Saying the Legislature would “decimate the state’s ability to pay our bills and invest in our people,” Gov. Laura Kelly on Friday vetoed a tax bill that would have cut revenues by an estimated $245 million over three years.
“Just as Kansas begins to stabilize after years of senseless fiscal crisis, House Bill 2033 (would) create a $1 billion deficit within three years,” Kelly wrote in a veto message Friday.
She derided the bill — passed in the waning hours of the Legislative session — as “a rushed attempt to achieve an immediate political victory. “
Instead, she called for a full and independent study of the tax code with an eye toward “how we can ensure our tax code is fair and truly incentivizes economic growth – in urban and rural communities alike. Our state has not conducted such a study since 1995.”
The bill Kelly vetoed would have:
▪ Permitted deduction of so-called global intangible low-taxed income, or GILTI, allowing multinational corporations to bring profit earned overseas into the state without having it taxed as income.
▪ Allowed Kansas taxpayers to itemize deductions on their state tax form whether or not they itemize on their federal form. This became an issue when Kansans lost state deductions due to provisions of the federal tax law passed under President Trump that discourage itemizing federal tax deductions.
▪ Begun a slow drawdown of the state’s sales tax on food, which is among the nation’s highest.
Kelly and other Democrats have said for years that they want to reduce the sales tax on food, but they argued the other provisions of the bill would mostly just further enrich already wealthy taxpayers and corporations.
Senate President Susan Wagle, a Wichita Republican, immediately reacted with a statement of her own calling the veto sad.
“House Bill 2033 would have allowed Kansans to benefit from the Trump-tax cuts, reduce food sales tax, and increase our state’s competitiveness,” Wagle said. “Sadly, Laura Kelly’s tax increase will take money from hardworking Kansans and place it in the coffers of big government.”
The bill was the second that the Republican-controlled Legislature sent to Kelly during the recently concluded session and the second one Kelly vetoed.
The first bill would have cut taxes by an estimated $500 million, twice as much as the second try.
Wagle said Kelly’s veto of the second bill “showed that she is not interested in compromise. “
“After her original veto, we came back to the drawing board to create new legislation with the goal of providing relief to Kansas taxpayers and businesses.”
House Majority Leader Dan Hawkins, R-Wichita, also issued a statement blasting the Kelly veto and saying if she wanted a comprehensive tax plan study, she should have called for it months ago.
“Playing arm-chair quarterback by choosing to engage after session is over and vetoing not one, but two common sense tax relief plans does not display the kind of fiscally-responsible leadership candidate Kelly promised,” he said.
Contributing: Jonathan Shorman of The Eagle