Kansas taxpayers will see a series of tax cuts and increases after the Legislature swiftly moved to override Gov. Laura Kelly’s veto of a $94 million package Monday.
Lawmakers rejected the governor’s argument that the measures which include $130 million in tax cuts and $35 million in new sales taxes, would lead to the kind of deep budget reductions seen following tax cuts during former Gov. Sam Brownback’s administration.
The Senate approved the override on a 30-10 vote. The House approved the override on a 84-39 vote, three more yes votes than it earned last month.
Among the new yes votes was Rep. Ron Howard, a Wichita Republican, and Rep. Mark Samsel a Wellsville Republican.
Samsel is currently facing charges for allegedly physically assaulting a student while substitute teaching last month.
Howard returned to the Legislature Monday after being absent for medical reasons all session.
In a statement Monday Kelly slammed the vote as “reckless” and “shortsighted.”
“(It) jeopardizes our ability to fund education and will leave Kansans on the hook for another tax cut that we can’t afford,” Kelly said.
“It’s as if legislative leaders want to return to the days of budget crises, gutting transportation spending, and 4-day school weeks.”
The bill would permit multinational companies to bring money from overseas back to Kansas without paying state taxes. It would also increase the state’s standard deduction and allow Kansans to itemize state tax returns regardless of whether they itemize their federal taxes. It offsets some of those costs by imposing state sales taxes on goods sold online to Kansans.
With increased revenue estimates and a projected budget surplus over $1 billion, Republican lawmakers said it was past time to implement tax cuts they’d been seeking for three years.
“We are collecting more taxes in this state than we ever have,” said Sen. Caryn Tyson a Parker Republican. “I don’t think that this bill goes far enough but it is a bill that we can pass.”
But Democrats pointed to the long term economic impact and existing budgetary concerns.
The override comes the day after the Kansas Department of Revenue sent a memo to lawmakers warning that $53 million for higher education needed to be added to the budget in order to avoid risking the state’s federal stimulus funds.
According to the memo, the Legislature’s current budget doesn’t achieve “maintenance of efforts” — a requirement that funding remain relatively consistent year-to-year — for higher education. As a result, it said, the federal government could remove stimulus funds for K-12 and higher education.
Sen. Tom Hawk, a Manhattan Democrat, cited this as a reason to reject the tax package.
“I worry that we seem to always flirt with the same problem we had with the last recession in 2008 when we came back and gave tax cuts and then our state did not recover as quickly as the states around us,” he said.
The pieces of the bill addressing itemization and overseas profits have been sought by Republican lawmakers since the U.S. Congress passed major federal tax cuts in 2017.
Proponents said the measure would bring Kansas in line with the federal tax code and keep businesses in the state. Opponents contend that it would gut the state budget in the interest of cutting taxes for only the wealthiest Kansans.
In 2018 and 2019, Kelly vetoed a bill to implement those policies. In February, she proposed that the Legislature replace those cuts with an overall increase of the standard deduction and by applying Kansas sales tax to out-of-state retailers who sell products online in Kansas.
Kelly said her proposal would give relief to more Kansans without impacting the state’s budget.
The Legislature instead added both of Kelly’s suggestions to the bill without removing any existing tax cuts. The new tax on online sales offsets about $35 million in costs.
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