Lawmakers not giving up on reversing Brownback tax policies
Topeka ? Kansas lawmakers indicated Thursday that they are not giving up on efforts to reverse many of the income tax cuts that Gov. Sam Brownback championed in 2012 to avert a looming budget crisis for the next two years, despite his veto a day earlier of a bill that would have done just that.
At the same time, however, Senate leaders said they are pushing for a smaller tax plan that would not take effect until 2018, which would mean lawmakers would have to make some significant spending cuts next year, possibly including K-12 education.
“There is not a desire to retroactively cut, therefore the hole is deeper in 2018,” Senate President Susan Wagle, R-Wichita, said Thursday.
Tax committees in both chambers brought forth new bills Thursday, most of which are only slight variations on the bill Brownback vetoed. The House committee also advanced the bill containing Brownback’s own tax plan.
Lawmakers will begin working on those bills when they return from a 10-day break on Monday, March 6.
Meanwhile, Republican leaders in both chambers expressed frustration with Brownback, saying he has been unwilling to engage in any meaningful talks about tax policy beyond the plan he introduced at the start of the session, which they say has little or no support in the Legislature.
“It appears to me that he’s not working with the Republican Legislature when he doesn’t help us with real solutions,” Wagle said during a GOP caucus meeting Wednesday. “And my greatest concern is that when he says, ‘You’re the appropriators, it’s your problem,’ and the Legislature sends him a bill, then he vetoes it.”
House leaders were more muted in their remarks, but they did not deny that they’ve seen little movement on the governor’s part.
“You can’t just say no. We have to hear no but … ” House tax committee chairman Steve Johnson, R-Assaria, said Thursday. “That’s the part that we need to hear.”
Brownback, however, told reporters Wednesday as he signed the veto that he’s standing by the tax plan he offered at the start of the session, which calls for big increases in cigarette and liquor taxes but no major changes in income taxes beyond reinstating tax on “passive” income from things like rents and royalties.
“I put one forward. I would hope it would get a full and fair hearing,” Brownback said. “I’ve gone to the Senate president and to the (House) speaker and said I’m willing to work on adjustments to this plan or another plan.”
At the same time, though, he said he is not willing to give up on the one signature piece of his 2012 tax plan, the so-called LLC loophole that eliminates taxes altogether on nonwage business income for more than 330,000 farmers and business owners.
“No,” he said. “I don’t think there’s been a fair presentation of it.”
The bill that Brownback vetoed Wednesday would have repealed the nonwage exemption, retroactive to Jan. 1.
It also would have retroactively raised income tax rates for individuals earning more than $15,000 a year, or couples filing jointly earning more than $30,000 a year. And it would have reinstated a third, higher tax bracket for individuals with incomes over $50,000 a year, or couples earning more than $100,000.
Wagle and Senate Majority Leader Jim Denning, of Overland Park, voted against the bill, and against the override, despite what Wagle described as intense pressure from constituents to do so.
“Right now we’re getting a lot of calls, anger from our constituents: ‘Vote to override, vote to override.’ Mine are running 10-to-one,” Wagle told the GOP caucus Wednesday.
Both insisted they supported the general policy, but they objected to the retroactive provision for individual rates, saying that would have imposed a burden on lower-wage workers, not to mention employers who would have to adjust their payroll withholding formulas.
On Thursday, Denning introduced a new bill in the Senate tax committee that is similar to the original bill, except the increased rates would not be retroactive.
The House tax committee, meanwhile, advanced two new bills to the House floor: one that is identical to the bill that Brownback vetoed and another that deletes only the retroactive language for increasing individual rates.
All three of those bills would also repeal the LLC exemption.
The House committee also advanced, without recommendation, a bill that contains Gov. Brownback’s tax plan.
“I’m not optimistic that that tax plan will move forward; nonetheless we don’t want to hold it up,” Johnson said.
Wagle, meanwhile, told her caucus Wednesday that the final tax bill will most likely look something like the one Brownback vetoed.
“That’s where we’re most likely to end up, addressing the loophole and addressing rate changes,” she said. “Clearly I think there’s a strong majority to fix the loophole, and so then the rest of it is, where are we at on rate changes?”