Friday saw things fall apart under the dome after House leadership crafted a plan by which they could end tax debates on the floor and push the whole of decision making into a conference committee.
Having watched the Senate debate a tax plan crafted by Sen. Les Donovan (R-Wichita) only to kill it on a vote of 1 to 30, legislators came up with the idea of putting a minimalist bill into conference. In this way, they would have tax conference committee reports to act on and not bills – a conference committee report cannot be amended so this action would dramatically limit what happens in floor debate.
The House passed a small tax plan – basically only the amnesty program – in SB 29 and shot it over to the Senate. Since this was a bill that the Senate had already passed in another form, all they could do was vote to concur in the House changes or non-concur and form a conference committee.
Senate leadership offered a motion to non-concur and form a conference committee but Sen. Anthony Hensley (D-Topeka) immediately offered a substitute motion to concur in the bill. If adopted the Hensley motion would send the bill to the Governor and if defeated, it would kill the bill outright.
Hensley argued that it was wrong to simply put all decision making into the hands of the six members of the conference committee and essentially deny a real voice to all the other Senators and Representatives. He was joined in this argument by the hard right conservatives including Mary Pilcher-Cook (R-Shawnee), Greg Smith (R-Overland Park) and Dennis Pyle (R-Hiawatha).
Sensing their best laid plans going haywire, it was decided to break and go to caucus to discuss the issues. Upon returning, Republicans had united. They voted down the Henlsey motion and then reconsidered their action, passing a motion to non-concur and send the bill to conference.
Now we are at a point where the bill will be taken up in conference. We expect that the conferees will assemble a comprehensive plan and send it out in a report to be voted up or down in both chambers. Each plan that fails will send the conference committee back to craft another, attempting to figure out how to get 63 votes in the House and 21 in the Senate.
On Saturday, things went very slowly with very little progress noted.
Probably the most important event was the Governor’s press conference at which he finally stepped in and suggested a plan.
The Governor’s plan would:
- Tax the “guaranteed payment” provisions in the now-exempt businesses at the lowest income tax rate, 2.7%.
- Raise the sales tax to 6.65%.
- Raise cigarette taxes by 50 cents/pack.
- Eliminate income tax deductions except home mortgage interest, property taxes paid, and charitable contributions. Charitable contributions would be at 100%, mortgage and property taxes at 50%.
- Raise the bottom income threshold at which income tax is owed thereby eliminating about 388,000 individuals from the income tax rolls.
- Slow the reduction in the income tax rates but continue the “march to zero.”
Much of the rest of the day was spent in caucus meetings.
There were two committee meetings “at the rail.”
The conference committee on HB 2353 (containing technical clean-up to the block grant bill and the education community’s consensus PNA bill) met to correct a mistake made in the bill drafting. HB 2353 will be considered once again.
The Senate Ways and Means Committee met to introduce a tax bill that would provide an income tax check-off for K-12 education. Think Chickadee Check-off for schools!
And that brings us to Sunday.
Despite being set to begin at 1:00 (House) and 2:00 (Senate), both chambers gaveled in and almost immediately recessed.
House Republicans decided to provide their members with a survey in an attempt to find out what taxes might get the support of 63 members. The Senate Republican caucus heard from Revenue Secretary Nick Jordan who assured them that the Governor would veto any bill that taxed the businesses now exempt.
The House came back at 4:00 and by 4:30 had adjourned until 10:00 Monday.
The Senate came back in at 4:13 to take up Sen Sub for HB 2109, a tax bill.
Several amendments were quickly offered and adopted:
- Senator Tyson (R-Parker) offered an amendment to require people to hold a social security card and work for a full year before qualifying for any tax credits.
- Senator Pilcher-Cook (R-Shawnee) offered an amendment to repeal a tax exemption for alumni associations.
- Senator Smith (R-Overland Park) offered an amendment that would end the opportunity to double dip when making charitable contributions (someone buys something for a non-profit using the non-profit tax exemption and then takes an income tax deduction for the contribution).
- Senator Holmes (R-St John) offered an amendment allowing Christmas tree farmers to benefit from the LLC business income tax exemption.
- Senator Baumgardner (R-Louisburg) offered an amendment directing the Department of Revenue to continue sending out detailed car registration letters; the DOR had recently decided to change to simply sending a reminder postcard to save money.
These amendments were all adopted.
Then came the biggie. After a long dinner break, the Senate reconvened at 8:00 to begin debate on an amendment from Sen. Abrams (R-Arkansas City).
The Abrams amendment was 81 pages long and contained a number of provisions. Essentially, it repealed many sales tax exemptions and used the savings to decrease the sales tax rate and accelerate the march to zero.
The repealed exemptions would have had the effect of forcing schools, non-profit hospitals, and youth development organizations (Girl Scouts, Boy Scouts) to pay millions of dollars in sales taxes. Debate was heated with some conservatives blasting the legislature for granting these exemptions to “special interest groups with big lobbyists.”
The debate showed deep divisions within the Republican caucus. Senator Melcher insisted that non-profit hospitals should pay up just like for-profits and Senator Donovan argued that non-profit hospitals take care of the poor and uninsured as part of their charitable mission.
Minority Leader Anthony Hensley (D-Topeka) called for the question to be divided, separating the sales tax decrease from the repeal of the exemptions. The sales tax decrease was adopted but the debate over exemptions raged on until it was finally defeated on a vote of 9 to 30.
At this point, the Senate recessed to hold caucus meetings. It was becoming increasingly clear that this was a disaster in the making.
Press reports indicate that the Republican caucus meeting was raucous.
In an attempt to cobble something together that the whole caucus could support, Senator Donovan offered a version of the Governor’s plan.
The first part to be attacked was the taxing of guaranteed payments on some of the exempt businesses. Senator Denning (R-Overland Park) called that “fictitious,” saying that it was simple to get around that and avoid paying taxes. They would be in the same position next year. He is reported to have asked, “Are we going to fix this turd or not?”
Senator Greg Smith (R-Overland Park) said the plan was “smoke and mirrors” and reportedly said, “You can take this plan and shove it!”
The biggest sticking point appears to be the conflict between Republicans who believe that businesses should be put back on the tax rolls in some fashion and the Governor who has vowed to veto any bill that does.
With things going south and tempers getting frayed, leadership decided to halt the proceedings and, at about 2:00 am, they put the debate on hold and went home for some much needed sleep.
Today should be interesting!