Tim Carpenter
May 31, 2017

A “zombie” tax-hike proposal featuring repeal of the business owner income tax exemption and implementation of higher personal income tax rates in a three-bracket system may have bit the dust at the Capitol.

House Majority Leader Don Hineman, R-Dighton, said the basic form of House Bill 2067 had been rejected previously by the House and Senate. On Tuesday night, the House voted down a bill with the same basic components.

“I think the zombie has finally been extinguished,” Hineman said.

The House’s vote to defeat tax legislation that had just been approved by the Senate was a blow to those trying to close out the 2017 Legislature. It would have raised $1.2 billion over two years to cover the state’s budget deficit and a court-inspired increase in K-12 school funding.

House Democrats shocked some moderate Republicans by declining to form the majority necessary to forward the bill to Gov. Sam Brownback.

“The level of support from the minority party was surprisingly disappointing,” said Hineman, who initially voted for the bill, but pulled off when it was clear it would fail. “We’re getting tired of voting ‘yes’ for nonproductive tax bills.”

House Minority Leader Jim Ward, a Wichita Democrat among lawmakers opposing the bill, said the 40 Democrats in the House weren’t prepared to jump on the tax bandwagon driven by centrist Republicans.

GOP moderates have been less accommodating of ideas from Democrats as the session passed the 90th and 100th days, Ward said.

“Time and time again, we’ve come to them with ideas to try and move us forward. Their explanation is, ‘We’ll draft the school finance formula. We’ll fund schools the way we think is appropriate. We’ll do the budget. And, then, what we’ll do is ask you to pay the bill,’ ” Ward said.

He said House Democrats were committed to reversing major pieces of Brownback’s tax program, restoring suitable funding to school, pension and highway budgets and ending the Brownback administration’s addiction to borrowing money.

House Bill 2067, like its brethren, would have eliminated the income tax exemption held for five years by owners of 330,000 businesses. It would have imposed a third personal income tax bracket for wealthy Kansans. And, the bill would have elevated income tax rates paid by individuals.

However, Ward said, new funding for K-12 education cooked into calculations of the tax bill wouldn’t have met the Kansas Supreme Court’s instruction for spending on at-risk students. The House bill would add $285 million in state aid to schools over two years, while the Senate’s version would increase state spending $230 million in a two-year period.

“There is virtually unanimous consent in this building that it is woefully inadequate,” Ward said.

Ward said lowballing the Supreme Court would be a mistake because it could force a special session of the Legislature later in June and prompt a high court order to close public schools after July 1.

Heidi Holliday, executive director of the left-leaning Kansas Center for Economic Growth, said the House’s refusal to follow the Senate thwarted “a viable pathway out of the state’s ongoing fiscal crisis.”

“For five years, Gov. Sam Brownback has continually prioritized his tax experiment over the good of the state and the will of its people, despite all indications of its failure,” Holliday said. “We’re now in overtime at the Statehouse. Unfortunately, lawmakers failed to take a game-winning shot.”

Jeff Glendening, lobbyist with the conservative Americans for Prosperity, said interest among Kansas legislators in raising taxes by more than $1 billion might be weaker than assumed. Public sentiment is likely to wane more when taxpayers learn the Legislature and Brownback are pushing for spending increases as well, he said.

“We will educate the voters, and I can promise you they won’t be happy. We will hold legislators accountable for failing to control spending, while again asking for a record-breaking, retroactive tax increase,” Glendening said.

It is likely House and Senate tax negotiators could take a look Thursday at piecing together a bill capable of gaining the minimum number of votes required — 63 in the House, 21 in the Senate — to pass.

Settling on provisions more likely to be signed by Brownback may require transitioning closed-door talks in the House to the wish lists of conservative GOP legislators, Hineman said.

“That’s where the bulk of the discussion has been (Wednesday), at least on the House side,” said Hineman, the GOP leader. “Politics is the art of the possible. If some folks believe it’s possible to raise more revenue than (Tuesday) night’s tax bill did, they just truly don’t understand the makeup of the legislative body and what could be achieved.”

Read more from the Topeka Capital Journal here.

ClayTOPEKA CAPITAL JOURNAL: Kansas House GOP leader weary of ‘zombie’ bill, hungry for tax deal