Senate Barely Approves Tax Bill; House Appears Ready to Kill It

On Sunday night, after a long and contentious debate, the Senate finally approved a bill (HB 2109) to raise enough in taxes to cover the $400 million shortfall generated by Gov. Brownback’s reckless tax cuts of 2012 and 2013.

The bill had plenty of parts contained in it. It is some 600 pages long and no legislators had actually read it when the debate and vote took place.

The bill balances the budget on the backs of the middle class and working poor by raising sales taxes to 6.55%, eliminating nearly all itemized deductions and cutting the home mortgage interest and property taxes paid deductions to 50%, eliminating the food sales tax credit for the poor, and raising the cigarette tax by 50 cents/pack. It also contains the tuition tax credit that would give corporations up to $10 million if they will take children from public schools into private and unaccredited schools, expanding the eligibility rules for students.

For a while it looked as if the bill would fail to get the necessary 21 votes. A call of the Senate was instituted under which no Senators may leave the chamber, those that are missing are searched for, and those that passed are required to cast a vote aye or nay.

Two Senators were absent – Sen. Tom Arpke (R-Salina) who is on a cruise in Alaska and Senator Rob Olson (R-Olathe). Senator Julia Lynn (R-Olathe) was out of the chamber and cast an AYE vote when she returned; Senator Michael O’Donnell (R-Wichita) had passed and changed his vote to AYE ensuring passage of the bill.

The bill preserves the income tax exemptions for LLCs under which partners in businesses (think attorneys, physicians, etc.) pay no income tax while their employees do.

The 21 yes votes were Republicans Steve Abrams (Arkansas City), Terry Bruce (Hutchinson), Jim Denning (Overland Park), Les Donovan (Wichita), Stephen Fitzgerald (Leavenworth), Mitch Holmes (St. John), Dan Kerschen (Garden Plain), Jeff King (Independence), Forrest Knox (Altoona), Jacob LaTurner (Pittsburg), Garrett Love (Montezuma), Julia Lynn (Olathe), Ty Masterson (Andover), Jeff Melcher (Leawood), Michael O’Donnell (Wichita), Mike Peterson (Wichita), Mary Pilcher-Cook (Shawnee), Larry Powell (Garden City), Greg Smith (Overland Park), Susan Wagle (Wichita), and Rick Wilborn (McPherson).

Many of these Republicans had signed no tax increase pledges from the Kansas Policy Institute and Grover Norquist’s Americans for Tax Reform.

This action sent the bill to the House.

House Defers Action on Tax Bill

The House, which did not work on Sunday, was expected to take up SB 2109 upon their return on Monday. They had set 2:00 pm as their hour to convene.

When they did get together, they immediately broke and said they would caucus on the bill at 5:00 pm and reconvene at 6:00.

Lobbyists settled in for a long night.

While the House Democrats did meet at 5:00 to discuss the bill, the Republican caucus was cancelled.

When they reconvened at 6:00 it was only long enough to announce a tax conference committee meeting for 9:30 the next morning and then adjourn for the night. Less than 10 minutes work for the day.

It is widely believed that the outpouring of criticism in the press and on social media of the bill and the Senate for passing it had raised so much concern that leadership worried about their ability to get the necessary 63 votes to pass the bill in the House. See some of that criticism here.

Going Forward

Governor Brownback continues to insist that his reckless tax policy is fine and just needs more years to work. His Budget Director, Shawn Sullivan, went before the Republican Caucus to let them know that there would be massive cuts to K-12 education and public safety if they did not pass the tax bill. Sullivan said the cuts to education could be as high as $191 million. Read the AP report here.

The sticking point continues to be the Brownback policy under which more than 330,000 businesses in Kansas no longer pay any income tax. Many legislators believe that these businesses should be back on the tax rolls and that any increases in “consumption taxes” (sales, gas, tobacco, liquor, etc.) should be kept to a minimum. Others believe in the Brownback policy and want to keep those businesses off the tax rolls; these legislators would make our tax system even more regressive than it is now.

Brownback has vowed to veto any legislation that taxes those businesses.

The tax conference committee that was scheduled for 9:30 has been postponed until 1:00 pm. Both chambers gaveled in at 10:00 this morning and quickly recessed until 2:00 this afternoon.

A rumor under the dome is that the Governor has dispatched his staff to pressure reluctant Republicans into voting for the bill with the promise of “trailer legislation” to address their concerns. This is what happened in 2012 when Brownback promised moderate Republicans in the Senate that the tax bill he wanted them to support and that they knew would cripple state revenue would not be the final bill. He persuaded a few moderates to switch votes, the House immediately concurred in the bill and Brownback signed it. The result is today’s fiscal crisis. And after convincing those Republican moderates to help him, Brownback went after them in the next election, purging the Senate of most moderate Republicans.

Day 110

The 90 day Kansas legislative session is now on day 110 with no end in sight. This is the longest session in Kansas history and costs the taxpayers $43,000 for each day they continue. So far, that’s 20 days times $43,000 for a grand total of $860,000 – nearly .5% of the cut to education threatened by Budget Director Sullivan.