Kelly recommending one-time $445 million tax rebate to 1.2 million Kansas taxpayers

Democrat enters re-election year with proposals for tax rebate, food sales tax reform

By: - December 22, 2021 10:37 am
Gov. Laura Kelly recommended the 2022 Legislature authorize a one-time $445 million tax rebate that would provide 1.2 million resident Kansas taxpayers a $250 rebate drawn from the state treasury. (Sherman Smith/Kansas Reflector)

Gov. Laura Kelly recommended the 2022 Legislature authorize a one-time $445 million tax rebate that would provide 1.2 million resident Kansas taxpayers a $250 rebate drawn from the state treasury. (Sherman Smith/Kansas Reflector)

TOPEKA — Gov. Laura Kelly said the flow of state tax revenue was sufficient to propose Wednesday a $445 million tax rebate to Kansans who filed tax returns in the 2021 calendar year.

The Democratic governor said the recommendation would deliver a one-time $250 rebate to individual taxpayers.

“Thanks to our fiscal responsibility and record economic development success, we can return money to taxpayers and give every Kansas resident who filed taxes in 2021 a $250 rebate. These are significant savings for every family to be delivered by summer of 2022,” she said.

The 2022 Legislature, with a House and Senate controlled by Republicans, would have to concur with her strategy.

House Speaker Ron Ryckman, of Olathe, said the people of Kansas needed sustainable tax reform of the type Kelly vetoed in the past.

“We’re not opposed to serious opportunities to give Kansans a break on their taxes,” Ryckman said. “But, Kansans are smart. They can see right through Laura Kelly’s attempt to throw $250 their way right before her election.”

Senate President Ty Masterson, a Republican from Andover, put it a different way: “I appreciate Governor Kelly’s election-year revelation that Kansans are taxed too much. While I am open to all ideas to help reduce the tax burden on Kansas families, permanent solutions will be our priority.”

 

1.2 million qualifiers

The tax rebate received support from House Democratic Leader Tom Sawyer, of Wichita. He also said he was eager for discussions of bipartisan work on robust tax and budget issues beyond the one-time rebate and a proposal from the governor to eliminate the state government’s 6.4% sales tax on groceries. Kansas has the nation’s highest sales tax on food, when local sales tax rates are factored.

“We need to make sure hardworking families benefit as soon as possible,” Sawyer said, “starting first with cutting the state sales tax on food to 0%.”

Under Kelly’s new proposal, the tax rebate would take the form of a non-taxable direct payment of $250 for every Kansas resident tax filer. Resident tax filers who filed as married and who filed jointly would be eligible for a $500 direct payment. All other filing types would be eligible for a $250 direct payment.

The Kelly administration estimated 1.2 million Kansas resident taxpayers would qualify for the tax rebate.

Kelly said the plan would have “no impact on the state’s ongoing ability to collect revenues that fund critical services.”

She said the tax refund proposal would be paid for with Kansas’ current budget surplus. The state has experienced income and sales tax revenue collections in excess of analysts’ projections. In addition, Kansas has benefitted from billions of dollars in federal COVID-19 and economic revitalization funding.

“Since 2019, my administration has carefully worked to get Kansas’ budget back on track after years of mismanagement,” Kelly said.

 

Tax tug-of-war

A spokesman for Attorney General Derek Schmidt, a Republican candidate for governor, said Kelly was borrowing from the Republican playbook on tax reform.

“Governor Kelly’s proposed rebate checks today are essentially plagiarized from the GOP tax bill she vetoed, except the GOP plan was twice as generous to taxpayers,” said Schmidt campaign spokesman C.J. Grover.

In April, Kelly vetoed a bill granting tax breaks to business sought for years by corporate lobbyists, implementing a sales tax on out-of-state online transactions proposed by the governor and increasing the standard income tax deduction for filers. The Legislature provided the necessary two-thirds majorities to override her veto.

Under Senate Bill 50, the state required collection of sales and compensating use tax by so-called marketplace facilitators such as Amazon starting July 1. The measure applied to out-of-state businesses with annual gross receipts on sales into Kansas of more than $100,000.

The bill granted individual income taxpayers in Kansas the option of itemizing on federal income tax filings while taking the standard deduction for state income tax purposes. In addition, the standard deduction for Kansas filers starting in tax year 2021 increased under the bill to $3,500 from $3,000 for individuals, to $6,000 from $5,500 for single head-of-household filers and to $8,000 from $7,500 for married filers filing jointly.

Corporations that held income offshore secured an exemption from state income tax when that cash was brought into Kansas. The legislation enabled meal expenditures to again be deducted as business expenses beginning in tax year 2021.

In 2019, Kelly vetoed a pair of tax reform bills adopted by the Legislature. The original version would have reduced state tax revenue by $500 million over three years. After it was rejected by the governor, a second bill with a $245 million price tax over three years was vetoed by Kelly. Lawmakers were unable to override these vetoes.

Kelly was a critic of the 2012 income tax exemption granted more than 300,000 business owners. The reduction in state income tax rates, without equivalent reductions in spending, contributed to revenue shortfalls during the administration of Gov. Sam Brownback. In 2017, after years of budget cuts, sales tax increases and large-scale borrowing, the GOP-led Legislature defeated Brownback’s veto of a bill reversing much of his 2012 tax program.

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Tim Carpenter
Tim Carpenter

Tim Carpenter has reported on Kansas for 35 years. He covered the Capitol for 16 years at the Topeka Capital-Journal and previously worked for the Lawrence Journal-World and United Press International. He has been recognized for investigative reporting on Kansas government and politics. He won the Kansas Press Association's Victor Murdock Award six times. The William Allen White Foundation honored him four times with its Burton Marvin News Enterprise Award. The Kansas City Press Club twice presented him its Journalist of the Year Award and more recently its Lifetime Achievement Award. He earned an agriculture degree at Kansas State University and grew up on a small dairy and beef cattle farm in Missouri. He is an amateur woodworker and drives Studebaker cars.

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