Kansas House ends night short of votes to pass tax plan

TOPEKA — When the clock struck midnight Wednesday, Kansas House members left without locking in votes on a tax plan meant to prevent massive budget cuts to education and other state services.

“This is the last train out of here,” House Speaker Ray Merrick, R-Stilwell, had told House Republicans earlier, before debate on a tax plan designed to fix the state’s $400 million budget deficit. “There’s not another bill coming. This is it.”

But not all of his party was ready to board that train.

On the 111th day of the session, the longest session ever in Kansas, the House had appeared to be gaining momentum Wednesday afternoon with a plan to increase taxes. The Senate had passed a somewhat similar bill Sunday.

By the end of Wednesday, that momentum had disappeared.

The main tax increase bill, HB 2109, failed to gain enough support when lawmakers first cast their votes. The initial count was 44-71, with 10 lawmakers absent. House leaders ordered “a call of the House,” a procedure that requires the Kansas Highway Patrol to attempt to find missing lawmakers.

House members settled in to wait, with bill supporters hoping additional votes would either arrive or lawmakers would change their votes.

House Majority Leader Jene Vickrey, R-Louisburg, pleaded with members to cast their votes in favor of the bill, saying that “none of us can comprehend what is going to happen to our citizens” if lawmakers do not pass a tax plan to stave off budget cuts.

It didn’t work. The House kept shedding votes and by midnight the tally was 29-86.

The House passed a rule earlier in the session that restricts it from conducting business after midnight, a move meant to ensure transparency. Rep. John Barker, R-Abilene, the rules chairman, said if House members left at midnight and returned at 8 a.m., it would not count as an adjournment and the House would still be on the same item when it reconvened.

Democrats accused Republicans of abusing the midnight rule to prevent a final vote, allowing House leaders time to find more votes before Thursday morning.

“Time for the gamesmanship just stopped,” chastised House Minority Leader Tom Burroughs, D-Kansas City. “Close the roll. Don’t hide behind this midnight rule.”

Asked if the House would have better luck in the morning, Merrick replied, “We’ll see.”

The House had spread its plan over two bills. The less controversial SB 270 passed 66-49, three votes above the minimum for passage.

The Senate was set to act on SB 270 shortly after the House took up HB 2109. After the House left, the Senate chose to adjourn until Thursday morning.

Sen. Greg Smith, R-Overland Park, joked that the House had turned into a pumpkin.

Increasing sales tax

The compromise plan would raise the sales tax to 6.55 percent from 6.15 percent on July 1 and cut the sales tax rate on food to 4.95 percent on July 1, 2016. Kansas is one of few states that tax food at the same rate as other purchases.

House negotiators protected a food sales tax credit that benefits low-income families, which would have been eliminated under the Senate’s plan.

Removing this tax credit – to save $15 million – would be an unfair burden to the most vulnerable Kansans, said Rep. Marvin Kleeb, R-Overland Park, the tax committee chairman.

The Senate’s plan would have ended most sales tax exemptions, including ones for schools and hospitals, in four years unless lawmakers acted to keep them. The House protected exemptions for schools, hospitals and local governments.

The Senate also had sought to require local governments to ask voters in order to increase property taxes beyond the inflation rate. The compromise plan adds language to ensure that local governments could raise taxes as needed to comply with federal and state mandates and to pay for infrastructure.

In a complicated process, lawmakers planned to spread the legislation over two bills.

Kleeb told the GOP caucus that Gov. Sam Brownback had promised to sign both bills.

Kansas schools stand to lose nearly $200 million if the Legislature fails to balance the budget and the governor cuts it by 6.2 percent across the board. Wichita schools would lose $22 million.

Kleeb emphasized the impact to schools when selling the plan to the GOP caucus Wednesday evening.“This isn’t about tax increases. This is about funding education,” he said.

‘Hold my nose … and vote’

Rep. Mark Hutton, R-Wichita, has led a group of about 25 Republican lawmakers who wanted to see 330,000 business owners who pay no income tax return to income tax rolls. That is not included in the House plan, Kleeb said, because Brownback has threatened to veto it.

“The governor’s indicated his desire not to have it in there. It’s a setback to sit here and have a veto,” Kleeb said. “It’s not what the state needs. The House is very interested in making sure all the schools are funded.”

Despite his desire to see business owners pay some tax, Hutton said earlier Wednesday that he could vote for the House plan and would encourage his colleagues to do the same.

“I can hold my nose and a couple of other things and vote for this bill,” he said. “We’re working hard to bring everybody on board. We’re telling them this is the right thing for Kansas right now. It’s hard to take a loss. It always is. But right now this is more about taking care of the people of Kansas than it is about this issue.”

Rep. Les Osterman, R-Wichita, a member of Hutton’s group, said – on the verge of tears – that he planned to vote for the plan to protect people receiving disability services through the state’s Medicaid program. He said he couldn’t bear the thought of seeing those services cut.

State budget director Shawn Sullivan said earlier in the day that cuts in state funding could trigger cuts to federal aid, especially for Medicaid, where every $1 million in state funding is matched with $1.3 million in federal funding.

The agencies that administer the state’s Medicaid program, the Kansas Department of Health and Environment and the Kansas Department for Aging and Disability Services, estimated they would lose nearly $115 million in federal aid.

‘Move forward’

Brownback emphasized the urgency of the situation when he spoke to reporters Wednesday afternoon.

“They need to move it on forward and they need to do it now,” he said. “Now’s the time. It needs to happen. There’s been a lot of discussion, a lot of negotiation. The Senate passed the bill. We need to get it moving on forward. … Both houses have passed a budget. They need to adequately fund it.”

He would not directly say whether he would accept a bill that taxes business at 1 percent, an idea that had been floated by House members.

“In my estimation, they need to just take up the Senate bill … that’s the route forward. It’s there. It’s doable, and I would just urge all of them, everybody, both parties, all factions, to do that and move forward,” Brownback said.

Senate Minority Leader Anthony Hensley, D-Topeka, criticized the governor for refusing to compromise on the business income tax.

“The recurring theme that I hear from my constituents is, why should business pay nothing when I have to continue to pay taxes on my wages?” Hensley said. “It’s the inherent unfairness of it that I think has people really upset. … We are raising taxes on working class, low-income people to protect the governor’s political supporters, the business community.”

The compromise tax plan would impose a tax on guaranteed payment to partners in limited liability companies, but several lawmakers have said it would be easy for LLCs to dodge the tax by restructuring their payment systems.

Other Democrats contended that the main bill was too flawed to fix. Rep. Brandon Whipple, D-Wichita, whose wife recently had a baby, pointed out that a provision the Senate added to require that people have a Social Security number for at least one year before they could qualify for tax credits – which many saw as motivated by anti-immigrant sentiment – would mean that many families with infants would be unable to claim them on their taxes.

How to contact lawmakers and the governor.

This story was originally published June 10, 2015 at 4:25 PM with the headline "Kansas House ends night short of votes to pass tax plan."