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Emotions High at 4 a.m., Kansas House Passes Tax Plan

A tax plan crawled to passage in the Kansas House in the early hours Friday morning, after Gov. Sam Brownback warned lawmakers that massive budget cuts would occur Monday if they failed to act on taxes.

By Bryan Lowry

A tax plan crawled to passage in the Kansas House in the early hours Friday morning, after Gov. Sam Brownback warned lawmakers that massive budget cuts would occur Monday if they failed to act on taxes.

The House began debate on a pair of bills at 1:30 a.m. meant to plug the state's nearly $400 million budget hole. It did not pass until after 4 a.m.

Democrats castigated Republican leaders for holding the debate at such an hour when lawmakers are weary and most of the public are asleep.

But Republican lawmakers stressed the urgency of passing a bill now rather than later with the state staring down massive cuts if lawmakers failed to act.

The first bill, SB 270, scraped by with 63 votes, the bare minimum for passage, and the second, HB 2109, initially fell four votes short: 59-48 in favor with another 19 representatives.

House Speaker Ray Merrick, R-Stilwell, invoked a rule known as "the call of the House," which pauses the vote and requires the Kansas Highway Patrol search for missing representatives. Merrick and other Republican leaders picked up their phones and aggressively pressed colleagues to back the bill.

"I need some movement," the speaker emphatically said into his phone within earshot of reporters seated nearby.

The call lasted more than two hours before Rep. Blake Carpenter, R-Derby, cast the deciding vote after 4 a.m. Carpenter left the House chamber before answering questions.

"Sometimes it's hard to get 63 votes," Merrick reflected after the bill passed. "That's the way the process works. It's a hard vote for Republicans raising taxes. It's a real tough vote for me."

Before the pair of bills can go to the governor's desk the Senate will have to pass SB 270, which is not a necessarily guaranteed.

"It moves that last train down the track," Merrick said about the House vote.

The two bills generate $384 million in revenue, which if added to other legislation passed this year, would fill the state's shortfall and leave the state with a razor thin $36 million ending balance in fiscal year 2016, which begins in July. House leaders are also counting on the governor to issue $50 million in unspecified budget cuts of his own to bring the total to $86 million.

Rep. Marvin Kleeb, R-Overland Park, told his colleagues that if they failed to pass the bill then the state would be plunged into financial crisis. He asked them to be statesmen and support it.

The House plan -- if both bills become law -- would raise the sales tax from 6.15 percent to 6.5 percent on July 1, which would bring in about $164 million in revenue.

Rep. Tom Sawyer, D-Wichita, criticized this provision, noting that Kansas already has the highest sales tax in the region and the second highest tax on food in the nation. The hike on the state rate when combined with local taxes would give Kansas the highest tax on food in the nation, he argued.

The House plan lacks a reduction to the sales tax rate on food that had been included in a plan previously passed by the Senate. Republican lawmakers promised to revisit the issue during next year's legislative session.

The House plan includes the governor's proposal to eliminate income taxes for 380,000 low-income Kansans starting in tax year 2016. Some analysts have warned that low-income Kansans will still end up paying more taxes overall because of the sales tax hike.

Republican leaders made a case that the bill was necessary to prevent cuts to state services.

Rep. Ron Highland, R-Wamego, who serves as House Education chair, argued that failing to pass the bill would put the state's schools in jeopardy.

"And we all know that," he admonished.

Governor's warning

Brownback and top administration officials warned that massive budget cuts would have to be enacted Monday if lawmakers fail to pass a tax plan that fills the state's budget hole at a rare joint caucus meeting of House and Senate Republicans.

"We're at day 112. ... We're at Thursday. By Monday you have to come up with something," Brownback said.

Jim Clark, the secretary of administration, told the meeting that his department needs to begin entering budget information into the state's accounting system Monday in order to ensure that payments to agencies go out on time when the fiscal year starts July 1.

State law forbids an unbalanced budget. That leaves a limited set of options.

Budget director Shawn Sullivan said the governor could veto the entirety of the state's $15 billion budget or he could use line item vetoes to fill the state's nearly $400 million shortfall.

For example, Sullivan said, issuing line item vetoes of combined state budgets for Wichita State University and the state's other regents institutions would fill the shortfall, or the administration could proceed with a 6.2 percent across-the-board budget cut that would cost Kansas public schools nearly $200 million.

The Kansas Board of Regents released a statement Thursday evening decrying the floated cut, calling it an "unprecedented situation."

"To completely defund higher education will have a devastating and long-lasting effect on students, families, businesses, and the entire economy of the State of Kansas," said Andy Tompkins, president and CEO of the Board of Regents.

Sullivan said all of these were horrible choices. He said that eliminating higher education funding was "not a permanent solution obviously."

Brownback called on lawmakers to pass a tax plan instead to avert the budget slashing.

"Now is the time you've got to act," he said. "You've just got to act."

During the House debate, Rep. Jim Ward, D-Wichita, accused the governor of making threats to in order to get his way. The plan leaves an income tax exemption for business owners, which the governor has championed, largely untouched -- apart from a tax on guaranteed payments to partners of limited liability corporations, which many lawmakers say will be easy to dodge.

Ward said that the cost of leaving more than 330,000 business owners' income untaxed had passed the costs onto the poor and working class. "Why do we expect the little guy to continue to pick up the tab?" he said.

After the vote, Ward did not hide his disappointment.

"It's like a Greek tragedy. You knew what the ending was going to be," Ward said. "You just hoped against hope it would be different."

Rep. John Whitmer, R-Wichita, a freshman lawmaker, came to the House lectern sobbing to urge his colleagues to vote in support of the bill.

"I voted for something I am not proud of, but I feel it's what the folks need," Whitmer said in tears.

Whitmer and other conservatives who had resisted passing a tax increase for most of the marathon legislative session lined up in support of the bill after a grueling day.

(c)2015 The Wichita Eagle (Wichita, Kan.)

Caroline Cournoyer is GOVERNING's senior web editor.
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