Topeka — Gov. Laura Kelly’s top priority for tax reform is to scrap the state’s 6.5% sales tax on groceries, and she’s putting a shoulder behind one-time tax deduction plans for more than 1 million state residents.
“My administration took steps to restore the Kansas economy, and that fiscal responsibility paved the way for a direct tax break,” Kelly said. “This exemption will come specifically through proposals such as eliminating the food tax and offering a one-time $250 tax credit to Kansas families.”
Huge cash reserves in the state treasury opened the door to support a cut in the state’s very high sales tax on food, but it’s unclear whether the legislature has the appetite to turn over $450 million a year to end this revenue source. The governor’s $445 million rebate program could prove politically difficult given the avalanche of ideas for property, income and sales tax cuts littered around the Capitol.
Both Senate Speaker Ty Masterson, of Andover, and House Speaker Ron Rickman, of Olathe, both said they would push hard for the tax break in the 2022 legislative session. However, both viewed Kelly’s opponent as a campaign gimmick.
“While I am open to all ideas to help reduce the tax burden on Kansas families, durable solutions will be our priority,” Masterson said.
The 90-day legislative session takes place on Monday, and election year politics have highlighted the issues of the bread and butter tax.
The House and Senate Joint Tax Committee of the Legislature has recommended removing no longer in vogue appropriations and exemptions from the legislation books. An upcoming bill to create one individual income tax bracket, instead of three, in Kansas. There will be an effort to reform energy tax policy, perhaps at the expense of renewable energy advocates.
In the House and Senate, lawmakers have introduced accompanying bills to provide a sales tax exemption to ranchers or farmers who purchase materials to rebuild fences destroyed by wildfires. Dozens of House members have sponsored a bill that would provide income tax credits to members of the military. It may require the latest court-ordered foreclosure auctions to be in-person events in the same county as the property.
A bill that would give seniors a significant property tax cut has caused an uproar between the two parties. There is an interest in eliminating the 1.5 mill property tax that diverts money to state universities for building maintenance. Kansas has higher taxes on gasoline and cigarettes than Missouri and Colorado, but there is a bill to amend the state tax on wine.
The Senate is leading the task of making a constitutional amendment aimed at restricting the growth of the government. This can be done by placing ceilings on revenues or expenses. In an emergency, cover can be suspended by a two-thirds majority vote of the House and Senate and with the consent of the governor.
Another proposal aims to put bloated bureaucracy on a diet: link government employment in the state to the residents of Kansas.
Senator Karen Tyson, the GOP for Parker and chair of the Senate Tax Committee, said the legislative leadership is ready to bring up a constitutional amendment for discussion in the 2022 session. She dismissed the skepticism of Wichita Representative Henry Helgerson, who said the constitutional amendment came with too many complications.
“We need to innovate. We need new ideas,” Tyson, who is seeking the Republican nomination for state treasurer, said. “I think this is the year.”
Tyson said the state’s heavy reliance on property tax to run the government must end. She said low-income people make choices to buy food, buy medicine, or pay property taxes.
“We’ve come so dependent on the property tax that we’re stagnating,” Tyson said. “In fact, people and companies are leaving the country as a result.”
The Legislative Council is expected to debate a bill exempting social security benefits from state income tax. It would cost the state $230 million to $300 million annually to exempt all retirement income from state taxes. A political question posed by Republicans and Democrats centered on whether it was fair to give this special-benefit tax break to wealthy retirees.
“I don’t worry about people making hundreds of thousands of dollars, because they also buy Beamers and Mercedes,” said Representative Les Mason, a McPherson Republican.
Senator Mark Stephen, R. Hutchinson, said the state attorney general should challenge the constitutionality of a state law that gradually increases state assistance to public school districts from kindergarten through the end of high school, which is backed by a statewide property tax of 20 million . He pointed out that the inflation factors in the current law will lead to an unsustainable increase in financial pressure on the state’s general budget.
It is not clear how much tax reform the state can afford and how keen lawmakers and the governor are to compromise on tax policy. Overall, during the 2021 legislative session, only 116 bills became law out of 769 submitted. Kelly intercepted 10, but five were passed.