TOPEKA — Senate President Ty Masterson responded to a second failure to override Gov. Laura Kelly’s veto of a bill collapsing the state’s three-rate individual income tax structure into a single 4.15% rate and speeding elimination of the state’s sales tax on groceries by stripping a dissident Republican of a committee chairmanship.
The decision to deprive Olathe Sen. Rob Olson of the opportunity to lead the Senate Utilities Committee in the waning hours of the 2023 legislation session was unlikely to alter the fate of Senate Bill 169, but Masterson sent a message to his caucus by dismissing Olson from the job of vetting utilities legislation.
Kelly said she vetoed the tax bill because it would eliminate $1.4 billion in state tax revenue within three years. It was financially unsustainable and would push the budget into the red in the manner resembling Gov. Sam Brownback’s aggressive income tax cuts nearly a decade ago, she said. Brownback’s quest to eliminate the state’s personal income tax cratered the budget, forced spending cuts and a sales tax increase before his program was repealed in 2017.
On Wednesday, Masterson’s effort to override Kelly on the tax legislation fell one vote shy of the required two-thirds majority. GOP Sen. John Doll of Garden City, GOP Sen. Carolyn McGinn of Sedgwick and independent Sen. Dennis Pyle of Hiawatha voted with the 11 Democrats for a 26-14 result.
McGinn said in a Senate floor speech Thursday that she had an overnight change of heart and made the motion to reconsider the bill. Her plan was to provide the 27th vote for an override. She explained she regretted her previous “no” vote and concluded $1.6 billion in the state’s rainy day fund was a sufficient cushion to advance tax reduction.
“It is not our money,” she said. “I do feel comfortable now about the (budget statistical) profile.”
The political math crumbled when Olson announced he would flip his “yes” vote to a “no” vote on the override to leave Masterson short again. Olson said he regretted voting the previous day for the override and was convinced the bill was overly generous to people making more than $100,000 annually but not helpful enough to lower-income Kansans. He also said he was troubled by a provision of the bill to accelerating reduction in corporate taxes.
“I’ve been thinking about this bill since we voted on it,” Olson said. “People making more than $100,000 are doing really well in this tax bill. I struggle with that. I just don’t think we did enough for the people at the bottom.”
Result of the second vote was 25-14 in the 40-member Senate with GOP Sen. Alicia Straub of Ellinwood deciding to vote “pass” after voting “yes” in the first round of voting on this override. The bipartisan coalition rejecting the override included 11 Democrats as well as Pyle, Doll and Olson.
“This bill is about the average lower-income taxpayer,” said Sen. Caryn Tyson, a Parker Republican who helped put the bill together. “If you don’t see that, you’re in denial. This is a vote for the people.”
Masterson relied on his authority as Senate president to terminate the utilities committee chairmanship held by Olson, a member of the Legislature since 2005.
“We appreciate Senator Olson’s service as chair of the utilities committee,” Masterson said in a statement. “However, his services are no longer required.”
The Senate Democrats reacted with a post to Twitter: “And just like that, Senator Rob Olson has been stripped of his chairmanship after bucking Republican leadership on their reckless tax policy. This is what happens when you stand up for what’s right for Kansans.”
Under Senate Bill 169, the state’s individual income tax structure would be converted to a flat rate of 5.15% starting in the 2024 tax year. The corporate income tax rate would fall in 2024 to 3%, rather than the scheduled 3.5%, from the current 4%. The bill would expand the income tax exemption tied to Social Security benefits from the current $75,000 in federal adjusted gross income to a new limit of $100,000 in adjusted gross income.
The bill would eliminate the state sales tax on food and food ingredients on Jan. 1, 2024. Under a bill adopted last year by the Legislature and signed by Kelly, the 6.5% state sales tax on groceries was reduced to 4% on Jan. 1. That law scheduled a cut to 2% in January 2024 and the reduction to zero in January 2025.
