Stacey Saldanha-Olson,Jason AlatiddTopeka Capital-Journal
Kansas lawmakers on tax committees met Monday afternoon to discuss the newest tax cut agreement brokered behind closed doors between Republican party leaders and Democratic Gov. Laura Kelly.
Rep. Tom Sawyer, D-Wichita, said there wouldn't be an official bill until Tuesday, when the special session starts. That meant certain document were not available for legislators to look over during the joint meeting.
Officials said the new bill will be similar to Senate Bill 37, which was vetoed by Kelly in mid-May.
"The bulk of this is similar to Bill 37, which was the last bill that the Legislature passed that was vetoed," Sawyer said.
What is in the tax cut plan and how much does it cost?
The tax cut compromise plan was struck by House and Senate GOP leadership and Kelly. While there was no bill text available at the start of Monday's committee meeting, a previously released one-page sheet broke down some key points.
The cost of tax cuts was a key sticking point, as Kelly had said previously plans were too costly. The compromise tax cut plan has an estimated fiscal impact of nearly $2 billion over five fiscal years.
The state's current three income tax brackets would be converted into two tiers with new thresholds and rates, while both the standard deduction and personal exemption would be increased. Those changes would combine to $1.1 billion in tax cuts over five years.
Social Security benefits would be fully exempted from state income taxes for all beneficiaries. Currently, only people with incomes under $75,000 don't pay state taxes on Social Security benefits. That totals $657 million in tax cuts over five years.
Property taxes would be cut for homeowners by increasing the exemption on the 20-mill levy used to help finance schools. Increasing the exemption to $75,000 — which is less than previous proposals of $100,000 — totals $236 million in tax cuts over five years.
A privilege tax cut would benefit banks and financial institutions that were left out of a previous corporate income tax cut. It would cost $20 million over five years.
The plan would also have a 50% childcare tax credit, which would cost $30 million over five years.
Legislators and lobbyists react to tax cut compromise
With no official bill to look over, multiple legislators raised concerns about the process being used for this bill.
"So here we are at a significant expense, because we all filled out travel forms, and we don't have a document to look at, which is a part of the legislative process," Sen. Molly Baumgardner, R-Louisburg, said. "Help us understand how this is not truly a perfunctory process when we have nothing to look at. How is that we have nothing to look at?"
Sen. Caryn Tyson, R-Parker and the chair of the Senate tax committee, responded saying she wanted to make sure everyone knew it was not the statehouse staff's fault and that the researchers have been working tirelessly.
Rep. Stephanie Sawyer Clayton, D-Overland Park, stated her support for fully exempting Social Security from income tax. She said that would help retirees in high cost of living areas like northeast Kansas to afford to continue living in their homes.
Kansas Chamber lobbyist Eric Stafford said he appreciated the hard work of everyone who came together to make this adjusted bill.
"This is a good approach too because we stand out as one of 12 states that taxes Social Security, and we were one of I don't know how many states that taxed food and we taxed it at the highest level," Stafford said. "There are merits to the decisions that have been made and they are good tax changes. We can't let our own interest of what we think would be good get in the way of the 160 opinions in this building plus the governor and her staff's opinions. So, we also have to operate in reality and come up with what we can collectively come up with and put input for."
Rep. Lance Neelly, R-Tonganoxie, took issue with the amount of tax relief in the bill, wanting more tax cuts especially for property owners.
Sen. Tom Holland, D-Baldwin City, asked if he supports the way this process has been outlined and if he plans to present any amendments when it comes on the floor Tuesday. Neelly said he did not like the process and he'd be happy to present an amendment on the floor.
"I think we are back to a plan that was so close to what we already passed and here we all are spending taxpayer money to come back and do something that should've been accomplished while we were in session in the first time," Neelly said.
While Kelly has said she intends to sign a tax cut bill passed by the Legislature during the special session, amendments to it could make it lose the governor's support.
The special session could also see more than just the compromise tax bill. There is a plan in the works for a government subsidy program to help fund a new stadium in Kansas for the Kansas City Chiefs or the Royals. Some are also looking to revive a proposed constitutional amendment to limit property tax valuation increases.
"If you have time to run a bill for a billion-dollar subsidy for a sports stadium, I think taxpayers would say you have enough time to consider a constitutional amendment to give them some property tax relief," said Kansas Policy Institute CEO Dave Trabert.
