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Kansas Gov. Laura Kelly, GOP leaders reach deal on tax cuts days before special session

Jonathan Shorman, The Kansas City Star on

Published in News & Features

Kansas Democratic Gov. Laura Kelly and top Republican lawmakers said late Thursday they reached an agreement on tax cuts ahead of a special session next week and after months of dispute over the size of a package.

The agreement moves Kansas from three income tax brackets to two – by far the most controversial portion of the deal. But it also includes other provisions that enjoy widespread support, including some property tax relief and eliminating taxes on Social Security income.

The Legislature must still pass the agreement. House Speaker Dan Hawkins, a Wichita Republican, and Senate President Ty Masterson, an Andover Republican, are expected to put the proposal up for votes when lawmakers gather in Topeka on Tuesday. Legislative hearings are expected on Monday.

Kelly said she would sign the package into law if it passes.

“Legislative leadership and I have come to a consensus on a tax relief package that will be presented to the House and Senate during the upcoming special session. This agreement allows significant, long overdue tax relief to Kansans while preserving our ability to invest in the state’s future,” Kelly said in a statement.

The deal, if approved quickly, potentially frees lawmakers to weigh a plan to attract the Kansas City Chiefs or Royals to the state. Hawkins and Masterson have both signaled their willingness to advance legislation to offer one or both teams supercharged public financing of new stadiums – if a tax agreement is reached.

While the taxes bill text wasn’t released on Thursday, aides to House and Senate leaders both said it sets income tax rates at 5.2% and 5.58%.

The last plan passed by lawmakers – and vetoed by Kelly in May – would have set the top rate for married couples filing jointly at 5.57% and the bottom rate at 5.2%, with $46,000 serving as the dividing line between the two rates. Legislative staff indicated the agreement follows the same income threshold.

Under current Kansas law, the income 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.

Kelly was at odds with a bipartisan coalition of lawmakers this spring, with the Legislature advancing tax cut plans the governor found too aggressive. While all sides want tax cuts, Kelly has said their annual cost shouldn’t exceed roughly $425 million. Because of previously passed tax reductions, lawmakers believed they needed to limit a package to about $375 million to satisfy the governor.

 

The cost of the agreement wasn’t released on Thursday night; legislative aides said those numbers would come Monday.

“For over a year, the legislature has been laser-focused on easing the burden of inflation by letting taxpayers keep more of their hard-earned money by passing multiple broad and sustainable tax relief plans. We firmly believe the surpluses belong to the people, not the government,” Hawkins and Masterson said in a joint statement.

Unlike earlier proposals, the agreement does not accelerate the elimination of the state sales tax on food, which ends Jan. 1. But it still contains additional higher income tax deductions and exemptions included in previous bills. It also sets the state child and dependent care tax credit at 50% of the federal allowance.

The two GOP leaders said that while Kelly’s previous vetoes prevented more substantive tax cuts, they called the agreement “an important first step that lowers taxes today” for those who need it most while also eliminating a property tax reduction program for local governments that they called a “slush fund.”

Kelly said the agreement was “not without its flaws.” She faulted the move from three income tax brackets to two as limited the amount of property tax relief that can be provided.

“However, it does meet the affordability criteria I proposed. Thus, should the Legislature pass this negotiated agreement, I intend to sign it,” Kelly said.

During past tax debates, many House Democrats had often supported tax plans with Republicans that Kelly later vetoed. By contrast, Senate Democrats largely voted against plans that Kelly also opposed.

Senate Minority Leader Dinah Sykes, a Lenexa Democrat, in a statement said compromise “is ugly sometimes.” She said Senate Democrats would continue fighting for more property tax and child care relief.

“While this proposal is not what we fully wanted, in the spirit of compromise it moves us forward,” Sykes said.


©2024 The Kansas City Star. Visit at kansascity.com. Distributed by Tribune Content Agency, LLC.

 

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