(Updated to include comments from Masterson meeting with reporters and edits throughout)
Democratic Gov. Laura Kelly on Friday made good on her promise to veto a Republican tax plan that included a flat tax, which she described as a “reckless” measure that would do nothing for the middle class.
The governor’s veto sets up a showdown with the Legislature, which failed to override the governor’s rejection of a similar tax plan last year because it included a flat tax.
She also threatened to call a special session of the Legislature if an agreement on a tax bill can’t be reached, something that the Senate president called “gamesmanship.”
“I support responsible tax cuts, but I refuse to sign into law a reckless flat tax that would take us back to Brownback while doing next to nothing for the middle class,” Kelly said in a statement.
“This flat tax experiment would overwhelmingly benefit the super wealthy, and I’m not going to put our public schools, roads and stable economy at risk just to give a break to those at the very top,” she said.
The governor and Republican leaders in the Legislature are at an apparent impasse over moving the state to a single tax rate. Just how it plays out and whether there’s another GOP tax plan in the offing is cloudy.
Nevertheless, the governor said she would not let legislators return home this session without cutting taxes at a time when the state is expected to have a nearly $3 billion surplus in the treasury.
“While I urge the Legislature to take this irresponsible flat tax experiment off the table once and for all, know that I will not let legislators leave Topeka this year without meaningfully and responsibly cutting taxes for middle-class families,” she said.
“I will call a special session if I have to – anything to ensure Kansans see tax relief, immediately,” she said.
“Let’s work together to cut taxes in a way that continues our economic growth while benefiting all Kansans, not just the wealthiest.”
Republicans rebuked the governor for digging in against a single tax rate.
“Today the governor yet again put her radical ideology ahead of the people,” said Senate President Ty Masterson.
“She is so focused on hyperpartisan politics that she has again vetoed a compromise tax plan that was primarily designed to increase the take home pay for every Kansan and bring sustainable tax relief for hard-working taxpayers who are suffering under Bidenflation.
“The governor has proven again that she has abandoned the middle,” he said.
Meeting with reporters in Kansas City, Masterson called the governor’s threat to call a special session “gamesmanship.”
“It’s that disingenuous we’ll ‘meet you in the middle,'” he said, alluding to the governor’s “middle of the road” theme she has been sounding since her 2022 reelection campaign.
“We are in the middle,” he said. “Every portion of that plan is a compromise on every level, and here we are getting stuck over this.
“I think she’s literally concerned that if she blows this plan up, there’s no second bite at the apple. I think that’s legitimate,” he said.
Asked if he was ready to walk away without a tax cut, Masterson said, “If she will not compromise at all, she will not come to the middle, I am not afraid to walk away and have that conversation at the ballot box.”
The House voted 81-37 to pass the bill with a 5.25% flat tax rate that Republicans are advocating as an alternative to Kelly’s tax proposal.
The Republican bill also cuts property taxes, eliminates taxes on Social Security income, increases the standard deduction and raises the personal tax exemption.
The bill that passed the Legislature last week was three votes short of overriding the governor’s veto in the House and two short in the Senate.
The House passed the bill with support from Democratic state Rep. Marvin Robinson of Kansas City, who frequently sides with Republicans on issues.
There were four Republicans absent on the first vote who are expected to give the bill 85 votes in the House when it comes time for an override vote
The Senate voted 25-11 to pass the bill and is expected to struggle to find the 27 needed for a veto override.
Two Senate Republicans – Rob Olson of Olathe and John Doll of Garden City – and a conservative independent – Dennis Pyle of Hiawatha – are on board with Kelly’s tax plan.
The Senate could still end up one vote short of an override, assuming everyone who was absent during last week’s vote would vote the same way they did last year.
The bill vetoed by the governor would cost roughly $1.6 billion over three years in all funds compared to the governor’s plan, which would cost about $1.1 billion.
The bill vetoed by the governor would:
- Exempt all Social Security income from state taxes starting in tax year 2024. The governor’s plan includes this measure.
- Exempt the first $100,000 of taxable property value from the state’s 20-mill property tax levy for schools starting in tax year 2024. The governor’s plan includes this measure.
- Raise the standard deduction based on inflation increases starting in tax year 2024. The governor proposed increasing the standard deduction for single Kansans from $3,500 to $5,000; for those with head of household filing status from $6,000 to $7,500; and for those who are married filing jointly from $8,000 to $10,000.
- Increase by $50 the state’s personal tax exemption of $2,250 starting in tax year 2024. The exemption also would be increased based on inflation starting in tax year 2025. The governor’s plan didn’t include this element.
- Move the state to a single income tax rate of 5.25% starting in tax year 2025. Single filers earning less than $6,150 and married filers making less than $12,300 would be exempt from the tax. The governor opposes the flat tax component.
- Eliminate the sales tax on groceries starting April 1, 2024. Republican lawmakers originally proposed ending the tax on July 1, but moved it up to April. The governor agrees with this part of the Republican plan.
- Reduce the privilege tax rate for banks to 3.75% from 4.37% and for trusts and savings and loans to 3.85% from 4.5%. The tax cut, which starts in 2025, corresponds with a previous cut in the corporate tax rate. Banks don’t pay corporate taxes. The governor included this in her plan.
