TOPEKA, Kan. (AP) — Persistent budget problems that followed a now-abandoned tax-slashing experiment in Kansas helped kill new cuts this year that were meant to return an unexpected “windfall” to the state from changes in federal tax laws.
Top Republicans pushed Friday — the last day of the GOP-controlled Legislature’s annual session — for passage of a bill that would save taxpayers an estimated $78 million during the state’s next budget year, which begins July 1. It was a response to changes in federal tax laws that will force some individuals and corporations to pay more to the state because the state’s tax code is tied to the federal one.
The Senate passed the bill, 21-19, early Friday morning, but it failed on a 59-59 vote Friday evening in the House after Republican leaders spent hours trying to cajole reluctant lawmakers to support it. A frustrated Senate adjourned for the year as the House held its vote open in hopes that missing members would return or some no voters would switch to yes.
Top Republicans had on their side business groups and the compelling political argument that the state shouldn’t collect extra dollars from its taxpayers that it hadn’t expected anyway. But legislators had earlier increased spending on public schools to satisfy a court mandate and added spending in other areas of the budget that they felt they had neglected for years.
Over the debate hung the shadow of the income tax cuts former Republican Gov. Sam Brownback engineered in 2012 and 2013, which were followed by budget woes that prompted lawmakers to reverse most of them last year to stabilize the state’s finances. Republicans split on this year’s tax-cutting bill, and critics repeatedly cited the experiment that made Kansas a national example of how not to do trickle-down economics.
“It’s Brownback all over again,” said state Rep. Tom Sawyer, of Wichita, the top Democrat on the House Taxation Committee. “We just got over that nightmare, and people did not want to relive it again.”
Republicans who supported the tax bill said it was unfair to characterize it as a return to the policies of Brownback, who stepped down as governor in January for an ambassador’s post. The proposed cuts were far smaller and, GOP lawmakers said, designed to keep people from paying taxes even higher than lawmakers intended when they approved a $600 million-a-year income tax increase last year.
One major change would have allowed Kansas filers to itemize on their state returns even if they do not on their federal returns, something they cannot do now. The federal changes limited some deductions and raised the federal standard deduction, so fewer Kansas would itemize.
“We have to do something, or this money is stolen from the taxpayers,” conservative GOP Rep. John Whitmer, of Wichita, told colleagues during a meeting of fellow House Republicans meant to build support for the bill. “It’s their money. Let’s give it back to them.”
Other Republicans argued that the real problem was a failure to control spending.
Lawmakers in April approved a new education funding law that will phase in a $534 million increase in spending on public schools over five years to comply with a Kansas Supreme Court ruling in October. The court said the state’s current funding of more than $4 billion a year isn’t sufficient under the state constitution, and it will review the new law in a May 22 hearing.
Legislators also added millions of new dollars elsewhere, restoring some past cuts in higher education, granting pay raises to state workers and attempting to catch up on past shortings of the state’s annual contributions to public pensions.
Some Republicans were quick to note that even without factoring any tax cuts, projections from the Legislature’s research staff suggested that the state could be facing budget shortfalls again within a few years.
“With or without this bill, the spending is in the red,” Senate tax committee Chairwoman Caryn Tyson, a conservative Parker Republican, told her colleagues during a debate on the tax legislation. “It has nothing to do with this bill.”