Government & Politics

Kansas tax debate will drag on another day as House calls off vote

Representatives and lobbyists congregated Monday outside the Kansas House chamber shortly after recess was called for further negotiations on a tax bill. The Legislature’s 2015 session will last at least 110 days — the longest in history — after the recess was called. Negotiators from the House plan to meet with their counterparts from the Senate on Tuesday morning.
Representatives and lobbyists congregated Monday outside the Kansas House chamber shortly after recess was called for further negotiations on a tax bill. The Legislature’s 2015 session will last at least 110 days — the longest in history — after the recess was called. Negotiators from the House plan to meet with their counterparts from the Senate on Tuesday morning. The Associated Press

The Kansas Legislature’s 2015 session will last at least 110 days — the longest in history — after the House on Monday canceled an expected debate on raising taxes.

Instead, negotiators from the House plan to meet with negotiators from the Senate on Tuesday morning.

The Senate on Sunday passed a bill that would increase sales and other taxes, generating more than $420 million in revenue. That bill, coupled with other legislation already passed, would fill the budget hole and leave a projected $75 million at the end of fiscal year 2016.

Gov. Sam Brownback said Monday morning that he would sign the bill if the House passed it. But House members said they did not want to rush to approve a massive tax bill without studying it.

The bill could have a difficult time in the House. Representatives from across the political spectrum have expressed objections.

Rep. Dan Hawkins, a Wichita Republican, called it a “piece of garbage.”

The bill would increase sales taxes from 6.15 percent to 6.55 percent beginning July 1. The sales tax on food would drop to 4.95 percent in July 2016.

It would eliminate most itemized deductions and a food sales tax credit for poor families this year. It would eliminate most sales tax exemptions in four years unless a state commission approves keeping them.

The bill also would increase the cigarette tax by 50 cents a pack to $1.29.

The state originally faced an $800 million deficit in the budget, in large part because of 2012 income tax cuts. Half of that was closed with fund transfers and other budget moves. Sunday’s tax bill would fill the rest of the gap.

“People have looked at 40, 50 iterations of a tax bill. … It’s time to get this done. It’s past time,” Brownback, a Republican, said Monday. “This is a good plan and it’s been thoroughly discussed. And it’s time to move it forward, because I will sign it.”

Brownback said that he had called lawmakers Sunday from the hospital where his first grandchild was born to urge them to support the bill. “My wife was complaining about that,” he said.

Brownback continued to push back against the notion that Kansas’ budget problems have been caused by tax cuts he ushered into law in 2012. He blamed spending instead.

“I don’t think it’s fair to discount the cost side,” he said, pointing to the costs of shoring up the state’s pension system.

The bill largely protects an income tax exemption for business owners established in 2012. That is a sticking point for some House members, said Rep. Marvin Kleeb, an Overland Park Republican.

Other major policy changes — ones that would require local governments to seek voter approval to increase property taxes and put public dollars toward scholarships for children attending private schools — have also drawn scrutiny.

The House took Sunday off. When it returned Monday, House leaders indicated they wanted time to vet some of the policies before bringing the bill to the floor.

“There’s some policy here that needs to be discussed,” Kleeb said. “Our leadership is not interested in this work-all-night, let’s-wear-people down sort of approach to getting policy passed.”

Bare minimum

The bill passed with 21 votes in the Senate — the bare minimum. The minimum in the 125-member House is 63 votes, which could be tough to get.

Democrats, who hold 28 seats, are universally opposed to the bill, while Republican factions remain split.

“I don’t know if we have 63,” said House Majority Leader Jene Vickrey, a Louisburg Republican. “I do know that we need to make sure that we understand a bill that has this many different components, some of which are new and we have not discussed.”

Rep. Kristey Williams, an Augusta Republican who previously served as mayor, said she doesn’t like how the bill affects local governments. She plans to oppose it.

Some GOP lawmakers oppose any tax increase. “Any day I can vote against a tax increase is a good day for me,” said Rep. Pete DeGraaf, a Mulvane Republican.

Asked whether there is a plan B if House members vote down the bill, Senate President Susan Wagle, a Wichita Republican, said the governor might have to make automatic budget cuts called allotments. She said the House needs to pass the Senate’s plan or offer an alternative.

Senate Majority Leader Terry Bruce, a Hutchinson Republican, said the bill was the best plan the House was going to get and that the chamber should approve it.

But some Republican senators were not confident that the bill would succeed in the House.

Sen. Les Donovan, a Wichita Republican who, as chairman of the taxation committee, carried the bill on the Senate floor, said he expects it to fail.

“Disgust comes to mind,” Donovan said when asked for his feelings. “Sadness maybe. Because we worked really hard to come up with a bill that works. … There’s something in it for just about everybody to like it. There’s something in it for a lot of people to dislike — I know that. That’s usually when you’ve got a balance.”

Sen. Michael O’Donnell, a Wichita Republican who voted for the bill, has met with House members and encouraged them to vote against it.

“I reluctantly supported the bill to get something out of our chamber over to the House chamber. Because I don’t support the majority of things in that bill, but I also don’t want to just tell people that we’re not going to try and find a solution and just rely on allotments,” O’Donnell said.

“So I think this starts the discussion,” he said.

To reach Bryan Lowry, call 785-296-3006 or send email to blowry@wichitaeagle.com.

Key points in the tax bill

Here are the major provisions of the tax plan the Senate passed: It generates about $471 million, leaving the state with an ending balance of about $75 million.

Financial provisions

▪ Raise sales tax from 6.15 percent to 6.55 percent; $187.7 million. Sales tax on food to drop to 4.95 percent in July 2016.

▪ Eliminate most itemized deductions, reduce taxpayers’ deductions for mortgage interest and property taxes paid; $97 million.

▪ Eliminate food sales tax credit for poor families, seniors and people with disabilities; $15 million.

▪ Increase cigarette tax by 50 cents a pack to $1.29; $40.4 million.

▪ Provide amnesty on penalties to people who agree to pay back taxes owed; $30 million.

▪ Postpone scheduled decrease in income tax rates on wage earnings; hold rates at 2.7 percent in low bracket and 4.6 in upper bracket; $26.4 million.

▪ Tax guaranteed payments to owners of pass-through businesses who currently pay no state income tax; $23.7 million.

▪ Require Social Security number for tax credits; $15 million.

▪ A separate bill increased the “privilege fee” tax on managed-care health plans; $47.8 million.

Policy provisions

▪ Sets Dec. 31, 2019, as an automatic expiration date for virtually all sales and property tax exemptions, except those for churches, agriculture, business-to-business transactions and select health-care-related purchases.

▪ Establishes a tax study commission to determine whether any exemptions eliminated by the automatic expiration should be retained.

▪ Requires cities and counties to hold a public election to raise property tax income by more than the rate of inflation.

▪ Allows private schools to directly receive money from a tax-credit funded scholarship program, to accommodate students whose parents pay for schooling by tithing to their church.

▪ Starting in 2019, requires automatic tax cuts if state income grows more than 3 percent in a year, adjusted for required spending on pensions and Medicaid.

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