House rejects $600M-per-year tax package

Members of the House negotiating team on the Legislature's tax conference committee Monday, May 22, 2017, included Rep. Tom Phillips, left, R-Manhattan; Rep. Steve Johnson, R-Assaria; and Minority Leader Jim Ward, D-Wichita. Ward filled in for Rep. Tom Sawyer of Wichita who was absent due to illness.

? The Kansas House rejected a $600 million income tax increase late Monday after moderate Republicans who supported the bill could not get enough Democrats to join them.

The vote came on the fifth anniversary of the day Gov. Sam Brownback signed a sweeping package of income tax cuts in 2012. The bill would roll back or reverse many of those cuts by reinstating a three-bracket tax system, raising individual income tax rates, and repealing the “glide path to zero” formula that automatically lowers tax rates in the future.

It also would repeal the so-called “LLC loophole” that allows more than 330,000 farmers and business owners to pay no tax on their nonwage business income.

The bill was the most generous offer yet from Republicans who said it would raise enough money over the next two years to balance the state budget and pay for a school finance plan that would phase in a $280 million increase in education funding over the next two years.

But a large number of Democrats disputed that, saying the budget plan being talked about still involves sweeping $300 million a year out of the state highway fund and delaying some payments into the state pension system.

They also argued that the school funding plan probably would not be enough to satisfy the Kansas Supreme Court. That would force lawmakers to come back for a special session this summer to find more revenue.

“It does not meet constitutional adequacy. It does not provide us the resources to do that,” House Democratic Leader Jim Ward, of Wichita, said during a caucus meeting earlier in the day.

Only 14 of the Legislature’s 40 Democrats voted for the bill.

Rep. Steve Johnson, R-Assaria, who chairs the House Taxation Committee, said the bill would have raised 30 percent more money than a bill the House passed in February with a veto-proof majority. All 40 of the House’s Democrats voted for that plan.

Democrats, however, said that was before the Kansas Supreme Court’s decision March 2 that declared current funding for public schools was inadequate and unconstitutional, giving the Legislature until June 30 to pass a new funding system that will meet constitutional muster.

But Rep. Russ Jennings, R-Lakin, a moderate who supported the bill, said he could not accept that argument, saying the court’s decision did not come as a surprise to most legislators.

Conservative Republicans also opposed the bill. Earlier in the day, they held a news conference to present an alternative budget plan that would include no new spending over the next two years and would accept Gov. Sam Brownback’s plan to delay payments into the state pension system and sell off the state’s interest in future tobacco settlement payments.

It also included a 3-cent per gallon increase in the motor fuel tax, which would raise about $50 million a year to restore some of the sales tax revenue to be swept out of the highway fund.

A number of outside groups that have advocated for repeal of the 2012 tax cuts took to social media before the vote, urging lawmakers to accept the plan. Among those were the Kansas National Education Association, the “Rise Up Kansas” coalition and the “Save Kansas” coalition.

The bill failed on a vote of 53-68. Lawrence Reps. Barbara Ballard and John Wilson, both Democrats, and Republican Rep. Tom Sloan, voted in favor of the bill. Democratic Rep. Boog Highberger voted no.

Johnson said after the vote that the tax conference committee would go back to work Tuesday in search of another tax plan. But he said it was unclear from Monday’s vote whether the next tax bill would be larger or smaller than the one the House rejected.

Monday marked the 98th day of what is budgeted to be a 100-day legislative session.