsible as we look at the budget,” Pittman said. “This is in the range, I think, we can sustain over the next three years.”

Stakes are high

Kansas politicians were handed a rare opportunity during the 2024 session to devote a portion of an estimated $4 billion surplus to reducing the tax load. There was no shortage of ideas.

Sen. Robert Olson, an Olathe Republican who endorsed a tax plan offered by Kelly, said he was impressed with the bill presented to the House and Senate for ratification. He welcomed the child-care tax credit, an increase in the standard income tax deduction and the lower property tax for K-12 schools. The Social Security piece of the bill was long overdue, he said.

“These seniors have paid their taxes on that when they earned that money,” Olson said. “They shouldn’t have to pay taxes twice on the Social Security.”

Under the bill, the state’s 2% sales tax on groceries would be repealed July 1. The Social Security tax would vanish in the 2024 tax year. The upper tier of the state income tax would fall from 5.7% to 5.5%, while the lower tiers of 5.25% and 3.1% would remain unchanged. The standard deduction for a married couple filing jointly would grow from $8,000 to $10,000.

On Thursday morning, the governor met with members of the House Democratic caucus to urge them to support the compromise bill. At that point, there appeared to be more opposition to the legislation in the House than in the Senate.

Sen. Tom Holland, a Baldwin City Democrat and the only senator to oppose the tax compromise, said he didn’t like the process relied upon to select elements of the deal. He objected to the influence of special-interest organizations, including the Kansas Chamber, on legislators and the governor.

He said the bill “wildly misses the mark” in terms of reducing residential property taxes. He indicated the reduction for owners of a $250,000 home would amount to $141 annually.

“I know we can kind of take a step back and say, ‘Well, it’s a tax bill. Not everybody is happy, so I guess that’s a good work product.’ Have you all looked at your property tax bills for the past five years and how much they’ve gone up? This is kind of half a Band-Aid where the sore is still festering,” Holland said.

The quest by special-interest lobbyists and legislators to lower the top individual income tax rate amounted to a “quixotic journey to stupidity,” Holland said, because that served interests of higher-income Kansans rather than the W-2 wage earners.

The Senate and House tax negotiators have cobbled together a series four or five other bills that bundled provisions considered by the Legislature. Votes on those bills were expected before lawmakers adjourned Friday for three weeks, a break that leads to the veto-session starting at the end of April.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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