Kansas governor vetoes bipartisan plan to slash income, property and sales taxes

by Sherman Smith, Kansas Reflector
April 24, 2024

TOPEKA — Gov. Laura Kelly rejected a bipartisan package of tax cuts Wednesday and proposed a cheaper alternative, setting up a showdown with lawmakers who return Thursday to the Statehouse after a three-week break.

Kelly said House Bill 2036, which slashes income, property and sales taxes, would jeopardize the state’s long-term financial stability. When combined with other tax cuts passed by the Legislature, the state would lose about $520 million in annual revenue. The Democratic governor proposed an alternative package that would lower revenue by about $433 million per year.

“Kansans need meaningful sales, property and income tax relief,” Kelly said. “However, we must ensure that the plan is affordable for the long term. We must be mindful of the fiscal mistakes of the previous administration and ensure we can provide tax relief while continuing the progress we have made as a state.”

HB 2036 would create a two-tiered system for taxing income and drive down the tax rate for wealthiest Kansans from 5.7% to 5.5%. The governor’s proposal instead would lower the rates for each of the three existing income tax brackets.

There is common ground in other areas — exempting Social Security income from state taxes, increasing the standard deduction, lowering the statewide property tax and ending the tax on food as of July 1.

House Speaker Dan Hawkins, who earlier in the session failed to find enough support to impose a single-rate income tax, complained Wednesday that the governor was moving the goalposts with her vetoes of tax bills. The Wichita Republican pointed to the state’s $3 billion surplus and widespread support for HB 2036, which passed 119-0 in the House and cleared the Senate 24-9.

“At this point, there are two more things that deep down we all know to be true — Kansans need and deserve tax relief and Gov. Kelly isn’t serious when she says she wants to provide it,” Hawkins said. “As your elected representatives, we’re going to work to override her veto and get your money back to you.”

Lawmakers return to action Thursday with several big ticket items — including funding for public schools — unresolved. The House and Senate won’t meet to consider veto overrides or other motions until Friday. Two-thirds of both chambers — 84 out of 125 in the House and 27 out of 40 in the Senate — are needed to override a veto.

Senate President Ty Masterson, R-Andover, said he would encourage senators “to ignore the governor’s my-way-or-the-highway stance and stand in support of Kansas taxpayers.”

The Kansas Department of Revenue estimates HB 2036 would reduce tax collections by about $2.5 billion over the next five years, with about half of that attributed to changes in income tax brackets.

In her veto message, Kelly recalled the financial calamity that followed massive tax cuts under former governor Sam Brownback, and the dire financial situation she inherited when she took office in 2019.

“I have said repeatedly that I will do everything in my power to prevent our state from the fiscal mismanagement of the previous administration,” Kelly said. “Since becoming governor, my administration has been laser-focused on getting us back on track, so we don’t go back to the days of four-day school weeks, crumbling roads and bridges, and crippling debt. This bill is too expensive and risks reversing the progress we’ve made. ”

House Majority Leader Chris Croft, R-Overland Park, said the governor’s veto “serves as a slap in the face to every single person in this state.”

“Gov. Kelly is choosing to stand in the way of a strong plan that sustainably provides the relief that people want and desperately need,” Croft said. “It’s not time to play politics with people’s money — it’s time for relief that will uplift Kansas families and retirees.”

Kelly also vetoed House Bill 2098, which includes sales tax reductions for new and used vehicles, broadband development, and disabled veterans. That legislation, which carries a three-year price tag of $83.7 million, passed the House 102-17 and the Senate 34-1.

The governor said HB 2098 was “on the right track,” but that the impact to the state budget “cannot be realized without knowing the total cost of all tax bills.”

Kansas Reflector is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.