Kansas governor vetoes flat tax plan, proposes one-time $800M rebate

By: - April 24, 2023 10:07 am
Gov. Laura Kelly appears at Elmont Elementary School north of Topeka to announce she has vetoed a flat tax plan

Gov. Laura Kelly appears at Elmont Elementary School north of Topeka to announce she has vetoed a flat tax plan. She says the tax cuts overwhelmingly favor the wealthiest Kansans and would jeopardize funding for public schools. (Sherman Smith/Kansas Reflector)

TOPEKA — Gov. Laura Kelly said Monday she was vetoing a flat tax package that predominantly favors the most wealthy Kansans and proposing instead a one-time rebate of $450 per taxpayer.

The GOP-dominated Legislature passed a plan in the early morning hours before adjourning in early April that would install a 5.15% income tax rate for all Kansans, regardless of how much they earn. By abandoning a three-tier system, the change would reduce revenue by about $330 million annually. Lawmakers return to work this week and could attempt an override of the governor’s veto as early as Wednesday.

Other elements of Senate Bill 169 would accelerate $40 million in annual tax cuts for corporations, end the state sales tax on food a year early on Jan. 1, 2024, and provide about $40 million in residential property tax relief.

The Democratic governor announced her veto at Elmont Elementary School north of Topeka, where she said there was no doubt that public schools would be “the first to take a hit” if the tax plan were to become law. She compared the tax plan to former Gov. Sam Brownback’s tax experiment, which crippled state finances.

“Under the Brownback administration, our public schools were shortchanged time and time again,” Kelly said. “The Brownback tax experiment was a failed experiment. Our schools, our teachers, our parents, our families, and everyday Kansan paid the price.”

As an alternative, Kelly proposed a one-time tax rebate of $450 per person, or $900 for married couples, that would be delivered this summer. The total cost of the one-time rebates would be $800 million.

Republicans have examined various forms of a flat tax proposal this year as they wrestled with ways to transform a record surplus into tax cut relief. The state is projected to end the current fiscal year with a $2 billion surplus and $1.6 billion in a rainy day fund.

The bill passed the House 85-38, then cleared the Senate 24-13 with three Republicans absent. Republicans need 84 votes in the House and 27 in the Senate to override the governor’s veto.

“In these times of economic uncertainty when Kansans need tax relief more than ever, it’s especially careless and out of touch for Governor Kelly to veto this broad, sustainable tax policy that provides tax relief to ALL Kansans,” said House Speaker Dan Hawkins, a Wichita Republican.

Kelly said any flat tax is unattractive because it is regressive. The plan she vetoed would offer more than $250 per month in savings to Kansans who earn more than $250,000 per year. But individuals who earn between $25,000 and $75,000 would get receive $5 to $8 per month in tax relief.

To pay for the plan, Kelly said, lawmakers have already proposed to slash the K-12 education budget, as well as divert public funding into private school vouchers.

She said Republicans were taking the state’s strong financial position for granted.

“I refuse to take us back to an era of chronically underfunded schools, four-day school weeks, crumbling roads and bridges, and crippling debt,” Kelly said. “That’s exactly what this bill would do.”

The governor has called for immediate relief on groceries, diapers, feminine hygiene products, school supplies and Social Security income.

Senate President Ty Masterson, an Andover Republican, said the governor’s “big government approach” is comparable to President Joe Biden’s administration, which he blamed for economic instability.

“The governor’s veto and gimmicky proposal reveals a stark truth — she believes that taxpayer money belongs to the government, for politicians to dole out in one-time ‘payments’ rather than recognizing the money we collect belongs to the people and that we should simply let them keep it,” Masterson said.

House Minority Leader Vic Miller, a Topeka Democrat, said lawmakers should have emphasized a proposal to provide more residential property tax relief for Kansans who have seen valuations rise dramatically.

“Despite having an affordable package of property tax cuts in front of them, ready for a vote, the GOP gave tax breaks to corporations and the super wealthy,” Miller said. “But that’s the GOP way, I suppose.”

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Sherman Smith
Sherman Smith

Sherman Smith is the editor in chief of Kansas Reflector. He writes about things that powerful people don't want you to know. A two-time Kansas Press Association journalist of the year, his award-winning reporting includes stories about education, technology, foster care, voting, COVID-19, sex abuse, and access to reproductive health care. Before founding Kansas Reflector in 2020, he spent 16 years at the Topeka Capital-Journal. He graduated from Emporia State University in 2004, back when the school still valued English and journalism. He was raised in the country at the end of a dead end road in Lyon County.