Senate rejects plan to roll back Brownback tax policy

Senators voted down a bill Wednesday that would have rolled back much of Gov. Sam Brownback’s signature tax policy, leaving lawmakers still searching for a way to close the state’s budget shortfall.

The Senate voted 18-22 to reject the plan. Both Republicans and Democrats split over the proposal.

Senators who voted against the bill expressed reservations about increasing taxes before lawmakers decide how much spending on schools should be increased to respond to a Kansas Supreme Court decision that ruled funding is inadequate.

But supporters called the bill a “solid first step” toward solving the state’s fiscal problems. They argued that perfect should not be the enemy of the good in crafting a tax plan.

“It’s an anguished vote for me,” Sen. Tom Hawk, D-Manhattan, said as he voted yes on the bill.

The plan would have generated more than $1 billion over two years. The state faces a projected budget shortfall of about $900 million over the same time.

But if lawmakers approve additional spending for schools, the anticipated new revenue would likely not cover the cost. A school finance plan in the House calls for the state to ramp up education spending by $750 million over five years, but the bill has not been finalized.

The Legislature faces a June 30 deadline from the Supreme Court to enact a new school finance formula.

Senators raised concerns that they were being asked to vote for a tax increase without knowing how much funding will be needed for schools.

“Given the situation we’re in with the courts right now, that’s not a gamble I’m going to take,” said Sen. Tom Holland, D-Baldwin City.

Senators were being pressured to make a decision, he said. He said lawmakers should vote against any tax plan until the cost of schools is known.

Conservative senators joined some Democrats in opposing the bill. Sen. Rob Olson, R-Olathe, said the bill would raise taxes on lower-income individuals.

“The taxpayer is the one picking up the tab here; we’re not, because we can’t control our spending,” Olson said.

Under the proposal, married people filing jointly with income between $30,001 and $100,000 would be taxed at 5.25 percent, up from 4.6 percent. Income above $100,000 would be taxed at 5.6 percent. The tax rate for the bottom bracket would go to 3 percent from 2.7 percent.

The state now has two personal income tax brackets – 2.7 and 4.6 percent. The higher rate applies to individuals who make at least $15,000, or married couples who make $30,000 or more.

The bill also would have again taxed certain business income that was exempted from taxation in 2012.

The proposal voted down Wednesday was the same as a plan the House came close to debating a week ago, before Republican leaders called off a discussion at the last minute.

The bill would provide enough revenue to increase funding to schools by as much as $150 million, however, said Senate Vice President Jeff Longbine, R-Emporia. And the bill provides a structural fix to the budget, he argued.

“I think this is the fix,” Longbine said.

The Legislature earlier this year approved legislation that would have increased taxes and raised about $1 billion a year. Brownback vetoed the bill.

An attempt to override the veto cleared the House but fell three votes short in the Senate. Senate Majority Leader Jim Denning, R-Overland Park, was among the senators who voted against the veto override.

On Wednesday, he said lawmakers need to tackle revenue in two bills: a bill to balance the budget and another to pay for funding increases to schools. Denning has previously proposed a utility surcharge as a way to fund education.

Denning then voted yes on the bill, calling it “probably the most difficult decision I’ll make in my career.”

This story was originally published May 10, 2017 at 5:02 PM with the headline "Senate rejects plan to roll back Brownback tax policy."