TOPEKA — Republicans in the Kansas Senate approved Wednesday a three-year, $1.6 billion tax reform bill anchored to introduction of a controversial flat 5.25% state income tax rate, but not by the two-thirds margin required to override a potential veto by Democratic Gov. Laura Kelly.
Senators spent a couple hours exploring advantages and disadvantages of sales, property and income tax provisions crafted by GOP negotiators in the House and Senate. The package, dominated by the $300 million per-year reduction in income tax revenue and elimination on April 1 of the state’s $75 million sales tax on groceries, moved to the Republican-dominated House for a vote. If passed, it would go to the governor.
A series of Senate Republicans praised features of House Bill 2284 during the Senate floor debate. A handful of Democrats, a Republican and an independent senator outlined objections on policy and procedural grounds. The vote was 25-11 in favor with two Democrats and two Republicans absent. No Democrat endorsed it.
“There is absolutely no reason not to return these resources to the people we serve. This is completely sustainable,” said Senate President Ty Masterson, an Andover Republican who was frustrated by criticism the bill tilted in favor of the wealthy. “To every tax cut you make, if you’re talking about dollar value, the rich always get more because they buy more food, they own more property, they make more money.”
He said conflict over the business of tax reform, including a pair of tax bill vetoes last year by Kelly, undermined the 2023 Legislature’s quest to deliver for Kansans. That zero-sum game could be repeated in the 2024 session without substantive compromise, he said.
“We’re saying because we want to have this warfare, we shouldn’t give benefit to anybody,” Masterson said. “All those arguments do — it promotes discontent, class warfare, yours is better than mine. It’s unhealthy.”
The dissenters
On Monday, Kelly offered a bipartisan plan devoting about $1 billion to state tax cuts. Some pieces were included in the GOP plan that emerged Tuesday from negotiations between House and Senate members. Interest in rewriting tax policy came from projections of a $2.8 billion surplus in the state treasury and $1.7 billion in a separate rainy-day fund by June 2024, assuming no unexpected increases in expenditures or reductions in revenue.
Sen. Rob Olson, an Olathe Republican who endorsed Kelly’s tax proposal, praised elements of the Republican bill. He voted against it because the legislation didn’t concentrate tax relief on people with modest incomes who struggled with sales, property and income tax obligations along with inflation.
“This tax cut that is before us is heavily slated for the people making $80,000 or more. They’re going to receive the bulk of that money,” said Olson, who said some of his peers were afraid to fight for an alternative due to concern about blowback from Masterson and right-wing special interest groups. “They’re afraid to lose what I’ve lost. I believe I’m fighting for the people in my district — not the people in the hall, not the people in Wichita, not the people across the street.”
Olson drew the ire of Masterson during the 2023 session by refusing to help Republicans override Kelly’s veto of what Olson considered an unfair bill headlined by the flat-rate income tax. In response, Masterson sacked Olson from his position as utilities committee chairman.
Independent Sen. Dennis Pyle, of Hiawatha, said some lawmakers were being led on tax policy by GOP leaders like lambs to slaughter.
Pyle, who also endorsed Kelly’s tax alternative, said nuggets of popular tax policy woven into the GOP leadership’s bill could be rescinded whenever the economy faltered or state revenue plummeted. That’s what transpired after GOP Gov. Sam Brownback signed an aggressive income tax cut in 2012, which included a big increase in the standard deduction to state income taxes. In less than one year, Pyle said, the crash in state revenue led Republicans to repeal part of the deduction.
“Whatever you do today, we all know, can be taken back. I’ve seen it happen. I’ve seen them reverse their policy promises in this building,” Pyle said.
Sen. Jeff Pittman, a Leavenworth Democrat, said if the state ran “into hard times, you bet your bottom dollar we are not increasing that tax rate.”
