By John Hanna/AP
TOPEKA, Kan. (AP) — Kansas legislators have approved major tax cuts and ended a political stalemate with Gov. Laura Kelly. Yet some of them sounded frustrated as they were doing it.
The Republican-controlled Legislature approved a bill Tuesday to cut income and property taxes by a total of $1.23 billion over the next three years. The measure contains the exact terms of a compromise reached by the Democratic governor and the GOP leaders of the House and Senate, and Kelly promised to sign it.
But many lawmakers, particularly Republicans, said they’d wanted more for taxpayers, and legislators in both parties view its property tax relief as meager. The bill decreases what homeowners will pay to the state to help finance public schools, but the 15.6% cut in that tax for the owner of a $250,000 amounts to $76 a year and is lower than previous plans lawmakers considered this year.
The bill cleared the Legislature with huge bipartisan majorities during a one-day special session called by Kelly after she vetoed three previous tax-cutting plans and lawmakers ended their regular annual session May 1. The GOP leaders who negotiated with her office warned colleagues that they risked another veto if they made any changes — and they didn’t. They’ve worried that failing to cut taxes will anger voters in this year’s elections.
“We can absolutely afford more tax cuts,” said Senate tax committee Chair Caryn Tyson, a Parker Republican. “I do support this legislation, but it is not the best we can get.”
The state’s coffers have bulged with surplus revenue, but disagreements between Kelly and Republican leaders prevented Kansas from enacting major reductions.
Republican leaders wanted tax cuts worth at least $230 million more over three years, but Kelly argued that those larger cuts would lead to budget shortfalls in five years.
“Although this package is not perfect and emphasizes income tax reductions instead of property tax relief, it does provide significant relief,” she said in a statement.
Personal income tax cuts account for nearly 87% of the bill’s relief, even though legislators repeatedly said their constituents’ biggest concern is rising property taxes fueled in part by rising home values. But most property taxes are levied by local officials, and the state’s school tax is a small portion of what people pay.
The bill moves Kansas from three personal income tax rates to two and cuts the highest rate from 5.7% to 5.58%. Other changes will increase the amount of income automatically exempted from taxes so that a married couple filing jointly will not pay any tax until they earn more than $25,000, whether they have children or not.
Kansas also will stop taxing retirees’ Social Security benefits instead of taxing the entire amount once someone earns more than $75,000. The state also will double an income tax credit for child care expenses.
The measure also provides a 14% cut in the tax paid by banks, savings and loans and other financial institutions instead of the corporate income tax. That mirrors past cuts for other businesses.
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