Legislature adjourns without tax law fix

? Legislators met briefly Thursday to formally close their annual session and disappointed House Republican leaders who wanted a chance to rewrite a new tax law.

The law temporarily reduced the annual income tax credits allowed to developers renovating historic properties as part of a larger plan for shoring up the state budget. Some preservationists worry the law endangers ongoing projects, and leaders of the House’s GOP majority hoped to respond.

But leaders of the Senate’s Republican majority hesitated to reopen the issue, and Democrats in both chambers were content to have administrative agencies deal with it in the short term. House GOP leaders sensed they would not be able to push a bill through and did not try.

As a result, the House and Senate each met less than 15 minutes, mostly to read messages from the other chamber and the governor. A balky sound system delayed the House in getting started and kept members from hearing much.

“We passed flawed legislation that we had an opportunity to fix, and we didn’t,” House Speaker Mike O’Neal, a Hutchinson Republican, said after legislators adjourned.

Legislators finished their other work on May 9. After Thursday’s ceremony, they’re not planning to reconvene until January, barring a special session.

Scheduling a separate day for the session’s formal adjournment gives lawmakers a chance to fix mistakes or deal with emergencies, and they have used the opportunity in five of the previous 10 years.

But some legislators were skeptical about moving too quickly on new tax legislation. They worried that reversing course on historical preservation tax credits could cost the state several million dollars in revenues with the state already struggling to stave off a deficit on June 30.

“It’s important to take our time and get it right,” said Senate Majority Leader Derek Schmidt, an Independence Republican.

Legislators cut a long list of income tax credits to help with the budget for the fiscal year beginning July 1. They capped total credits for historic preservation at $3.75 million for the next two fiscal years. That’s 90 percent of the credits claimed for 2006, the last data available, a projected savings of about $420,000 per year.

Developers claim the credits after they have finished their projects, but typically they obtain financing from banks and other investors based on them. Preservationists worry money for projects will dry up — or financing will collapse for projects already under way.

“There were a whole lot more projects than we were aware of,” said Richard Cram, the Department of Revenue’s director of policy and research.

Last month, the department and the Kansas State Historical Society agreed on guidelines for allocating credits.

A full tax credit will go to a project that is finished by June 15. Otherwise, the new cap will apply, and some developers may have to wait to claim their full credits until 2012, Cram said.