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Kelly vetoes flat tax bill from state senate

Governor calls for tax rebate for Kansas taxpayers


TOPEKA, Kan. — Monday, Governor Laura Kelly announced her veto of House Substitute for Senate Bill 169, which would establish a 5.15 percent flat income tax rate for all Kansas taxpayers. According to the governor’s office, the bill would cost the state $1.3 billion over the next three years and put public education funding at risk.

“Our public schools were one of the biggest victims in the legislature’s last tax experiment and are one of the many services that would take a hit should this bill become law,” Kelly said. “Kansans know all too well where irresponsible, costly tax experiments lead: to underfunded schools, to deteriorating roads and bridges, and to essential services being cut.”

School districts’ budgets are already over-stretched as they often must cover the shortfall in special education funding. Federal law requires special education to be 100 percent funded with the federal government covering The State of Kansas is mandated to provide 92 percent of the outstanding balance, with the remaining eight percent to be provided by the individual school districts.

Since neither the state nor federal obligations are being met, districts must cover a larger portion of special education costs. Districts must shift funds from other academic and extra-curricular areas, such as cutting the number of elective classes available or disbanding an athletic team, because those funds had to be shifted to make-up for the difference.

Under a flat tax, according to a statement from the governor’s office, “middle-class taxpayers would see less than $100 in annual savings, but it would cost Kansans their public schools. Already, legislators are proposing cutting money from public schools in this year’s K-12 Education budget in order to pay for this tax cut.”

According to Kansas Chamber President and CEO Alan Cobb, state tax receipts have climbed nearly 30% during the last three years, adding that “offering modest tax relief to Kansans struggling to pay for daily necessities seems to be a no brainer.”

Cobb says that Kelly also vetoed tax changes in 2019, 2020, and 2021 out of fear they would destroy the state’s budget.

"They didn't. And this plan won't either,” Cobb said. "The truth is, if you make more than $30,000 in Kansas, right now you are paying 5.7% in income taxes. This plan vetoed by Governor Kelly would establish a single rate of 5.15% on all income.”

State Representative Ken Collins (R-2, Mulberry) supports the flat tax, saying it is good for everyone because everyone gets a tax cut, adding that he “would like to see taxes lowered across the board.”

According to Collins, tax breaks put money in people’s pockets, and that money either gets spent, increasing corporate profits (increasing taxable corporate revenue); or reinvested by business owners, to create more jobs (creating new taxable revenue streams). Theoretically, these additional revenue streams—from increases in profits and newly created jobs—will be sufficient to maintain the budget surplus.

The governor disagrees. “This bill would upend our tax system and throw our state’s budget out of balance long-term. There is no question: Just like under my predecessor, this tax plan would be paid for by cutting funds from our public schools,” Kelly said. “Already, those same legislators have proposed cutting millions of dollars from public schools, and particularly rural schools. I won’t stand for cuts to our public schools, period.”

In addition to challenging the flat tax rate, Kelly called on legislators to grant taxpayers a one-time rebate from the surplus. The rebate would amount to $450 for individuals and $900 for married taxpayers filing jointly.

Kelly says this one-time rebate provides relief to Kansas residents without breaking the bank or threatening education funding.

“In my first term, I made a commitment to getting our state back on track. I’m proud of how far we have come, but we can’t risk turning back now,” Kelly said. “I’m calling on legislators to put this one-time surplus back in the hands of taxpayers -- without risking our ability to continue fully funding schools and investing in roads, bridges, and essential services.”

Kelly said she wants to cut taxes for everyday Kansans, something she and Republicans can agree on. But Kelly’s plan is through “targeted, responsible tax cuts on groceries and Social Security” and by providing a one-time rebate from the state’s coffers.