Kansas Gov. Laura Kelly vetoes tax cut that ‘misses the mark,’ will call special session

Kansas Gov. Laura Kelly on Thursday vetoed a wide-ranging package of tax cuts passed with bipartisan support and said she will call the Legislature into special session, a move certain to anger Republicans and potentially some Democrats who had embraced the measure.

The Democratic governor said she would announce the date of the special session next week.

The session could eat into precious campaign time for incumbent lawmakers as elections for every legislative seat loom later this year. Kelly has insisted the Legislature approve tax cuts that she is willing to sign, but she is at odds with most lawmakers over the size of reductions the state can sustainably afford.

The special session will continue the Legislature’s ongoing bipartisan confrontation with Kelly over taxes, which has lasted months. Lawmakers, many of whom want to tell voters they enacted tax cuts, have approved three tax measures this year that the governor has vetoed.

Kelly in a statement said she recognizes that Kansans “desperately need tax relief.” She promised to work with legislative leaders to develop a compromise, “forging a bipartisan tax cuts plan” to responsibly offer relief without threatening the state’s future fiscal stability.

“Next week, I will be announcing the date of a special legislative session so we can deliver comprehensive, sustainable tax cuts. If we all work together, an affordable, bipartisan tax plan can be passed in less than a day,” Kelly said in a statement.

But the vetoed tax plan “misses the mark,” she said.

“Its proposed cuts and the excessive spending by the Legislature endanger all the progress we’ve made in restoring services for Kansans, funding our public schools, and investing in our infrastructure,” Kelly said in her veto message.

The special session offers another test of whether the Legislature can find a package to Kelly’s liking – or summon the votes necessary to override a potential veto. Lawmakers can’t override Kelly’s most recent veto because the bill was passed during the regular session, but they could potentially attempt to overturn vetoes of any bills passed during the upcoming special session.

The vetoed plan, after a first-year cost of $641 million, was projected to cost between $462 million and $472 million a year during the first five years. Kelly has called for the cost of tax cuts not to exceed roughly $425 million a year, a limit her aides say includes all tax changes passed by the Legislature, not just this bill.

Ahead of the veto, top Republicans released a barrage of messaging calling on Kelly to sign the measure and ramp up public pressure on the governor. They called a special session unnecessary and a waste of money.

“It is hard to make rhyme or reason out of today’s vetoes by the governor. Her shifting reasons for vetoing tax relief have now morphed into the absurd, especially when the state she governs is awash with billions in surplus money that belongs to the people,” Senate President Ty Masterson, an Andover Republican, said in a statement.

The tax package that Kelly vetoed on Thursday passed the House in a 108-11 vote and the Senate 25-9. It would have moved Kansas from three state income tax brackets to two, which would have provided many taxpayers with a break in the process.

It would have set the top rate for married couples filing jointly at 5.57% and the bottom rate at 5.2%, with $46,000 serving as the dividing line between the two rates. All other taxpayers would be taxed at 5.15% in the bottom bracket and 5.55% in the top bracket, with $23,000 dividing the two brackets.

The plan contained other less controversial tax changes, including raising the personal exemption allowance for dependents, lowering the statewide mill levy for schools, and accelerating the elimination of the state sales tax on food to July 1, in addition to ending taxes on Social Security income.

Whether lawmakers can reach an acceptable compromise with Kelly wasn’t immediately clear. Top Republican lawmakers say they have already compromised because they believe up to $500 million in annual reductions are sustainable. Some GOP senators have voted against overriding Kelly’s vetoes, however.

Democrats split on the most recent vetoed tax plan, with most House Democrats supporting and some opposing it along with Senate Democrats. Some House Democrats have voiced growing exasperation with Kelly and have urged her to be more clear about what she will sign.

“I’ve been through different governors and I’ve been through different Houses and different speakers,” Rep. Barbara Ballard, a Lawrence Democrat who entered the Legislature in 1993, said in the final hours of the Legislature’s regular session last month. “But I’ve never seen the frustration as high.”

Kelly’s veto of the latest tax plan had been expected. Before the Legislature passed the plan in April, her chief of staff, Will Lawrence, promised the governor would veto it and call a special session. The governor herself had repeatedly said this year she would call a special session if the regular session ended without a tax plan she was willing to sign.

The special session injects fresh uncertainty into a contentious campaign season. Democrats are seeking to end GOP supermajority control in the Legislature, which would ensure Kelly’s vetoes in the final two years of her term couldn’t be overturned if Democrats are unified.

Beyond keeping lawmakers away from voters in their districts, fundraising is also restricted during a special session. A drawn-out session lasting several weeks could begin to significantly hamper campaigning by incumbents.

While the session is expected to focus on taxes, lawmakers can pass bills on any topic. Some proposals that didn’t pass earlier this year may be resurrected, including a measure to lure the Kansas City Chiefs and Royals into Kansas by issuing controversial bonds.