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House agrees to big Senate tax cut package

What once seemed a worst-case scenario comes closer to reality

By Mike Shields | May 09, 2012

In what passes for high drama at the Kansas Statehouse, the House and Senate today simultaneously took up dueling tax plans. The afternoon showdown was fought in a flurry of parliamentary maneuvers that ended when the House passed a measure so big that even some of the most ardent tax cutters conceded it would need fixing sooner or later.

"I don't think it's unmanageable. It's unfortunate, but we have what we have," said Sen. Susan Wagle of Wichita, a member of the GOP's more conservative faction. "There will be an election, and then we can come back and fix it. Now it's time for everyone to take a deep breath and see if this is the way they want to end the session."

The House came back from recess at 2 p.m. to consider a motion to concur with a tax-cut bill that the Senate had passed earlier in the year as a bargaining chip with little expectation it could become law because of its cost. According to the Legislature's research arm, the bill would deplete the treasury by $829 million in the coming fiscal year and leave the state $3.7 billion in the hole after five years.

Senate President Steve Morris.

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"With that kind of deficit, it would be devastating," said Senate President Steve Morris, R-Hugoton. "We did pass it with the urging of the governor so we could have something in conference."

Conference committees are where House and Senate negotiators grapple with the session's more complicated pieces of legislation and the bills sent to them often come out unrecognizable from the way they went in.

The Senate went in at 2:30 p.m. to debate an alternative tax plan that had been the subject of prolonged House-Senate negotiations, and about two dozen members began what Morris later called "stall tactics" awaiting the outcome in the House. The House acted before the Senate could vote so Morris declared the bill in the Senate moot.

The bill up in the Senate was projected to reduce state revenues by about $600 million a year, according to an analysis released Tuesday by the Institute on Taxation and Economic Policy. But among the things lawmakers have disagreed on this session have been the differing projected costs of the various tax plans.

Some House members who supported the plan with the bigger price tag said they had done so because they were convinced the Senate was intent on defeating any tax-cutting plan.

"It was the only thing we could do. It was the only option they left us," said Rep. Scott Schwab, an Olathe Republican who voted to concur with the Senate measure. "If we can come up with something better (before the session ends), great. But let's do it in good faith. The Senate cared more about upsetting the governor's agenda and the agenda of the people of Kansas than they did about passing a tax bill. The only way to get jobs here is to get companies to come here, and the way to do that is with good tax policy."

The governor and many legislators have said the costs of the proposed tax cuts would be partially offset by new jobs and business growth that would add to tax collections. The Legislature's research department does not use those types of "dynamic" projections in calculating potential costs because they are not considered as reliable.

"It would be very irresponsible," Morris said, for the governor to now sign into law the bill he will have before him following the House action.

"The magnitude of this bill, irresponsible doesn't even begin to describe it," said House Democratic Leader Paul Davis of Lawrence, who later urged House members to reconsider what they had done by accepting the Senate bill on a non-debatable motion.

Davis said the bill would require deep cuts in spending for schools and social services. His motion to reconsider failed on a 70-53 vote, a bigger margin than the bill had passing.

"Sam Brownback's got one big mess on his hands," said Senate Democratic Leader Anthony Hensley of Topeka.

But the governor said otherwise.

"It would create tens of thousands of new jobs and combined with spending restraint will help to reverse a lost decade of declining employment," Brownback said in a prepared statement. "I am prepared to sign the bill, but I encourage Kansas legislators to continue their work on reforming our state's tax policy and to consider some of the alternatives I proposed in my original pro-growth tax reform to offset the cost."

The notion that the House would accept the Senate measure was earlier considered a worst-case scenario that some at the Statehouse called "the nuclear option," and as soon as the House acted there was some discussion of a possible round of negotiations on a new counterproposal.

"Nothing's ever finished until the last gavel," Morris said.

The tax plan now headed to the governor's desk would, among other things, drop the top individual income tax rate from its current 6.45 percent to 4.9 percent and exempt the earnings of about 190,000 small businesses. It also preserved a number of popular tax credits that Gov. Sam Brownback proposed ending to offset part of the cost of his own plan for phasing down income taxes. The governor's plan would eliminate the mortgage deduction, the child care credit and the earned income tax credit, among others.

All the tax plans have met opposition from advocates for low-income Kansans. And a group of 55 former Republican lawmakers is publicly opposing plans to reduce or eliminate the income tax, saying the tax most harmful to Kansans is the property tax and that decreased reliance on the income tax would undermine education funding.

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