As lawmakers entered the fourth week of their Veto Session and rapidly approached their 100th day in Topeka, they seemed little closer to identifying the solution they seek to raise just enough revenue to balance the budget and pay for schools.
Some common themes are emerging. The so-called March to Zero, a provision in the current tax code which automatically lowers tax rates when revenues go up, is absent from every proposal. So is the exemption for income earned by LLCs and other pass-through organizations; that exemption is all but certain to be repealed retroactively. Under most of the tax proposals being passed around, Kansans will once again be able to deduct 100% of their medical expenses. Then it gets complicated.
The proposals differ in how many tax brackets they would create and the rates at which income would be taxed. Just last night, the House rejected a plan to tax married Kansans earning between $5,000 and $30,000 at a rate of 3.1%; those earning between $30,000 and $60,000 at 5.25% and those earning more than $60,000 at 5.7%. Legislators at both ends of the spectrum turned away from this proposal. Some contended the bill wouldn’t have raised enough money; others recoiled at the magnitude of the tax increases, especially for the new members of the highest tax bracket – families earning $60,001 each year. No one is quite sure what happens next. The tax conference committee, consisting of 3 members each from the House and the Senate, will be back to work today to try to build a new proposal which won’t collapse in the face of such bipolar opposition.
Some have proposed repealing the 2012 tax reform bill altogether and returning to the rates Kansans were paying 5 years ago. That idea seems all but certain to be vetoed and probably does not have enough support to pass by a veto-proof margin. But the fact it is part of serious discussions makes a return to 2012 a bona fide stake in the ground for other tax plans.
At the same time, the tax bill is being forged, education finance committees in the House and Senate are finalizing new formulas for funding schools in accordance with the supreme court’s Gannon decision. The general target seems to be roughly $150 million per year. The Senate Majority Leader proposed last week to pay for that by adding a surcharge to every Kansans’ electrical, water and gas bill. His idea was predictably very unpopular and its very legality under the state constitution was questioned. But it has to be taken seriously given that Senator’s stature and given that the schools do need to be paid for somehow. That discussion remained in progress as this update went to press.
Before adjourning in April, the House passed a bill allowing cities to create entertainment districts within which responsible adults could lawfully stroll down the sidewalk with a glass of beer or wine in their hand. The bill has now passed the Senate, too, but it was amended ever so slightly. So the basic rules of legislative procedure require that the bill be sent back to the House for their vote to concur in the amendment and, at long last, send the bill to the Governor for his signature. The bill is on the House calendar and it is hoped that this last procedural step can be quickly checked-off, whereupon champions of the bill will celebrate briefly and immediately set their sights on local government where the real decision whether to establish an entertainment district gets made.