Lawmakers pass school funding and tax package

Brownback says he will veto tax bill

Republican leaders of the Kansas House and some of their staff huddle around Speaker Ron Ryckman's desk Monday as the House prepared to debate a tax bill that would reverse course on many of Gov. Sam Brownback's signature tax cuts from 2012.

? Kansas lawmakers late Monday passed and sent to Gov. Sam Brownback a school finance bill that phases in a $293 million increase in annual K-12 school spending over the next two years and a tax bill that reverses course on many of the tax cuts that Brownback championed in 2012.

Brownback issued a statement immediately after the Senate vote that he would veto the tax bill.

“Given that this tax package was assembled and passed just today, I hope to avoid any unnecessary delays by announcing that I will veto Senate Bill 30, allowing the legislature sufficient time to address its many deficiencies and harmful impacts on Kansas families,” he said in a statement emailed to news outlets. “We have worked hard in Kansas to move our tax policy to a pro-growth orientation. This bill undoes much of that progress. It will substantially damage job creation and leave our citizens poorer in the future.”

That action came on the 108th day of a legislative session after weeks of partisan stalemates over those two key issues. It also came just hours after the House rejected an effort to put both the school funding policy and new tax policy in a single bill.

The school finance bill is needed because the current funding system expires on June 30, and the Supreme Court has declared that funding to be inadequate and unconstitutional. In a decision released in March, the court threatened to close the state’s public school system on July 1 if lawmakers do not pass a constitutional funding mechanism by that time.

Meanwhile, the tax bill is considered critical in order to pay for the school plan and prevent the need for massive budget cuts due to revenue shortfalls the state has experienced almost constantly since Brownback’s tax policies took effect.

It’s almost certain, however, that Brownback will veto the tax bill, as he did a similar bill in February. This time, though, supporters of the bill say they are more confident that they can muster the two-thirds majorities needed to override a veto.

Education plan

The school funding bill would establish a per-pupil funding formula similar to the one lawmakers repealed in 2015, when they replaced it with a block grant formula that essentially froze funding in place for two years.

It would phase in over two years a $293 million increase in annual K-12 education spending, and would then index the base aid formula to the Midwest inflation rate.

Much of that new money, though, would be targeted at programs for the roughly 25 percent of Kansas students who are performing below grade level in reading and math. A large percentage of those students come from low-income families or families in which English is not the first language.

Many Democrats argued that the increase would not be enough to satisfy the court because the base per-pupil amount of $4,006 is nearly $400 lower than it was in 2009, when the state began making deep cuts in the wake of the Great Recession.

But supporters of the bill said they believe the court would look favorably on it because it targets money at the lowest-performing students, which was an issue the court emphasized in its March 2 opinion.

Kansas state Rep. Melissa Rooker, right, R-Fairway, speaks to fellow House Republicans about a school funding and tax package, as Rep. Larry Campbell, R-Olathe, follows along, Monday, June 5, 2017, at the Statehouse in Topeka, Kan. (AP Photo/John Hanna)

Many Democrats also objected to a provision that expands a program that offers a 70-percent tax credit for contributions to scholarship funds that enable some students in low-performing public schools to attend private or parochial schools if they choose to do so.

Currently, those tax credits are only available to certain for-profit corporations, but the bill would expand that to allow individuals to receive those same tax credits.

But that scholarship program was the principal reason why many conservative Republicans voted for the bill.

“The tax credit scholarship is really important to me,” Rep. Chuck Weber, R-Wichita, said.

Rep. Melissa Rooker, a moderate Republican from Fairway, said she opposed the scholarship program too, but she said it wasn’t enough of an issue to justify defeating the bill.

“While I appreciate the comments about some of the areas of concern, I don’t find them to be at a level at which we should stop this in its tracks and go back to conference,” Rooker said.

The bill passed the House, 67-55. It then passed the Senate, 23-17.

In the House, Lawrence Reps. Barbara Ballard and John Wilson, both Democrats, and Rep. Tom Sloan, a Republican, voted for the bill. Rep. Jim Karleskint, R-Tonganoxie, whose district includes Eudora, also voted for the bill, while Rep. Boog Highberger, D-Lawrence, voted against it.

In the Senate, Sens. Marci Francisco of Lawrence and Tom Holland of Baldwin City both voted no.

Tax plan

The tax bill that eventually passed looked much like the one that was being promoted by a bipartisan group of female House members who called themselves the Women’s Caucus. It would raise a little more than $600 million in new income tax revenue a year by the time it’s fully phased in.

Like many of the plans considered this session, it would repeal some of the features of Brownback’s 2012 tax plan, such as the exemption on nonwage business income that allows more than 330,000 farmers and small business owners to pay no state income taxes, and the so-called “glide path to zero” formula that was meant to phase out state income taxes altogether.

It would also re-establish a third, upper tax bracket and raise individual rates across the board. But it also would restore many deductions and tax credits that were either reduced or eliminated under Brownback’s policies, most notably a tax credit to offset a portion of a family’s child care expenses.

Some conservatives were outraged by the bill, arguing that the state has a spending problem, not a revenue problem.

“We are increasing our spending by tens of millions of dollars, unnecessarily, so we can impose hundreds of millions in tax increases,” said Sen. Ty Masterson, R-Andover, a leader of a group that called itself the Truth Caucus which advocated for a budget that they said would not require a tax increase.

Sen. Rob Olson, R-Olathe, complained that the budget the Senate passed the night before does not fully fund the state pension plan in 2019, and said the state should put a cap on state contributions into the system.

“Because what’s been happening is we’ve got too many people that are benefitting that had high salaries and are getting very large pensions,” Olson said. “And the taxpayers, I don’t believe, are paying for us to do that. I believe they are paying for us to take care of our teachers and the people who are the most vulnerable.”

But Sen. Randall Hardy, R-Salina, said he heard an entirely different message from voters when he campaigned last year, defeating incumbent Sen. Tom Arpke, a conservative Republican, in the GOP primary.

“I knocked on 4,000 doors during that campaign process, and my message was we need to repeal the 2012 tax policy,” Hardy said. “And I did not find one voter who said, ‘We just have a spending problem.’ They all agreed with me on this one issue.”

The bill passed the House, 69-32.

In the House, Reps. Ballard, Highberger, Sloan and Wilson all voted for the tax bill; Rep. Karleskint voted no.

The Senate vote, which came shortly after midnight, was 26-14, one vote short of the two-thirds majority needed to override a veto.

Sens. Marci Francisco of Lawrence and Tom Holland of Baldwin City both voted yes.