Kansas’ new Democratic governor has vetoed a tax relief bill approved by the Republican-controlled Legislature.
Gov. Laura Kelly rejected the measure Monday after saying that it would repeat an infamous fiscal experiment that failed under a GOP predecessor.
The bill was aimed at preventing individuals and businesses from paying more in state income taxes because of changes in federal tax laws at the end of 2017.
Kelly’s top priorities are boosting funding for public schools and expanding the state’s Medicaid health coverage for the needy.
Republicans argued that their bill would prevent an unlegislated tax increase.
Democrats pointed to the budget woes that Kansas experienced after Republican legislators slashed income taxes in 2012 and 2013. Bipartisan majorities reversed most of the tax cuts in 2017.
Senate President Susan Wagle and House Majority Leader Dan Hawkins said Kelly is breaking a promise she made in last year’s campaign not to raise taxes. The two Republicans argued that the bill they championed prevented an unlegislated tax increase.
Hawkins has compared the tax debate to finding a wallet full of cash on the sidewalk with the owner’s ID. He said: “She kept the money for herself.”
The following message is from Governor Laura Kelly regarding the veto of Senate Bill 22:
Just two short years ago, the State of Kansas found itself on the brink of financial disaster. Even after depleting state savings and enduring multiple rounds of devastating budget cuts, unsustainable tax policy continued to perpetuate fiscal crisis. We saw schools close and class sizes grow. We saw an overwhelmed child welfare system let children fall through the cracks. And despite promises of immediate prosperity, Kansas routinely ranked among the nation’s worst in multiple economic indicators.
As the budget hole continued to grow, the legislature passed two sales tax increases, swept more than $2 billion from the state highway fund, delayed numerous payments to the state pension system, accumulated historic levels of debt, and raided every critical investment from early childhood education to public safety. But in the end, none of these short-term band aids could stem the bleeding caused by reckless tax policy. In November of 2016, Kansans called for change.
The very next year, the state hit “reset” in a historic act of bipartisanship with the passage of comprehensive tax reform. Our credit score improved within a week. The number of Kansans participating in the labor force increased for the first time since 2014. And we’ve finally begun to heal from the unprecedented devastation found in state agencies and state programs.
However, we have only just started the rebuilding process. Our recovery is tenuous; our budget is fragile. The State of Kansas cannot afford to make a U-turn.
Unfortunately, Senate Bill 22 would absolutely dismantle all the progress we’ve made. It would throw our state once again into a self-inflicted budget crisis, diminishing all the investments we’ve worked so hard to rebuild and restore. It would put our future at risk once again in order to give significant tax breaks to entities who need them the least, while continuing to leave working families behind.
Additionally, as noted by the Senate President during the floor debate, Senate Bill 22 will put Kansas out of compliance with theStreamlined Sales and Use Tax Agreement. This would potentially cost Kansas up to $18 million in lost revenue — on top of the bill’s already unaffordable $200 million price tag in the next fiscal year.
I look forward to working with the Kansas Legislature in the future to achieve our common goal of a reduced food sales tax. However, as I explained repeatedly — both as a candidate for governor and after I took office – we cannot responsibly enact a food sales tax cut until our state’s fiscal health stabilizes. This is not the time.
I share Kansas lawmakers’ desire to keep the state tax burden as low as possible and that will continue to be my priority. In January, I presented a structurally balanced budget to the Kansas Legislature that funded our schools and roads, reduced state debt, left Kansas with the largest ending balance in 20 years, and did so all without a tax increase.
The people of Kansas elected me to rebuild our state. They elected me to bring fiscally conservative and responsible principles back to our government. We must be patient, thoughtful, and prudent as we evaluate tax policy. And, when we move forward with commonsense tax relief, we must ensure that it benefits the Kansans who need it the most.
Therefore, under Article 2, Section 14(a) of the Constitution, I hereby veto Senate Bill 22.