TOPEKA — The Kansas Senate fought through a flurry of tricky procedural amendments Tuesday to more than double financial ramifications of a bill throwing tax breaks at multinational corporations sitting on overseas profits, wealthy people keen to itemize deductions, folks excited about higher standardized deductions and retirees weary of having Social Security benefits taxed.
What started out as a modest $175 million tax reform bill ballooned after several hours of Senate debate into what Republicans and Democrats figured to be a $450 million to $470 million package. Uncertainty about the financial bottom line of Senate Bill 22 was amplified when the Kansas Department of Revenue estimated the bill’s cost to the treasury could exceed $600 million.
Growth in the bill’s cost primarily resulted from dedication of $215 million for a state income tax exemption on retirement benefits in the fiscal year starting July 1 and the decision to provide $75 million to $80 million for expansion of the standard deduction on state income taxes.
“There is something in this bill for everyone now,” said Sen. Caryn Tyson, the Parker Republican and chairwoman the Senate Assessment and Taxation Committee. “In these times with Covid, we need to keep in mind the taxpayer and this bill does that exactly.”
Sen. Jeff Pittman, a Leavenworth Democrat, said it was the size of the overhauled bill that prompted concern about the state’s ability to secure enough tax revenue for basic functions of government. He voted “no” on the measure, which was adopted 24-15 by the Senate.
“I can’t support such a massive amount at this time,” Pittman said. “I think it’s too soon, too much, too quick.”
With the preliminary vote in the 40-member Senate at 23-9, Republican Sen. Richard Hilderbrand of Galena invoked a parliamentary maneuver to force seven senators seeking to pass on Senate Bill 22 to cast a yes-or-no vote on the legislation. That elicited six “no” votes and one “yes” vote for the tax bill. The bill will ultimately be placed in the hands of House and Senate negotiators responsible for developing a compromise tax reform package. Kelly could veto the bill, as she’s done previously with tax bills viewed as irresponsibly large.
Sen. Jeff Longbine, an Emporia Republican voting against the tax bill, said tenor of the debate and outcome of voting offered him a sense of deja vu. He said it felt much like 2012 when the Legislature passed an astounding income tax cut signed by Gov. Sam Brownback that haunted the state for years. The Brownback plan to drive the state’s income tax to zero was officially abandoned in 2017.
“Not many of us that are in this body that were here in 2012 when we had a very, very similar day. We took a reasonable, responsible tax bill and we blew it up,” said Longbine, who recalled being assured sensible people in the Legislature would correct the overreach. “I spent five, six, seven years after that cutting budgets and raising sales taxes. Fool me once, but you won’t fool me twice.”
Senate Minority Leader Dinah Sykes, a Democrat from Lenexa, said the Senate-passed bill contained tax cuts for the rich that didn’t have an impact on a pandemic-damaged economy and a huge unemployment problem.
“At a time when we’re facing economic uncertainty,” she said, “we do not need to repeat failed tax experiments which studies have shown, and which we have seen firsthand here in Kansas, have no impact on economic growth.”
