TOPEKA, Kan. — Kansas' new Democratic governor on Monday vetoed a tax relief bill approved by the Republican-controlled Legislature, arguing it would repeat an infamous fiscal experiment that failed under a GOP predecessor.
Kansas @GovLauraKelly says she will veto SB22. This is a tax cut bill. She told me tax cuts would not be a “speed bump it would be a u-turn.”— Steven Dial (@StevenDialTV) March 25, 2019
To override the veto the senate needs 27 more votes and the house needs 84 more than the bill passage number.. @41actionnews #ksleg pic.twitter.com/TNHWy9vV8s
Gov. Laura Kelly signaled for weeks that she would reject Republican leaders' top priority this year, a measure 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.
"We cannot fix our state if we repeat the mistakes of the past," Kelly said Monday.
A clash was inevitable. Allowing the tax relief to become law would have undermined the state's ability to sustain Kelly's proposals for education funding and Medicaid expansion. Republican leaders have yet to muster the two-thirds majorities necessary to override a veto and enact the tax bill, so Kelly is likely to prevail.
Republicans argued that failing to enact tax relief would allow an unlegislated tax increase. They said the issue was akin to deciding whether to return a lost wallet full of cash after finding it on the sidewalk with the owner's ID inside.
The governor and fellow Democrats noted the persistent budget woes that Kansas experienced after Republican legislators jumped into cutting income taxes in 2012 and 2013 at the urging of then-GOP Gov. Sam Brownback. Voters came to view the experiment as a failure, and bipartisan majorities reversed most of the tax cuts in 2017.
Kelly's administration projected that under the bill, taxpayers would save $209 million during the state budget year beginning in July.
Like other states, Kansas faced the issue of revising its income tax code because it is tied to the federal tax code. While changes in federal tax laws championed by President Donald Trump lowered rates, they also included provisions that raised money for Kansas, in party by discouraging individual filers from claiming itemized deductions.
The bill vetoed by Kelly would have provided relief to taxpayers who have itemized on their state returns. It would have allowed them to keep itemizing even if they don't on their federal returns, something previously prohibited.
Republican legislators also attached a provision to lower the state's sales tax on groceries to 5.5 percent to 6.5 percent to make the bill harder for Kelly to veto. Kelly herself promised during her campaign last year to work to lower the tax.
But much of the relief in the bill would have gone to large businesses that faced paying state income taxes on income generated by operations outside the U.S. because of the federal changes.