Kansas GOP’s tax bill could undercut school funding it backs

TOPEKA, Kan. (AP) — Republican legislators in Kansas helped advance Democratic Gov. Laura Kelly’s plan to boost funding for public schools Thursday before sending her an income tax relief bill that could make it harder for the state to sustain the new spending.

The GOP-controlled Senate voted 32-8 to approve Kelly’s proposed education funding increase of roughly $90 million a year, sending the plan to the House. Top Republican senators backed the plan as the most straight-forward fix, putting them at odds with conservatives who want new money tied to policy changes , including a voucher program to allow bullied students to move to new schools, public or private.

Kelly’s plan is designed to satisfy a Kansas Supreme Court order last year requiring legislators to increase the state’s education funding, currently at more than $4 billion a year. Attorneys for four local school districts that sued the state in 2010 are pressing for a larger increase and Democrats who voted as a bloc for Kelly’s plan Thursday had supported the districts. Top Republicans argue that even Kelly’s plan would be a financial stretch.

But the Senate also approved, on a 24-16 vote, a bill pushed by GOP leaders and aimed at preventing individuals and businesses from paying higher state income taxes because of changes in federal tax laws at the end of 2017. Republicans said the issue is fairness, while Democrats excoriated the bill as a budget buster, particularly after senators approved more money for public schools.

“How you turn around and vote for this thing, I don’t understand,” said Sen. Tom Holland, a Baldwin City Democrat. “It doesn’t add up.”

The tax measure is headed to Kelly because the House approved it last week. She and other Democrats have said the bill would repeat the failed fiscal policies of her Republican predecessors.

Kelly stopped short Thursday night of saying she would veto the measure but said it would create a “self-inflicted budget crisis.” Neither chamber passed the bill with the two-thirds majority needed to override a veto.

“Our recovery is tenuous; our budget is fragile,” Kelly said in a statement. “This is not the time to make significant changes to our tax code.”

Republican leaders see no contradiction in considering Kelly’s school funding plan and the tax relief bill at the same time. GOP lawmakers argue the tax bill heads off an unlegislated tax hike that would occur otherwise because the state and federal tax codes are tied. They also argue that tax relief will stimulate the economy.

“I hope we have a strong economy for a long time so we can afford the school funding bill,” Senate President Susan Wagle, a conservative Wichita Republican, said before the chamber’s debates.

Wagle and other Republicans contend the income tax measures would merely keep Kansas from getting a “windfall” in revenues it isn’t collecting now.

“This bill keeps companies, individuals and families in business, and a vote against this bill is a vote for a tax increase,” Wagle said during her chamber’s debate.

Kelly’s administration sees the potential revenue picture differently, projecting that the state would give up $209 million during the budget year beginning in July.

Much of the tax savings are going to large businesses with operations outside the U.S. The bill also would provide relief to taxpayers who have claimed itemized deductions on their state returns in the past but no longer can because of federal changes discouraging itemizing on federal returns.

Before approving the bill, the House married its Senate-approved income tax measures to a cut in the state’s sales tax on groceries to 5.5 percent from 6.5 percent. Kelly pledged during her successful campaign for governor last year to lower the tax on groceries.

Still, legislators in both parties expect Kelly to veto the bill after she repeatedly urged them to hold off on considering tax proposals and focus instead on quickly meeting the court mandate on schools.

The state Supreme Court has ruled six times since 2013 that legislators weren’t fulfilling their duty under the Kansas Constitution to provide a suitable education for every child. A 2018 law phased in a $548 million increase in education funding by the 2022-23 school year, but the court ruled that it didn’t adequately account for inflation.

GOP conservatives remain frustrated with the continued demands from the Supreme Court and the school districts suing the state for more money.

“It’s ‘Peanuts,’ Charlie Brown. Every time you go to kick the ball, Lucy pulls it away,” said Sen. Ty Masterson, a conservative Andover Republican, referring to the classic comic strip. “I can see the lawyers laughing at us all the way to the bank.”