Government & Politics

Tax plan passes Kansas House and Senate, Brownback set to sign

Kansas House Taxation Committee Chairman Marvin Kleeb (left) and Sen. Les Donovan (right) met Thursday night to hash out the provisions of a bill to satisfy the $400 million shortfall in the budget. It was early Friday morning, about 4:30 a.m., that the House passed a bill.
Kansas House Taxation Committee Chairman Marvin Kleeb (left) and Sen. Les Donovan (right) met Thursday night to hash out the provisions of a bill to satisfy the $400 million shortfall in the budget. It was early Friday morning, about 4:30 a.m., that the House passed a bill. The Wichita Eagle

Kansas will avoid massive budget cuts after a tax plan crawled to passage in the Legislature on Friday, but some lawmakers who voted for the plan say the state has failed to right its financial ship.

Many lawmakers — including ones who supported the bills — accused Gov. Sam Brownback of bullying lawmakers into accepting a flawed plan.

Republicans, who hold supermajorities in the Kansas House and Senate, found themselves bitterly divided on taxes for weeks in the face of a $400 million budget hole as the legislative session stretched to 113 days, the longest in state history.

The House scraped together the 63 votes needed for passage at 4 a.m. Friday, passing a plan that raises $384.4 million in tax revenue, after working around the clock since Wednesday night. Several lawmakers who voted for the plan were moved to tears before Rep. Blake Carpenter, a Derby Republican, cast the deciding vote.

Little more than 12 hours later, the Senate approved the plan with 21 votes, again the bare minimum for passage, after an emotional debate. But even some lawmakers who voted in favor of the plan argued that it failed to address the cause of the state’s financial woes.

Sen. Jeff Longbine, an Emporia Republican, accused the Brownback administration of perpetrating “political blackmail” in recent weeks by threatening to veto any plan that rolled back an income tax exemption for certain businesses. That exception was passed in 2012 and removed more than 330,000 business owners from income tax rolls.

“This fix doesn’t fix the problem,” Longbine said. “If you’ve got congestive heart failure, you go to the cardiologist and not the dentist.”

The 2012 tax bill also eliminated the top tax bracket and cut all income tax rates. Longbine pointed out that it has already cost the state more than $1 billion, but argued that the plan passed by the Legislature through a pair of tax bills Friday failed to address that impact.

The measures will instead raise the sales tax to 6.5 percent from 6.15 percent in July and hike taxes on cigarettes by 50 cents per pack to help balance the state’s budget.

Longbine said he wanted to watch the plan burn but voted in favor of it to prevent cuts to the state’s schools, universities and disability services.

Brownback had warned that if lawmakers did not pass a tax plan before Monday, then he would make massive budget cuts — either issuing a 6.2 percent across-the-board cut costing schools nearly $200 million, or line-item vetoes of budgets for the state’s regents universities.

Budget Director Shawn Sullivan said the warnings were not threats, but were meant to make lawmakers understand the gravity of the situation.

Brownback praised the tax plan after its passage as “pro-growth tax policy.”

“This … continues our transition from taxes on productivity to consumption-based taxes and provides a mechanism for reducing income tax rates for all our citizens,” Brownback said in a statement.

Senate President Susan Wagle, a Wichita Republican, said she wanted to close the tax loophole for business owners, but that the governor had promised to veto any bill that did.

Such legislation would have had a difficult time passing the conservative Senate, she told House moderates Thursday night as they were crafting a plan to establish a $300 fee for limited liability companies. The plan was discarded.

“It was the best plan we could put forward that gathered enough votes to pass onto the governor,” Wagle said about the final tax plan.

In addition to hiking the sales tax rate, the plan eliminates most income tax deductions and reduces the property tax and mortgage interest deductions by 50 percent.

The charitable contribution deduction will remain intact.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, called the package “Robin Hood in reverse.”

“We’re asking poor people to pay more to keep a misguided, reckless tax policy in place,” he said.

Sen. Ty Masterson, a Republican from Andover, accused Democrats of class warfare and defended the business exemption. He argued that it encourages wage earners, such as secretaries, to go out and start their own businesses, such as a nail salon or auto shop.

“It’s easy to sit there and be an obstructionist, vote no on everything and throw bombs,” Masterson chided Democrats. “The adults are finally coming in the room. We’re going to get something done.”

The two tax bills, Senate Bill 270 and House Bill 2109, generate $384 million in revenue. Added to other legislation passed this year, it would fix the state’s shortfall and leave Kansas with a $36 million ending balance for fiscal year 2016, which begins in July.

House leaders are also counting on the governor to cut the budget unilaterally by $50 million to bring the ending total to $86 million.

Sullivan said the administration was working with state agencies to identify cuts.

The House discarded a Senate provision to cut the food sales tax rate to 4.95 percent in July, but it restored a food sales tax rebate program that would’ve been eliminated under the Senate’s original plan.

The amended plan also eliminates income taxes for 380,000 low-income Kansans in tax year 2016, an idea that was first floated by the governor late last month.

The House did not begin its debate until 1:30 a.m. Friday.

House Democrats castigated Republican leaders for holding the debate so late when lawmakers were weary and most people are asleep.

But Republican lawmakers stressed the urgency of passing a bill this week with the state facing cuts if lawmakers failed to act.

The first bill, SB 270, scraped by with 63 votes, the bare minimum for passage, and the second, HB 2109, initially fell four votes short: 59-48 in favor with another 19 representatives missing.

House Speaker Ray Merrick, a Stilwell Republican, invoked a rule known as “the call of the House,” which pauses the vote and requires the Kansas Highway Patrol to search for missing representatives. Merrick and other Republican leaders picked up their phones and pressed colleagues to back the bill.

“I need some movement,” the speaker emphatically said into his phone within earshot of reporters seated nearby.

The call lasted more than two hours before Carpenter cast the clincher. Carpenter left the House chamber before answering questions.

Sen. Rob Olson, a Republican from Olathe who cast the deciding vote in the Senate half a day later, also would not answer questions. Olson had initially voted no but changed his vote to yes, breaking a 20-20 deadlock.

“Sometimes it’s hard to get 63 votes,” Merrick said later. “That’s the way the process works. It’s a hard vote for Republicans raising taxes. It’s a real tough vote for me.”

Rep. John Whitmer, a freshman Republican from Wichita, came to the House lectern sobbing to urge his colleagues to vote in support of the bill.

“I voted for something I am not proud of,” he said, “but I feel it’s what the folks need.”

Whitmer and other conservatives who had resisted passing a tax increase for most of the marathon legislative session lined up in support of the bill after a grueling day.

Republican leaders framed the vote as a vote in favor of education. Rep. Ron Highland, a Wamego Republican who serves as House education chairman, said failing to pass the bill would put the state’s schools in jeopardy.

“And we all know that,” he said.

During the House debate, Rep. Jim Ward, a Wichita Democrat, accused the governor of making threats in order to get his way.

After the vote, Ward did not hide his disappointment.

“It’s like a Greek tragedy. You knew what the ending was going to be,” Ward said. “You just hoped against hope it would be different.”

Reach Bryan Lowry at 785-296-3006 or Follow him on Twitter: @BryanLowry3.

Tax hikes passed by the Legislature

The plan would raise $384.4 million in tax revenue. It is also premised on the governor issuing $50 million in unspecified cuts. Adding that on top of other legislation passed this session, the state would have an $86 million ending balance at the end of fiscal year 2016.

Financial provisions

$164.2 million: Raise sales tax to 6.5 percent from current 6.15 percent.

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

$40.4 million: Increase cigarette tax by 50 cents a pack to $1.29. Impose tax on e-cigarettes in July 2016.

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

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

$26.4 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.

$3 million: Require Social Security number for tax credits.

How they voted

Lawmakers voted on two bills separately even though they were part of the same compromise pressed by legislative leadership. Combined, they raise a variety of taxes and make some policy changes.

House votes on Senate Bill 270

Yes — Republican

Tony Barton, Leavenworth; John Bradford, Lansing; Rob Bruchman, Overland Park; Erin Davis, Olathe; Willie Dove, Bonner Springs; Keith Esau, Olathe; Marvin Kleeb, Overland Park; Jerry Lunn, Overland Park; Charles Macheers, Shawnee; Craig McPherson, Olathe; Ray Merrick, Stilwell; Connie O’Brien, Tonganoxie; Randy Powell, Olathe; John Rubin, Shawnee; Bill Sutton, Gardner; James Eric Todd, Overland Park.

No — Republican

Barbara Bollier, Mission Hills; Stephanie Clayton, Overland Park; Blaine Finch, Ottawa; Linda Gallagher, Lenexa; Melissa Rooker, Fairway; Ron Ryckman Jr., Olathe; Scott Schwab, Olathe.

No — Democrat

Tom Burroughs, Kansas City; Pam Curtis, Kansas City; Stan Frownfelter, Kansas City; Nancy Lusk, Overland Park; Kathy Wolfe Moore, Kansas City; Jarrod Ousley, Merriam; Louis Ruiz, Kansas City; Valdenia Winn, Kansas City.

Absent: Larry Campbell, Olathe (R); Amanda Grosserode, Lenexa (R); Broderick Henderson, Kansas City (D); Brett Hildabrand, Shawnee (R); Mike Kiegerl, Olathe (R).

House votes on House Bill 2109

Yes — Republican

Barton; Bradford; Davis; Dove; Esau; Kleeb; Lunn; Macheers; McPherson; Merrick; O’Brien; Powell; Rubin; Ryckman; Schwab; Sutton; Todd.

No — Republican

Bollier; Bruchman; Clayton; Finch; Gallagher; Lusk; Rooker.

No — Democrat

Burroughs; Curtis; Frownfelter; Wolfe Moore; Ousley; Ruiz; Winn.

Absent: Campbell; Grosserode; Henderson; Hildabrand; Kiegerl.

Senate votes on SB 270

Yes — Republican

Steve Fitzgerald, Leavenworth; Julia Lynn, Olathe; Rob Olson, Olathe.

No — Republican

Molly Baumgardner, Louisburg; Jim Denning, Overland Park; Jeff Melcher, Leawood; Mary Pilcher-Cook, Shawnee; Greg Smith, Overland Park; Kay Wolf, Prairie Village.

No — Democrat

David Haley, Kansas City; Pat Pettey, Kansas City.

Senate votes on HB 2109

Yes — Republican

Denning; Fitzgerald; Lynn; Melcher; Pilcher-Cook; Smith.

No — Republican

Baumgardner; Wolf.

No — Democrat

Haley; Pettey.

(Olson didn’t vote)

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