Kansas Gov. Laura Kelly will call a special session after the Legislature early Wednesday passed tax cuts she intends to veto because of concerns over cost.
The Democratic governor has promised for months to return lawmakers to Topeka if they ended their annual session without tax relief she was willing to sign. The Legislature adjourned around 12:30 a.m., hours after a top Kelly aide reiterated the promise.
The special session could prove politically volatile, coming in an election year in which Democrats are hoping to end Republican supermajority control of the Legislature. Kelly, in her second term, isn’t on the ballot but GOP lawmakers are likely to run as opponents of her agenda.
The House passed the tax cuts package, SB 37, in a bipartisan 108-11 vote. The Senate passed it 25-9.
Ahead of the vote, Kelly’s chief of staff, Will Lawrence, said the governor would veto the tax plan. “She will call the Legislature back into special session if this is the tax plan sent to her desk,” Lawrence said in a statement.
Kelly’s office didn’t immediately announce the timing of a special session, but Lawrence told a meeting of House Democrats that it would potentially come in a couple weeks. Because Wednesday marked the end of the annual session, lawmakers will have no opportunity to override Kelly’s veto.
Lawmakers passed the tax plan a day after the Legislature failed to override Kelly’s veto of a previous tax measure, HB 2036, by one vote. The new plan passed by lawmakers is substantially similar to the vetoed plan, leaving little doubt that Kelly would reject it.
“I think it’s time that we go down to the second floor and try to figure out what in the world the governor will accept,” Sen. Tim Shallenburger, a Baxter Springs Republican, said as the Senate debated the bill just before midnight. The governor’s offices are located on the second floor of the Capitol.
The new plan moves Kansas from three state income tax brackets to two, which will provide many taxpayers with a break in the process. It sets the top rate for married couples filing jointly at 5.57% and the bottom rate at 5.2%, with $46,000 serving as the dividing line between the two rates.
All other taxpayers would be taxed at 5.15% in the bottom bracket and 5.55% in the top bracket, with $23,000 dividing the two brackets.
The plan contains other tax changes, including raising the personal exemption allowance for dependents, lowering the statewide mill levy for schools, and accelerating the elimination of the state sales tax on food to July 1, in addition to ending taxes on Social Security income.
“All session long we have worked toward tax relief for Kansans,” House Speaker Dan Hawkins, a Wichita Republican, said, accusing Kelly of moving the goalposts on taxes.
Kelly said the vetoed measure was too expensive when she vetoed it, citing the anticipated $460 million annual cost of the bill as well as the costs of additional tax bills passed by lawmakers. She has called for the cost of tax cuts not to exceed roughly $425 million a year.
The new plan, after a first-year cost of $641 million, is projected to cost between $462 million and $472 million a year during the first five years.
“The latest Republican tax proposal hikes the income tax rate for lower income Kansans while increasing the fiscal cost,” Lawrence said in an earlier statement on Tuesday. “This isn’t a serious proposal. It’s an attempt to leave town without tax relief.”
Kelly has gone back and forth with the Legislature over taxes throughout the session, with the governor previously vetoing a flat tax plan that would have set a single income tax rate for all taxpayers. Kelly also vetoed HB 2036, leading to Monday’s veto override showdown.
Republicans have been dismissive of the roughly $35 million annual difference between the size of the plans passed by the Legislature and what Kelly is willing to accept. But Kelly has emphasized that lawmakers have also passed other tax plans that add to the annual total.
“When do you not say that she’s being a bit of a dictator when you bipartisan supermajorities repeatedly sending her tax cuts?” Senate President Ty Masterson, an Andover Republican, said.
Projections circulated among House Democrats indicate that if several other tax measures become law in addition to the tax plan, the state’s ending balance could dwindle over the next few years.
In a late night meeting, several House Democrats voiced frustration with Kelly’s position and sought answers from Lawrence on what exactly she would support. Lawrence emphasized concerns about the ending balance and the overall, comprehensive costs of the tax measures.
Democrats in the House have supported previous tax proposals, including a measure vetoed by the governor, while Democrats in the Senate have voted against them.
“I’ve been through different governors and I’ve been through different Houses and different speakers,” said Rep. Barbara Ballard, a Lawrence Democrat who entered the Legislature in 1993. “But I’ve never seen the frustration as high.”