After House rejects tax plan, negotiators come back with 2-bracket proposal

After the House rejected a three-bracket tax plan, lawmakers are gearing up for a fight over a smaller, two-bracket proposal.

House and Senate negotiators produced a new plan on Tuesday evening. A debate on the House floor could come as early as Wednesday morning.

Lawmakers put a lot of effort into building a tax plan that would bring together a veto-proof majority, but that hadn’t succeeded, said Rep. Steven Johnson, R-Assaria, who chairs the House Tax Committee.

The House rejected a three-bracket plan on Monday that would have raised $1.2 billion over two years. The vote was 53-68, with most Democrats and conservative Republicans opposing the measure.

“Then the effort was ‘Can we start looking for a way where we try and move the other direction and see if there’s a way we can have a plan that moves forward?’ ” Johnson said.

Lawmakers have been struggling to find a way to pass a tax package that will either gain Gov. Sam Brownback’s approval or garner enough votes to override a veto. Wednesday will mark the 100th day of the legislative session – the number of days legislative leaders had budgeted for this year.

The plan put forward by negotiators on Tuesday would set personal income tax rates of 3 percent and 5 percent, using the same brackets currently in place. It also would repeal an exemption for certain kinds of business income.

The plan would also end sales tax exemptions for some services, such as towing, detective work and pet care. The plan also increases the liquor enforcement tax.

The bill would raise a little more than $900 million over two years. Kansas faces a budget shortfall of about the same amount over that time.

Rep. Tom Sawyer, D-Wichita, predicted no Democrat would support the measure.

“I don’t know how you fund schools with this plan. You can’t,” Sawyer said.

The House and Senate are both working on school finance formulas. The Legislature must enact a new formula by June 30 to meet a deadline imposed by the Kansas Supreme Court, which found the current funding system inadequate earlier this year.

The House plan calls for a ramp-up in education spending of $278 million over two years. The Senate plan is still under development.

This story was originally published May 23, 2017 at 8:54 PM with the headline "After House rejects tax plan, negotiators come back with 2-bracket proposal."