Deal offered three-year, $1.4 billion in property, sales and income tax reductions
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The Kansas House made a decision on Thursday to send a three-year, $1.4 billion tax cut package back to House and Senate negotiators. This decision was made through a voice vote, overriding House Speaker Dan Hawkins’ call to pass the bill and defying the guidance of Governor Laura Kelly.
Earlier today, the Kansas Senate took action to address one of the most pressing issues of the 2024 legislative session. They voted in favor of passing a tax reduction package, which Governor Kelly has pledged to sign into law. This compromise bill aims to find a resolution to the ongoing debate surrounding tax reductions.
Behind closed doors, Republican leaders in the House and Senate, along with Democratic representatives from the governor’s office, engaged in discussions to develop legislation pertaining to property, sales, and income taxes. The outcome of these talks resulted in the passage of House Bill 2036, with an overwhelming majority vote of 38-1 in the Senate.
According to Hawkins, a Wichita Republican, he admitted that the bill passed by the House last week was superior. However, he emphasized that the House had to reach a decision.
Hawkins expressed his frustration, questioning whether they should discard the tax bill altogether just because it doesn’t meet their preferred standards. He emphasized the need to not hastily judge and abandon the bill based on recent developments.
According to Hawkins, the other option was to embrace the bill from the House-Senate conference committee, which would ensure that “pretty much everybody out there” benefited from tax relief.
“I can guarantee that if we send it back, the headline tomorrow will be ‘House scuttles tax relief for Kansans.’ It’s going to be a challenge for us to counter that message. The press always goes for the most attention-grabbing headline,” Hawkins remarked confidently.
House Minority Leader Vic Miller, a Democrat from Topeka, expressed that the House unanimously approved their plan with the hope that it would be accorded due respect by the Senate.
“He expressed his frustration, stating that our position was completely disregarded. There was no consideration or discussion given to it. We deserve to be treated as though our thoughts and opinions matter,” he emphasized.
Miller, who is running for the Senate, expressed his disbelief at the idea of serving in that chamber.
Rep. Stephen Owens, a Republican from Hesston, expressed his dissatisfaction with the bipartisan compromise presented to the House and Senate. He emphasized that the people of Kansas deserve better and should have access to true savings in their pocket.
“Let’s face it. We’ve been told that this tax relief bill isn’t half bad. We’ve been promised the opportunity to return home. We’ve been bombarded with headlines,” Owens expressed. “But how about we create a headline of our own: House fights for the tax relief that Kansans truly deserve. Perhaps it’s about time that the House takes a firm stance. Ladies and gentlemen, today is that day. Let us stand together and send a powerful message that the people of Kansas deserve better.”
Senate lauds bill
The Senate believed that the tax-policy deadlock, caused by the governor’s veto of the GOP’s tax bill in January, was resolved by negotiating the provisions of HB 2036. Senate President Ty Masterson of Andover abandoned his plan to transition Kansas from a three-tier income tax system to a single-rate income tax system, a move that was criticized by Kelly and other critics for favoring wealthy taxpayers too much.
Prolonging the debate, according to Masterson, could potentially jeopardize the passage of tax provisions that are favored by the public. These provisions include exempting Social Security benefits from state income tax and ending the state’s sales tax on groceries. The proposed timeline for these changes is to implement them by July 1, rather than January 1.
“In this room, there isn’t a single person who isn’t aware of how much I appreciate the single-rate structure. It is, without a doubt, the most suitable structure for our state,” expressed the Senate president. “However, I recognize the current situation and the progress we have made. I have come to the understanding that there are at least 14 individuals in this chamber who are strongly committed to the three-tier tax structure, to the point where they were unwilling to allow the inclusion of the Social Security aspect. This plan, in every aspect, is a true compromise.”
As the clock wound down to Friday’s adjournment of the Legislature, the pressure to reach a deal escalated. He realized that he would not be able to secure the 27th vote in the Senate to override another gubernatorial veto of a single-rate bill.
Democratic Senator Jeff Pittman of Leavenworth expressed his support for the bill, highlighting its benefits for constituencies throughout the state. He emphasized that the three-year plan aimed to provide substantial relief, including $600 million in income tax reduction, $300 million in property tax cuts, $400 million in tax advantages for elderly residents, $54 million in tax credits for child and dependent care, and an early termination of the state sales tax on food, resulting in $67 million in relief.
County Executive Pittman explained that the proposed budget is a fiscally responsible decision. He believes that it falls within a sustainable range for the next three years.
Stakes are high
During the 2024 session, Kansas politicians were presented with a unique chance to allocate a portion of the estimated $4 billion surplus towards alleviating the tax burden. Numerous ideas surfaced during this time.
Sen. Robert Olson, a Republican from Olathe, expressed his admiration for the bill presented to the House and Senate for ratification. As someone who endorsed a tax plan proposed by Kelly, he was particularly pleased with several provisions. The inclusion of a child-care tax credit, an increase in the standard income tax deduction, and the reduction in property tax for K-12 schools were all welcomed by Sen. Olson. Additionally, he emphasized that the inclusion of the Social Security component in the bill was long overdue.
“These seniors have already contributed their hard-earned money in the form of taxes when they earned it,” Olson emphasized. “It is unfair for them to be taxed again on their Social Security benefits.”
The bill aims to repeal the state’s 2% sales tax on groceries effective from July 1. Additionally, the Social Security tax would be eliminated in the 2024 tax year. Moreover, the upper tier of the state income tax would decrease from 5.7% to 5.5%, while the lower tiers of 5.25% and 3.1% would remain unaffected. Another positive change includes an increase in the standard deduction for a married couple filing jointly, which would rise from $8,000 to $10,000.
On Thursday morning, the governor convened a meeting with the House Democratic caucus, where he encouraged them to endorse the compromise bill. At that juncture, it seemed that there was a greater inclination towards opposing the legislation in the House compared to the Senate.
Senator Tom Holland, a Democrat from Baldwin City, expressed his dissatisfaction with the tax compromise. He was the only senator who opposed it due to concerns about the process used to select elements of the deal. Senator Holland specifically objected to the influence of special-interest organizations, such as the Kansas Chamber, on legislators and the governor.
According to him, the bill falls short when it comes to lowering residential property taxes. He mentioned that homeowners with a $250,000 property would only see a reduction of $141 per year.
Holland criticized the tax bill, pointing out that not everyone is satisfied with it. He urged people to examine their property tax bills over the past five years and observe the significant increase. According to him, the bill is only a temporary solution, as the underlying issue is still unresolved.
According to Holland, the efforts made by special-interest lobbyists and legislators to decrease the highest individual income tax rate can be described as a futile and foolish endeavor. He believes that this pursuit primarily benefits wealthier individuals in Kansas, rather than those who earn wages through W-2 employment.
The tax negotiators from the Senate and House have assembled a series of four or five other bills that combine various provisions considered by the Legislature. It was anticipated that votes on these bills would take place before lawmakers adjourned for a three-week break, leading up to the veto-session at the end of April.
Kansas Reflector, a member of States Newsroom, operates as an independent news bureau with the support of grants and a coalition of donors as a 501c(3) public charity. For any inquiries, please reach out to Editor Sherman Smith at [email protected]. Stay connected with Kansas Reflector through Facebook and Twitter.
