Politics & Government

Kansas agency criticizes Legislature in fight over pizza magnate's $42 million tax bill

Gene Bicknell
Gene Bicknell

A state agency says Kansas lawmakers approved an unconstitutional bill that may result in the state having to pay back $42 million to a former pizza magnate.

The Kansas Department of Revenue says the Legislature used a tactic attacked by transparency advocates and made other questionable moves to stuff the bill with more than one topic. That would violate the state constitution.

The 2016 bill — which is now law — gives businessman Gene Bicknell a new day in court to fight a years-long dispute with the revenue department over a $42 million tax bill.

The decision by the agency to argue the law is unconstitutional comes as Gov. Jeff Colyer and lawmakers have preached the value of transparency. Both Colyer and the Legislature have taken steps to increase open government this year.

The department cites the use of a procedure called the “gut-and-go” in recent court filings alleging the law is unconstitutional. In a gut-and-go, lawmakers strip out a bill’s contents and insert a different bill.

The procedure allows legislation to move more quickly, but can obscure its origins. Lawmakers have moved to improve transparency this session, but legislation that would ban the tactic has stalled.

Rep. Jason Probst, D-Hutchinson, introduced a bill to ban the use of gut and go. He said the Bicknell case underscores the need to bar the procedure.

“It demonstrates again that that process allows us to pass legislation that the larger bodies really don’t know what is in that legislation,” Probst said.

Senate President Susan Wagle told a joint Kansas City Star-Kansas Press Association town hall in February that the tactic is only used at the end of a legislative session to help handle tight deadlines. “We’re not trying to hide anything,” she said.

The revenue department says the way SB 280 came together — including the use of the gut and go — violates the rule requiring bills to stick to a single subject.

“(The bill) was not the product of a robust discussion that took place in each respective chamber. No, it consisted of the House’s Committee on Taxation, without public debate, stripping away SB 280’s content and replacing it with whatever legislative initiatives it divined as worthy of inclusion,” the agency’s filing reads.

If Kansas ultimately loses the case, it will have to return the $42 million that Bicknell previously paid the state. Litigation over the tax bill has been happening for years.

Bicknell would not comment.

Bicknell grew up in Pittsburg and once owned the largest number of Pizza Hut franchises in the nation. The tax dispute stems from whether he was a Kansas resident during the 2006 sale of his company, NPC International.

The revenue department says he was a Kansas resident. Bicknell says his primary residence was in Florida.

The Kansas Board of Tax Appeals ruled last year that Bicknell was a Kansas resident. But SB 280 allows him to challenge the ruling in state district court and provide additional evidence that he wasn’t a resident.

The tax dispute was a source of tension between Gov. Sam Brownback and the Legislature. Brownback vetoed SB 280 but the Republican-controlled House and Senate overrode his veto.

“Tax obligations should be contested before the Board of Tax Appeals and not by seeking special treatment through the legislative process,” Brownback said at the time.

KDOR’s new court filings, which fault the Legislature for how it passed the bill, come after Colyer assumed office, signaling the tension between lawmakers and governor’s office over the Bicknell case may continue.