Kelly approves ‘small ticket’ tax cuts as bigger fight over Kansas food sales tax looms
Kansas Gov. Kelly has approved roughly $310 million in tax cuts and credits over the next three years as she and Legislative leaders prepare to push for bigger cuts when lawmakers return on April 25.
Kelly announced Thursday she had signed a package that reduced property taxes and established exemptions and credits for special interest groups, including homeowners, veterans, teachers, and the aviation industry.
“Our fiscal responsibility has put Kansas back on track,” Kelly said in a statement. “We’ve been able to fully fund our schools, fix our roads and bridges, balance the budget, and cut property taxes, providing relief for Kansans.”
Her support for the bill signals a departure from past warnings that tax cuts that could damage the state’s economy. Instead, as Kansas is experiencing a major surplus brought on in part by federal COVID-19 relief funds, Kelly asked for more.
Kelly again urged lawmakers to eliminate the food sales tax, among the highest in the nation, when they return to Topeka on April 25. Despite members of both parties listing the issue as a priority for the 2022 Legislative session, Republican leaders have not brought it up for debate in the House or the Senate.
When lawmakers return to Topeka they are expecting to take up a bill that would step the food sales tax down to zero over the next three years as well as another package of tax cuts projected to cost more than $431 million over three years.
The proposals were left on the table during the regular session, when both chambers abruptly adjourned early April 2.
Sen. Caryn Tyson, a Parker Republican and chair of the Senate tax committee, said eliminating the food sales tax was her highest priority for the year.
“We did our work, House leadership just chose to gavel out and go home,” Tyson said after the Senate adjourned. “I know others in the Senate are very hopeful we can get those last two pieces of tax policy done.”
The current Republican sales tax proposal falls short of what Kelly has asked for. Citing a need for financial responsibility, Republicans agreed on a plan that dropped it from 6.5% to 4% on January 1, by 2% the following year and fully eliminates it on Jan. 1, 2025.
“I think there is security in that, we’re being financially responsible,” Rep. Adam Smith, a Weskan Republican, said when proposing the plan.
But Democrats have said the proposal isn’t good enough and accused Republicans of playing election year political games with a tax that affects all Kansans.
“Folks are hurting out there with inflation they need relief immediately and I think that is the quickest way to do that,” Rep. Jim Gartner, a Topeka Democrat said, calling the current bill a “non-starter.”
Kelly hasn’t said whether she’ll support the current proposal.
Speaking to reporters Tuesday she would “have to take a real good look at it.”
“With inflation, particularly, it’s important that we do this now and not wait,” Kelly said. “If nothing gets done it will be on the Legislature.”
When lawmakers return on the 25th they’re also expecting to take up a series of “big ticket” tax reductions, including an increase in the standard deduction, a childcare tax credit, cuts on retirement income taxes and an elimination of the utility sales tax.
The proposal approved Tuesday was deemed the “small ticket” bill by lawmakers in the conference committee on taxation.
The bill combined 29 separate tax bills and consisted of of specialized tax cuts and credits targeting teachers purchasing supplies, aerospace employers, and homeowners.
“We often talk about, when you get into tax conversations, about tax loopholes and tax getaways. This is a bill that is getting into those things,” said Richard Auxier, a senior policy associate at the Tax Policy Center.
