Kansas House loudly blocks tax compromise backed by Kelly. What happens next is unclear
The Kansas House on Thursday rejected a compromise between top Republicans and Democratic Gov. Laura Kelly that would have cut income taxes, leaving the future of tax relief this year in doubt.
The sweeping measure, which Kelly had promised to sign into law, would have cut taxes for those making more than $30,000 a year in taxable income.
The proposal would have eliminated taxes on Social Security benefits, long a goal of both parties, and end the state sales tax on food on July 1, six months ahead of schedule. And it would have raised the standard deduction and child and dependent tax credit.
But a wide swath of House lawmakers were frustrated the plan concentrated income tax relief on earners in the top income tax bracket and provided insufficient cuts to property tax. They were also upset the Senate hadn’t considered an earlier tax proposal the House passed unanimously.
In a voice vote, the House early Thursday evening sent the tax measure back to House and Senate negotiators. The vote wasn’t recorded, but “ayes” to send the bill back for more work were much louder than the “no” votes and appeared to cross party lines.
“Kansans deserve better. Kansans deserve a tax bill that represents true savings in their pocket,” said Rep. Stephen Owens, a Hesston Republican.
The vote came after the Senate earlier in the day approved the compromise in a 38-1 vote. It occurred after a closed-door gathering of House Republicans away from the Capitol earlier in the day. An Associated Press reporter who entered the caucus was forced to leave, the AP reported.
Under current Kansas law, the tax brackets are set at 3.1%, 5.25% and 5.7%, with individuals making over $30,000 a year in taxable income taxed at the top rate. The proposal would have reduced that top bracket to 5.5%.
The rejection of the plan sends Kelly and GOP leadership back to the drawing board after nearly two years of squabbles over Kansas’ income tax structure. And it throws into doubt whether the Legislature can successfully approve tax cuts this year.
It appeared unlikely lawmakers will strike a new deal before adjournment on Friday but they’ll have another chance when they return for their annual wrap up session at the end of the month. Kelly has also pledged to call a special session if lawmakers go home without tax cuts she approves.
Lawmakers and Kelly had both insisted on delivering tax cuts this year, but the governor vetoed a single-rate income tax plan favored by Republicans. After GOP lawmakers failed to override Kelly’s veto, the two sides reached an agreement this week.
The compromise proposal was expected to cost about $1.4 billion over the next three years. A bill Kelly vetoed earlier this year centered around the flat tax would have cost more than $1.6 billion over three years.
Though she acknowledged the plan wasn’t perfect, Kelly personally visited a gathering of House Democrats on Thursday morning to seek their support.
“I want you to know that I’m not that happy with some of the things that are going to be there. But when I think about where we started on taxes for this year and now where we are, tremendous difference,” Kelly told House Democrats.
Kelly’s office declined to comment following the vote.
House Speaker Dan Hawkins, a Wichita Republican, similarly urged his members to support the measure but acknowledged he would have preferred a different bill.
“This bill is a good bill. It’s not as good as what we had with Senate Bill 300 and we all know that. Now you have to make a decision,” Hawkins said, referring to the tax plan the House had previously passed unanimously.
But the compromise received a lackluster reception, especially in the House where lawmakers were particularly irked that the final product was so significantly different from the dual-rate income tax plan that passed the House unanimously last week.
“I didn’t understand with a unanimous vote why the Senate wouldn’t want to take it up,” Rep. John Eplee, an Abilene Republican, said.
Rep. Tom Sawyer, a Wichita Democrat, urged his colleagues to send the bill back for more negotiations. “This is our chance to sit down and discuss Senate Bill 300 with the Senate,” he said.
The Senate had approved the measure with a near unanimous vote earlier in the day as lawmakers on both sides of the aisle framed it as a long sought compromise.
“This has been a difficult and divisive legislative session,” Senate Minority Leader Dinah Sykes, a Lenexa Democrat, said. “But I think with this plan we can show our constituents that we can come together and do the right thing and cut taxes for all Kansans.”
Now, they’re declaring the tax issue dead, at least for now.
Senate President Ty Masterson, an Andover Republican, said he would not return to the negotiating table before the end of the week and seemed unwilling to consider the dual-rate plan. Masterson, who had been one of the state’s loudest proponents of the flat tax, said he felt the House had disrespected the Senate in this process – not the other way around.
“We had a bipartisan supermajority that was completely ignored and then they send me something stuffed in a Senate bill,” he said immediately after the vote. “Our conference committees on tax are over.”
In a statement following the vote, Hawkins said House Republicans remained committed to delivering tax relief.
“This is a long process,” he said.
Sen. Tom Holland, a Baldwin City Democrat and the only senator to vote against the compromise plan, said he hoped legislative leadership would step aside and allow individual lawmakers to work out a deal now that their plan had failed.
“I am more than confident the six of us can work out a conference committee report,” he said.
Last year Kansas lawmakers adjourned for the year without tax cuts despite historic surpluses. With the rejection of the compromise, Sykes predicted “we’re going to go home without a tax bill.”
The Star’s Jenna Barackman contributed reporting
This story was originally published April 4, 2024 at 7:47 PM with the headline "Kansas House loudly blocks tax compromise backed by Kelly. What happens next is unclear."
