TOPEKA — Three Senate Republicans joined with Democrats on Monday to sustain Gov. Laura Kelly’s veto of a massive tax cut package over concerns about reshaping income tax brackets and the state’s long-term fiscal vitality.
The 26-14 override attempt on House Bill 2036 failed by one vote because two-thirds of the chamber’s 40 members are needed to override a veto.
The legislation includes a number of provisions that have bipartisan support — eliminating the sales tax on food by July 1, exempting Social Security from income taxes, raising the standard deduction on income tax returns and raising the residential property tax emption for the statewide mill levy from $40,000 to $100,000.
But the centerpiece of the legislation is an alteration to the state’s three-tier income tax system. The bill would lower the top bracket’s rate from 5.7% to 5.5% and the middle bracket’s rate from 5.25% to 5.15%. The lowest bracket’s rate, currently at 3.1%, would move into the middle bracket — but increases in standard deductions would ensure those in the lowest bracket still see a net tax reduction.
Sen. Rob Olson, R-Olathe, said his concerns with the bill were primarily about the income tax cuts. Lower wage earners were going to end up paying more, he said, so the top wage earners could pay less.
“I’m tired of the trickle-down economics,” Olson said. “It doesn’t work. You guys want to keep giving the people at the top these big tax cuts and hope they trickle down to us.”
Kelly has proposed a plan that would lower the rates for each of the three existing income tax brackets, and she promised to bring the Legislature back for a special session if lawmakers failed to provide tax relief.
The House, which had passed the bill 119-0 on April 5, voted 104-15 on Friday to override the governor’s veto.
Talking to reporters Monday, Kelly warned against the Legislature’s push to override her veto of tax legislation. Kelly said the plan, which would lower state tax collections by $2.5 billion over five years, would hurt state finances and halt attempts to move forward on addressing the state’s drought issues, along with future funding of state services for disabled Kansans, because there’s not going to “be any money.”
“There would go any prospect of developing a comprehensive water plan,” Kelly said. “We are going to need money to be able to set up dedicated funding sources specifically to look at our critical water crisis. If that bill becomes law, if they override, we’re not going to have that. In the long run, we’re going to have a hard time sustaining our current level of funding.”
During debate Monday, opponents to the tax plan questioned whether the state could afford to fully fund public schools, highway projects or other state services. Financial projections showed the tax plan would burn through a $3 billion surplus and leave the state with a deficit by 2029.
“The income tax portion of this piece is just too rich,” said Sen. Tom Holland, D-Baldwin City. “And when you line this thing up to the budget out years, it sinks like a rock.”
Sen. Caryn Tyson, R-Parker, rejected that assessment. Instead of sinking the the state, she said, the tax cuts would do the opposite — lift the state into prosperity.
“This is very elementary, but I would ask that you close your eyes,” Tyson said. “Close your eyes for a minute. Don’t think about the people in the building, or sitting next to you, or the politics. Think about being at home. Think about being at the grocery store, or going to a movie or a ballgame, talking to your friends, your neighbors, your families. That’s who you’re casting this vote for. You’re casting it for Kansans. Please hear me. Please hear your constituents. Please hear all Kansans and send them a tax cut.”
Olson, Sen. Dennis Pyle, R-Hiawatha, and Sen. John Doll, R-Garden City, voted with Democrats to send the Legislature back to the drawing board.
