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On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

Top Kansas lawmaker says governor might OK closing business tax loophole

By Sam Zeff | April 18, 2016

The vice chairman of the Kansas Senate Ways and Means Committee says he’s been told by Gov. Sam Brownback that the governor might consider rolling back a major portion of his signature 2012 tax cut bill.

Sen. Jim Denning, a Republican from Overland Park, said on KCUR’s Statehouse Blend podcast over the weekend that Brownback might not veto a bill that would close the loophole that allows more then 300,000 small businesses in Kansas to avoid state income tax.

Photo by KHI News Service File Photo Sen. Jim Denning, an Overland Park Republican, says Gov. Sam Brownback might consider rolling back a major portion of his signature 2012 tax cut bill.

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“It’s been signaled to me personally that he would not veto anything that the Legislature came up with to close that loophole this year,” Denning said. “So that’s a big movement from his position last year when he was 100 percent crystal clear that he was going to veto anything that we did.”

But the governor’s office suggests Denning may be jumping the gun.

“The governor will always carefully consider any bill the Legislature chooses to send him,” Brownback spokesperson Eileen Hawley said in a statement. “We will announce our proposals for balancing the budget next week when the new revenue estimates are released. A plan to raise taxes on small businesses or anyone else will not be among them.”

Denning also predicted a rather dire consensus revenue estimate when state officials and economists meet Wednesday. He expects revenue projections to be revised downward at least $150 million and as much as $250 million.

Kansas has missed revenue projections 11 of the last 12 months, including an $8.5 million shortfall in March and a $54 million shortfall in February. 

The Legislature returns April 27 for its veto session, and leaders have said they hope for a quick wrap-up session. However, if Denning is able to push through closing the loophole, the veto session could be a bit more complicated. That’s especially true in an election year. 

“This thing is past politics to me. It’s a policy decision. It’s a business decision,” Denning said on the podcast. “We’ve got to keep the trains running, and closing that loophole is such a simple step. For me personally, I just don’t see the political fallout.”

To make up for the anticipated revenue problem, Denning said Brownback has a couple of options to balance the budget for this fiscal year, which ends June 30. He can sweep more money from the Kansas Department of Transportation budget and make other transfers.

“We’ve got to keep the trains running, and closing that loophole is such a simple step. For me personally, I just don’t see the political fallout.”

- Sen. Jim Denning, an Overland Park Republican

Denning says Brownback also is prepared to cut more money from the Kansas Board of Regents budget. “I think the governor has another $17 million he plans on cutting out of higher ed, and I think they’re prepared for that.”

That would on top of an across-the-board 3 percent cut higher education took in March after the dismal revenue performance in February.

If Denning is correct, higher education in Kansas would have a total of $34 million cut from its budget this year. A spokesperson for the Board of Regents did not immediately respond.

— Sam Zeff covers education for KCUR. He's also co-host of KCUR”s political podcast Statehouse Blend.