One storm was on the Senate floor
The tax debate storm hit the Senate floor Wednesday night as the ice was moving in on most of the rest of Kansas. And frankly, some of the exchanges in the debate were a tad icy as well!
Senate President and self-appointed chair of the Senate Select Committee on Federal Tax Code Implementation Susan Wagle (R-Wichita) brought her pet project, Senate Bill 22, to the floor for debate. While Wagle has tried to portray her bill as real help for working Kansans, it is in reality a large corporate tax giveaway with little benefit for individual tax filers and no relief to working families.
We’ve been reporting on this bill as it was discussed in Committee but just to review, here are the facts in a nutshell:
- It decouples the Kansas income tax code from the federal income tax code,
- It stops retroactively the collection of Kansas income taxes on overseas earnings by multi-national corporations through the repatriation of overseas earnings,
- It protects multi-national corporations from paying additional Kansas income taxes under the GILTI tax provisions,
- It allows individual tax filers who will not longer itemize on their federal taxes due to the increase in the standard deduction to continue to itemize on their Kansas income tax forms
The bill has an estimated fiscal note of $192 million with $137 million of the benefit going to the multi-national corporations. $54 million would go to Kansas individual taxpayers who cannot itemize on federal taxes but would benefit by doing so on state taxes.
In the debate Sen. Wagle noted that 9% of Kansas tax filers can continue to itemize under the federal law and see a tax decrease under the Trump tax cut. Those 9%, the wealthiest Kansans, get no benefit from SB 22.
Another 9% of Kansans will see a tax benefit by no longer itemizing on their federal taxes and will see a modest tax increase in Kansas as a result. This 9% of Kansas tax filers will get a small benefit from SB 22.
The other 82% of Kansas tax filers – those working families and low income workers – get no benefit at all. Talking about this bill as tax relief for working Kansans is just not right. It really only benefits the wealthiest individuals and multi-national corporations.
What the bill will do, especially coupled with Senate Bill 9, is to drain much of the state treasury before a budget can be adopted making it much harder for Governor Kelly to address school finance, the failing foster care system, highway maintenance, health care, and the mess in our prison system. This bill is essentially a cynical political attempt to hamstring the Governor.
The only amendment considered last night was offered by Senator Dennis Pyle (R-Hiawatha). The Pyle amendment would have exempted social security income from state income taxes. Pyle asserted that retirees are fleeing Kansas seeking homes in those states that don’t tax social security. Pyle also admitted he had no research or data to prove his point. His amendment received only five votes. Pyle had asked for a roll call vote but failed to get five senators to support him on that.
Senator Tom Holland (D-Baldwin City) moved to send the bill back to committee with the intent of splitting the corporate and individual tax provisions and considering alternatives to simply decoupling from the federal code. His motion failed on a vote of 12 – 28 with Senator Mary Jo Taylor (R-Stafford) joining the Democrats in supporting the motion.
In the end the bill was advanced to final action on a voice vote.
Overnight storm closes almost everything…but not the Statehouse
While most of Northeast Kansas was closed due to a nasty ice storm and a dusting of snow on top of slick roads, Wagle announced that the Legislature would open so she could get her bill voted on final action.
In explanations of vote, Senator Bollier (D-Mission Hills) noted that the bill was fiscally irresponsible, that the fiscal note was speculative, and that the budget should be settled before considering tax changes. Senator Hensley said, “Kansans made it clear they don’t want more irresponsible policy when they elected Laura Kelly.”
“For the cost of this bill,” said Hensley, “the food sales tax could be cut in half.”
Republican Senator Mary Jo Taylor voted NO and suggested that the Legislature should first address their responsibilities before considering this bill.
In the end the bill was adopted on final action on a vote of 26 to 14. Senators John Doll (I-Garden City), John Skubal (R-Overland Park), and Mary Jo Taylor (R-Stafford) joined all 11 Democrats in voting no. The bill must now go through hearings and votes in the House before it can go to the Governor for signature or veto.
Governor’s school finance plan hearings in Senate Ed Finance Committee
Senate Bill 44 is currently in the Senate Select Committee on Education Finance. The hearing on the bill began yesterday and will continue on Tuesday next week.
This week many superintendents from around Kansas testified in favor of the bill, as one might expect. But the most notable testimony came from Schools for Fair Funding (SFFF), representing the Gannon lawsuit districts.
SFFF told the committee that should the Legislature pass SB 44 without amendment and with no changes to the school finance formula, they would stipulate to the Court that the solution met the funding needs of schools providing the Court retained jurisdiction in order to ensure that future Legislatures do not renege on the promises made in this legislation.
Senator Denning (R-Overland Park) pressed SFFF repeatedly on this issue to make it clear that the bill would be acceptable despite the fact that the inflation factor used in the bill – and recommended by the Kansas State Board of Education – is somewhat lower than the actual CPI.
We will see if this information has an impact. If adopted as is with no changes to the formula, SB 44 could actually end the Gannon school finance lawsuit.
This hearing will continue next week when KASB, KNEA, Game on for Kansas Schools, and the PTA will testify in favor. The only opponent will be the Kansas Policy Institute who consistently asserts that schools have more than enough funding right now and are failing.
