TOPEKA, Kan. (AP) — Republican leaders and the Democratic governor of Kansas have struck a deal on tax cuts, abandoning a push for a single-rate personal income tax that the governor opposed.
The compromise plan, set for a vote in both chambers of the Kansas Legislature, aims to save taxpayers around $1.4 billion over three years.
It's a more modest proposal compared to earlier plans, including one vetoed by Governor Laura Kelly in January.
Previous plans sought to shift Kansas to a single personal income tax rate from the current three-tiered system.
However, disagreements over these proposals stalled progress.
The new plan maintains three personal income tax rates but reduces the top rate to 5.5%. Republican leaders lacked the necessary two-thirds majority to override a potential Kelly veto of a single-rate plan, due to defections within their own party.
In addition to changes in income tax rates, the bill eliminates state income taxes on retirees' Social Security benefits, increases standard personal income tax deductions, enhances an income tax credit for child care expenses, reduces property taxes for public schools, and ends the state's expiring 2% sales tax on groceries six months early, effective July 1.
Despite bipartisan support for the final deal, there has been criticism. Some lawmakers feel the plan does not go far enough in cutting property taxes, particularly given the rising home values and local levies.
For a homeowner with a property at the median value of $210,000 in Kansas, the annual savings would amount to about $140.
The agreement in Kansas follows a similar move by Georgia's Republican-controlled Legislature, which recently passed personal and corporate income tax cuts favored by GOP Governor Brian Kemp. Like Georgia, Kansas boasts a substantial budget surplus, projected to exceed $4 billion by the end of June 2025.
Tax debates in Kansas are sensitive due to a widely criticized experiment in income tax reduction in 2012 and 2013 under GOP Governor Sam Brownback.
This experiment led to significant budget shortfalls, which persisted until most of the cuts were reversed in 2017 with bipartisan support.
Governor Kelly, who won her first term in 2018 by opposing Brownback's fiscal policies, has criticized the recent Republican proposals as fiscally irresponsible. Republican leaders, however, argue that the state can afford the proposed cuts given its substantial surplus.
With all state Senate and House seats up for election this year, lawmakers are eager to finalize the tax plan. Speaker of the House Dan Hawkins emphasized the need to pass the compromise, stating, "We need to get it done and get out of here."