The Kansas tax bill has been vetoed for the second time in three months. The plan would have done away with a tax bracket, and cut property taxes, social security taxes, and the state sales tax on food. The cuts would have saved $1.5 billion over the next three years.
Gov. Laura Kelly signaled that she had misgivings about a package of income, sales and property tax cuts, even with bipartisan support. Her chief of staff said before it cleared the Legislature this month that it was larger than Kelly thought the state could afford in the long term. The plan would have moved to two rates.
The governor immediately proposed new tax cuts worth roughly $1.3 billion over the next three years, but the Kansas House's top Republican immediately said the governor “isn't serious” about tax relief. The Legislature was set to reconvene Thursday following a spring break and wrap up its work for the year in just six days.
“While I appreciate the bipartisan effort that went into this tax cut package and support many of the provisions included, I cannot sign into law a bill that jeopardizes our state’s future fiscal stability," Kelly wrote in her veto message. “This bill is too expensive."
Top legislators have wanted to move Kansas to a single personal income tax rate, which at least five other states have done since July 2021, according to the Tax Foundation. But their dispute with Kelly over that idea has meant that Kansas hasn't enacted big tax cuts, even as surplus funds have filled its coffers.
In January, Kelly vetoed a plan to cut taxes by $1.6 billion over three years. It would have moved Kansas to a single-rate personal income tax, and Kelly argued it would have benefited the “super wealthy,” which Republicans disputed.
“Kansans need and deserve tax relief, and Governor Kelly isn’t serious when she says she wants to provide it," House Speaker Dan Hawkins, a Wichita Republican, said in a statement.
Democrats were split over the bill Kelly vetoed. In the Senate, they largely opposed it for the same reasons Kelly did, while in the House, no members voted against it.
Overriding a veto requires two-thirds majorities in both chambers. The House's top Democrat, state Rep. Vic Miller, of Topeka, said he likes Kelly's new plan but doubts Republicans will embrace it, making the bill Kelly vetoed possibly the best that Democrats can expect.
“I’m not sure I want to risk what she’s willing to risk," he said of the governor.
The bill Kelly vetoed would eliminate income taxes on Social Security benefits, which kick in when a retiree earns $75,000 a year. It would reduce the state’s property taxes for public schools and eliminate an already-set-to-expire 2% sales tax on groceries six months early, on July 1.
In moving Kansas from three personal income tax rates to two, it would drop the highest top rate from 5.7% to 5.55%.
Kelly's new plan includes the same sales tax and Social Security provisions, as well as a version of the property tax cut. Her plan would keep all three personal income tax rates and lower them. Her highest rate would be 5.65%.
Last week, a new fiscal forecast provided a stable picture for state government through the end of June 2025. A separate projection from legislative researchers said that even with extra spending approved by lawmakers this year and the tax cuts Kelly vetoed, the state would end June 2025 with more than $3.7 billion in surplus.
Kelly argues that problems would arrive in future years, though Republicans strongly disagree.
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