Gov. Laura Kelly on Monday vetoed a bill that would have cut taxes in Kansas by nearly $1.4 billion during the next three years, objecting to a proposal to impose a single-rate "flat" income tax for individuals.
The governor said abandoning the state's current, three-rate individual income tax with higher rates for higher earners would have been fiscally "reckless" and threatened funding for public schools. She announced her veto at a Topeka-area elementary school.
Legislative leaders plan to attempt overriding the veto once the full legislature reconvenes Wednesday to wrap up its business for the year. Backers of the bill included Americans for Prosperity, the grassroots low-tax, small-government group funded by the billionaire industrialist Koch brothers, and supporters appeared to have a good chance of getting the two-thirds majorities necessary to override a veto.
The measure also would have reduced taxes on retirees' Social Security incomes and accelerate phasing out of the state's sales tax on groceries, so that it would end at the start of 2024 instead of 2025, both measures the governor supported. It also would have reduced property taxes for most homeowners by $46 a year, a proposal pushed by Democrats.
The income tax changes were a nonstarter for many Democrats, particularly because it set the rate at 5.15% when the state's current top rate is 5.7%.
As an alternative, Kelly proposed a one-time, $450 rebate for each Kansas individual filer, so that the state's revenues would not be reduced each year going forward. Republicans have been cold to the idea of a rebate in the past.
The veto came four days after state officials and university economists issued a new fiscal forecast that boosted the state's official projections for tax collections through June 2024 by roughly 1%. Even with the tax cuts Kelly vetoed factored in, the state is on track to end June 2024 with surplus cash and rainy day funds of more than $4 billion.
Kelly and lawmakers see the tax cuts as a way of helping people deal with inflation.
