Kansas Tax Cut Bites The Dust, Lawmakers Brace For Political Fallout
The Kansas House killed a tax cut bill on its way out the door Friday, ending the 2018 session with yet another signal that this isn’t the same conservative-dominated body of just two years ago.
This is the Legislature that voted last year to expand Medicaid and end then-Gov. Sam Brownback’s signature 2012 tax cuts with a two-year, $1.2 billion tax hike.
But even as lawmakers finished their second year moving toward the middle, a few suggested the decision to reject tax cuts will feed into this fall’s elections. It could make some Democrats and moderate Republicans — groups that both gained seats in 2016 — vulnerable to more conservative challengers.
"It will not be without political consequence."
“It will not be without political consequence,” said Rep. Stephanie Clayton, among those who blocked the bill with a 59-59 vote. “Those of us who voted no will likely face some political difficulties for doing so.”
But the moderate Overland Park Republican said blocking that tax change was needed to keep the state budget on solid footing.
Rep. Chuck Weber, a Wichita conservative, left convinced that only November’s election can restore a smaller, more frugal state government.
“Unfortunately there are too many Democrats — well, all the Democrats — and too many Republicans who want to spend more of the people’s money,” he said. “We’re going to work hard to get the big tax-and-spenders out of this place.”
Many moderates and Democrats argue the state is still recovering from years of fiscal woes stemming from the 2008 financial crisis and Brownback’s tax cuts. And, they note, it faces increasing court pressure to better fund schools.
But many conservatives say — and some of their less conservative colleagues agreed — that last year’s tax hike meant they had a responsibility to help taxpayers this year.
A few said taking in more taxes from Kansans because of a change in federal tax law would be like finding a bag of someone else’s money and not returning it.
"Is it a windfall? ... It's not the state's money."
“Is it a windfall? What is it?” Rep. Ken Rahjes asked. “To me, it’s a takings. It’s not the state’s money.”
The bill that failed would have prevented Kansas taxpayers who itemize on their state returns from getting stuck with higher state taxes next year. That anticipated increase comes from changes Congress made in last year’s federal tax overhaul.
State legislative leaders and others who backed the bill have repeatedly called that money a “windfall” that the state has no right to keep.
“I’m extremely disappointed,” Senate President Susan Wagle said in a statement after the bill passed her chamber only to fail in the House. She called the measure’s defeat “another silent tax increase.”
Many Democrats and moderate Republicans were skeptical of changes in the bill estimated to cut state revenue about $80 million in the first year.
They argued the state couldn’t afford it. At the very least, they said, Kansas should hold off for another year because a number of unknown factors related to the federal tax overhaul made the real fiscal cost of the bill difficult to know.
Among those difficult-to-predict impacts, opponents homed in on the bill allowing multinational companies to transfer earnings from abroad without paying taxes.
Rep. Tom Sawyer, the Democrat’s lead tax negotiator, said that possibility was keeping him up at night.
“It’s wrong,” he said. “It’s extremely unfair.”
Jim Gartner, a Topeka Democrat who argued for “staying the course” until the state has more information, said he’s not worried about November.
“How on earth can we reduce state revenues” he said, “and then we come back in June — if the Supreme Court overturns the case — and we have to come up with additional revenue to fund education? … What would (Kansans) think of us as policymakers?”
Celia Llopis-Jepsen is a reporter for the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. You can reach her on Twitter @Celia_LJ. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to the original post.