Kansas governor to veto income tax hike meant to fix budget

By The Canadian Press
February 21, 2017 - 5:15pm

TOPEKA, Kan. — Kansas Gov. Sam Brownback promised publicly Tuesday to veto a bill that would roll back personal income tax cuts he's championed, calling the bipartisan measure for fixing the state's persistent budget problems "an assault on the pocketbooks of the middle class."

The conservative Republican governor announced his intention four days after the GOP-controlled Legislature approved the bill — and only hours after it was formally delivered to his office. The tax increases in the bill would raise more than $1 billion over two years, starting in July.

"This is bad policy for Kansas. This will hurt growth in this state. Growth is what we need," said Brownback, who made the promise to nearly 1,000 people during a speech at an annual banquet of the highly supportive Kansas Chamber of Commerce. About a third of the crowd gave him a standing ovation, cheering and applauding, while some did not clap.

The governor later issued a lengthy statement in which he called the bill's tax increases "punitive."

Supporters of the bill saw it as necessary for closing projected budget shortfalls totalling nearly $1.1 billion through June 2019 without deep spending cuts.

"The governor chose to be an obstructionist instead of being part of the process to fix the financial crisis," said House Minority Leader Jim Ward, a Wichita Democrat who supported the bill.

Legislators could attempt to override Brownback's veto, but the bipartisan majorities for the bill fell short of the two-thirds margins necessary to overturn a veto. Top Republicans already were making plans to start over.

Kansas has struggled to balance the budget since GOP lawmakers slashed personal income taxes in 2012 and 2013 at Brownback's urging.

The bill before Brownback would eliminate an exemption for more than 330,000 farmers and business owners that the governor has aggressively championed. It also would restore a third tax bracket for the state's wealthiest taxpayers, which Brownback fought successfully to eliminate in 2012.

It would increase income tax rates for individuals with adjusted gross incomes of more than $15,000 and married couples earning more than $30,000. The top rate would be 5.45 per cent, up from 4.6 per cent — but still lower than the 6.45 per cent imposed before the tax-cutting began in 2012.

Brownback has proposed raising tobacco taxes again, boosting liquor taxes and increasing annual filing fees for for-profit businesses, while preserving the core of his income tax cuts. He's also proposed internal government borrowing and other accounting moves to cover shortfalls.

The governor and his allies continue to argue that the tax cuts he championed are creating economic growth and the state's problems were largely caused by slumps in agriculture and oil production.

Voters rendered a different verdict last year. Even some Republicans concluded that Brownback's tax-cutting experiment had been a bust as an economic stimulus, and voters ousted two dozen Brownback allies from the Legislature, giving Democrats and GOP moderates more power.

Kansas is facing its third major tax increase to fill budget gaps in the five years since the first Brownback-inspired income taxes were enacted. In 2015, Republican lawmakers boosted sales and cigarette taxes in a package that critics labeled the largest tax increase in state history. This year's bill calls for an even bigger tax hike to cover larger budget shortfalls.

"Legislators who voted for this largest tax hike in Kansas history will try to persuade you that it is primarily a tax on wealthy business owners," Brownback said in his statement. "Rather, this bill is an assault on the pocketbooks of the middle class."

Some top Republicans lawmakers have said the governor's proposals collectively don't represent a permanent budget fix. The Senate's GOP leaders outlined a package to boost income taxes but also cut aid to public schools, dropping it when support for reducing education funding collapsed.

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Associated Press writer Allison Kite also contributed to this report.

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .

John Hanna, The Associated Press

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