By John Celock
Following a session that stretched to the early morning hours of Friday, the Republican-controlled Kansas House of Representatives voted to approve the largest tax hike in the state’s history to plug a budget hole.
The House voted 63-45 to approve a tax plan that calls for a 6.5 percent sales tax, along with a new property tax cap for local governments. The move – which passed with the bare minimum vote – caps a 23 day overtime session of the state Legislature which has been marked by deep divisions in the Republican part creating an impasse. The 63rd vote was cast at almost 4 a.m. central time following a session that did not convene until 12:30 a.m. to debate the tax plan and a vote held open for several hours as GOP leaders scrambled to find the necessary votes.
“We’re not raising taxes, we’re raising revenue to support education,” House Taxation Committee Chairman Marvin Kleeb (R-Overland Park) said.
The vote – which is expected to be confirmed by the state Senate Friday – will provide $350 million to fill the $400 million budget deficit. Gov. Sam Brownback (R) is expected to make up the final $50 million through unilateral budget cuts. The plan came on the 112th day of the 90 day annual legislative session. Friday’s session will mark the 113th day of what has become the longest legislative session in state history.
Republicans have been divided on how to plug the budget deficit, which resulted from the state’s income tax cuts that were passed in 2012. Many in the party said they would vote down any attempt to repeal a part of the income tax law that allows LLC owners to be exempt from personal income taxes, along with taxes for their companies. Democrats and a group of Republicans had called for a change on the LLC loophole, saying it would end the deficit.
Many Republicans – including Brownback – focused on changes to the state sales tax, with a 6.65 percent tax at one point. The sales tax hike was opposed by Democrats who argued it would hurt the poor and by lawmakers from border counties, who said it would send business to neighboring states. The statewide sales tax would be coupled with local sales tax rates, with some saying it would cause some communities in the state to have higher sales tax rates than New York City.
The higher sales tax would apply to food, with lawmakers pledging to revisit the food sales tax in January. An earlier proposal would have reduced the food sales tax while raising other sales taxes.
A major sticking point among Republicans turned into exemptions for sales taxes, including to organizations like the Girl Scouts and Catholic Charities. The Senate rejected a plan last week for the exemptions, with the plan coming back in different forms in tax plans that were rejected this week. The final plan calls for lawmakers to review all of the exemptions next year. Among the defeated plans was one creating a commission to study the exemptions for different groups.
The plan calls for cities and counties to be subjected to a new property tax cap that would require a public referendum in the event a property tax hike proposal is above the rate of inflation. The proposal was opposed by local government groups and lawmakers who argued that it would hinder local operations and local control.
The cap would not effect property tax hikes to cover certain costs including bond payments and interest, legal judgments and federal and state mandates.
Property tax caps have become popular in other states, with New Jersey and New York implementing a two percent property tax caps with similar exemptions.
Friday morning’s vote came almost 24 hours after the House defeated a similar plan following an overnight delay. On Thursday, legislative leaders and Brownback said a plan needed to be adopted or budget cuts would need to be made to pass a balanced budget. Brownback had threatened either across the board cuts of 6.2 percent in the budget or to veto the entire higher education budget.
Friday morning’s vote originally had 59 votes in favor with House leaders holding the vote open in an effort to win four more lawmakers. Several of the conservative Republican lawmakers who voted yes during the hold said that it came to avoid cuts.
Rep. John Whitmer (R-Wichita) gave an emotional speech on the House floor where he said he was trying to spare cuts. Whitmer was heard to be crying during and after his speech.
At one point during the debate, Speaker Pro Temp Peggy Mast (R-Emporia) could be heard on an open microphone plotting strategy, saying that Rep. Ken Corbet (R-Topeka) could not be compelled to flip since Democrats wanted to unseat him. Mast suggested finding a lawmaker from a safe Republican district.
Corbet, first elected in 2012, is from a swing district and has twice defeated former Rep. Ann Mah (D-Topeka), who has kept an active campaign presence against him in the district, including sending out newsletters.
The final vote was delivered by Rep. Blake Carpenter (R-Derby), a conservative Republican. Carpenter, the state’s youngest current lawmaker, had been viewed prior to the vote as a solid no vote.
Democrats argued that Republicans were ignoring the opinion of state residents in passing the tax hike.
“I have listened to Kansans and I hear their pleas. Trust me they are watching, they are listening and they here our message,” House Minority Leader Tom Burroughs (D-Kansas City) said. “Our constituents in the great state of Kansas deserve so much better, so much better. We have failed to listen.”