After weeks of gridlock, the Kansas Legislature passed a bill containing the largest tax increase in the history of our state. Governor Brownback signed this bill into law on June 16. The new tax law:
- Increases sales tax from 6.15% to 6.50% beginning July 1, 2015; combined with local sales tax rates, Kansas now has the highest sales tax rate on food in the country.
- Eliminates and reduces itemized deductions effective tax year 2015, including the property tax and mortgage interest rate deductions.
- Increases tobacco tax by $0.50 per pack beginning July 1, 2015.
- Implements a new tax on e-cigarettes beginning July 1, 2016.
- Creates a low-income exclusion provision, which eliminates income tax liability for single filers with taxable income of $5,000 or less, or joint filers with taxable income of $12,500 or less, beginning in tax year 2016.
- Extends rural opportunity zones (ROZ) for five years.
- Imposes property tax restrictions on local governments.
- Delays income tax rate reductions.
- Requires a Social Security number for a minimum of year to be eligible for tax credits.
- Authorizes tax amnesty for penalties and interest to certain delinquent taxes.
- Requires the Department of revenue to mail a copy of motor vehicle registration applications to owners, including all information required to register and pay by return mail.
I voted against this unfair tax policy because it balances the budget on the backs of the poor, the elderly, and the hardworking middle class Kansans for the sake of the governor’s reckless economic experiment. The increased sales tax is especially troubling for those who live on a fixed income and already struggle to meet their daily needs. Further, these tax policies do not provide a real, long term solution to our state’s budget problems; we will only see additional budget holes to fill in the future.
The 2015 legislative session is underway! Legislators gaveled in on Monday, January 12th and heard Governor Brownback’s annual State of the State address last Thursday (January 15th).
In his speech, Governor Brownback outlined his 2015 legislative priorities, including 1) overhauling the school finance formula, 2) continuing the march towards his “glide path to zero” income taxes, 3) moving local elections to November and 4) changes to the selection of Supreme Court justices. The next day, Governor Brownback released his proposal for the FY 2016 and FY 2017 budget. The proposal includes elimination of the school finance formula established in 1992 and replacing it with a block grant program. The governor also proposes more tax increases through an accelerated phase out of certain itemized deductions (including the home mortgage interest expense deduction) as well as significant increases to cigarette and liquor taxes.
In his State of the State message, the governor placed blame on the state’s self-imposed budget crisis on the “increases in K-12 spending since Fiscal Year 2014.” The fact of the matter is that the Governor’s tax policies have put us in this difficult position. The state is facing a budget shortfall of over $710 million (over one-tenth of Kansas’ SGF budget!) because of the sheer size of Governor Brownback’s income tax cuts (over $730 million a year starting in FY 2014) and the fact that they have not stimulated the economy as he promised. There’s really no avoiding the fact that the governor’s tax policies have put Kansas in a very deep financial hole. But I look forward to reaching across the aisle this session and working to restore some common-sense tax policies that will return our state to a sound fiscal footing.
I’ll do my best to keep you up-to-date in the coming weeks as legislators begin to work through specific budget issues. In the meantime, to access the Governor’s Budget Report in full, visit the Kansas Division of Budget’s website at http://budget.ks.gov.
On Wednesday, most of Governor Brownback’s tax plan that he discussed during the early days of this session made it to the Senate floor for debate. House Bill 2059 called for retaining the temporary sales tax rate (which was to sunset in July of this year), repealing the mortgage interest deduction, and making further cuts to personal income tax rates. The bill also includes clarifications and revisions of the original legislation which passed during the 2012 session.
Members of the Senate offered 11 amendments during five hours of debate. The first major amendment that passed added back the mortgage interest deduction but gradually reduces the value of ALL itemized deductions (with the exception of charitable contributions) by 94% for a six year period. What this means for the taxpayer is that $1,000 worth of deductions will only result in a return of $760 in tax year 2013, a return of $590 in tax year 2014, a return of $350 in tax year 2015, and a return of $60 in tax years 2016 and later. Deductions for gambling losses were also eliminated.
Amendments offered to sunset the temporary sales tax, to reinstate tax credits such as the disabled access tax credit, the child independent care credit, the food sales tax rebate, and the homestead tax credit, and to increase the standard deduction all failed.
The bill passed on a vote of 25-14. The bill now goes to the House for consideration.
I voted against HB 2059. Once again, low-income and middle-class working Kansans will be hit hardest under this bill while the state simultaneously faces huge negative ending balances starting in fiscal year 2017. In addition to being one of the largest tax increases in Kansas’ history, HB 2059 also violates the so-called principles of reform that Governor Brownback laid out last year. It further complicates the Kansas tax code by treating certain itemized deductions differently than others. Much more importantly, it actually takes more money out of the pockets of Kansas families that it puts in during the first four years of implementation. And even more disturbingly, the bill reneges on the promise the Kansas Legislature made to sunset the temporary sales tax when the tax was first passed in 2010.
This legislation is a continuation of tax policy designed to benefit big business and the wealthy at the expense of hardworking Kansas taxpayers. Hopefully the Kansas House will bring forward a more balanced solution for the House / Senate tax conference committee to consider.