Politics & Government

Kansas Senate halts tax debate to fix bill; House passes plan to avert furloughs

Kansas state senators, Senate aides and Alexander Orel, right, an aide to Gov. Sam Brownback, stand in a side aisle of the House and watch one of its electronic tally boards as members vote on a tax plan, Friday, June 5, 2015, at the Statehouse in Topeka.
Kansas state senators, Senate aides and Alexander Orel, right, an aide to Gov. Sam Brownback, stand in a side aisle of the House and watch one of its electronic tally boards as members vote on a tax plan, Friday, June 5, 2015, at the Statehouse in Topeka. Associated Press

TOPEKA – 10.a.m. update - The Kansas House passed a bill to declare aimed at preventing state employee furloughs at 9:45 a.m. The bill which would temporarily define all state workers as “essential” passed the House 106-0.

The Senate will now consider the bill.

***

The Senate started and then halted debate on a tax bill in the early morning hours Saturday, while the House launched a last-ditch plan to head off furloughs for more than 24,000 state workers.

Both houses worked late, faced with a deadline of midnight Saturday to fill a $400 million budget hole, or risk automatic furloughs of employees and a partial government shutdown.

The Senate worked on its tax bill until nearly 1:30 a.m.

But citing issues with the bill documents, Majority Leader Terry Bruce, R-Hutchinson, called off the debate.

The halt came moments after a chippy exchange between Minority Leader Anthony Hensley, D-Topeka, and Appropriations Chair Ty Masterson, R-Andover.

Hensley spoke scathingly of Gov. Sam Brownback and the Republicans who dominate the Legislature for failing to pass a budget.

"The hostages that are being held in all of this are the employees of the state of Kansas," Hensley said.

He noted that June 6 is the anniversary of the bloody D-Day invasion of Europe during World War II.

"June 6 is state employees’ D-Day," he said. "We have to come to grips with this crisis that has been caused and not leave state employees out in the cold ... I guess my question to the leadership here is, what’s the plan?"

Hensley’s remarks drew a heated response from Masterson, who defended the job the Senate has done on the budget.

Although the House has passed a final budget conference report and the Senate hasn’t, Masterson noted that the budget the House approved originated in the Senate and initially passed more than a month ago.

"To sit there and say this is somehow a Senate issue is just disingenuous," he said.

And he criticized the House for going home before the Senate debated the tax bill.

"Tough decisions have to be made," he said. "I contend tough decisions have to be made tonight, but the other side of the hall took a break, again."

Moments later, Bruce shut down the debate and announced the Senate would return at 10 a.m.

Just before the Senate began its post-midnight debate on taxes, the House introduced an emergency bill to try to avert the furloughs by temporarily defining all state workers as "essential." Only employees deemed "nonessential" can be furloughed.

That would keep them on the job and entitled to their pay, but they couldn’t actually be paid until the Legislature actually appropriates money, Masterson said.

The tax bill currently being debated largely protects a zero income tax rate for owners of limited liability companies and other businesses where profits "pass through" to owners untaxed.

The bill would tax only guaranteed payments to those owners, which critics say they could easily avoid by changing the way they pay themselves.

The bill would also:

▪  raise the sales tax from the current 6.15 percent to 6.55 percent on July 1. The rate for food purchases only would dial down to 5.95 percent on Jan. 1.

▪  repeal a food sales tax credit for elderly, disabled and poor Kansans.

▪  raise the tax on cigarettes by 50 cents a pack.

It also includes a policy – popular in the Senate – to require cities and counties to hold elections to raise property taxes by more than the rate of inflation.

Cities, including Wichita and Kansas City, say it’s based on incorrect math assumptions and would be chaotic to try to implement.

Lawmakers also added a provision expanding access to tax-credit-supported corporate scholarships for students who want to leave public schools and go to private school.

The proposal provides for direct payments to religious schools for children whose parents tithe to the affiliated church as payment for their tuition.

The tax conference committee crafted its latest plan about three hours after the full House voted down a bill that would have put a 2.7 percent income tax on businesses that currently pay zero taxes.

That bill failed 82-27.

But it was 24 more "yes" votes than Thursday’s tax plan, which protected the business break and was more heavily weighted toward sales tax increases.

About 330,000 business owners pay no state income tax under a 2012 tax plan that was championed by Brownback

The governor has threatened a veto if the Legislature passes a tax bill tampering with that.

Reach Dion Lefler at dlefler@wichitaeagle.com.

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