Kansas governor nixes $244M in tax cuts, including breaks for Genesis, anti-abortion donors

Gov. Laura Kelly vetoed a tax cut package on Friday, with a pair of controversial tax breaks dooming the rest of the policy pieces.

The governor rejected $244 million in tax cuts over three years in vetoing Senate Bill 8. The bill was controversial to some because of tax breaks for donors to anti-abortion counseling centers, plus Genesis Health Clubs and select other businesses that "compete against government."

"Instead of sticking with this fiscally responsible and bipartisan path," Kelly said in a veto message that touted her fiscal management, "this bill prioritizes tax breaks for big businesses over everyday Kansans and would harm the budgets of local governments and schools.

“While Senate Bill 8 includes tax cuts and personal property tax reforms that I support, by bundling 12 bills together the legislature has made it impossible to sort out the bad from the good."

More: What do rosy tax revenues mean for tax cuts and budgets in Kansas?

House Speaker Dan Hawkins, R-Wichita, blamed Kelly for "killing important tax policy that would help veterans, the disabled community, and spur the Kansas economy all because of their irrational focus and political bias against helping vulnerable new mothers.”

Senate Bill 8 didn't have a veto-proof majority, and the veto comes after the Legislature adjourned for the year, meaning there will be no attempt to override.

The veto leaves Kansans without any substantive tax breaks despite bipartisan calls to return to taxpayers at least some of the state's burgeoning budget surplus. When the legislative session started, state budget projections showed a $2.9 billion surplus when the fiscal year ends June 30, plus $1 billion in a rainy day fund.

Politics means Kansans get no tax relief

SB 8 was a collection of more than a dozen separate tax bills bundled together by top Republicans on a conference committee that. It joins Senate Bill 169, which had a collection of bipartisan-supported tax cuts combined with a Republican-backed flat single-rate income tax proposal.

Because of the political logrolling by Republican legislators and the Democratic governor's vetoes, Kansans are losing out on roughly two-dozen tax policy changes totaling $1.6 billion in tax relief over three years.

More: Tax relief in Kansas may be doomed by flat tax and other controversial provisions

The flat tax was bundled in SB 169 with corporate income tax cuts, financial institution privilege tax cuts, tax cuts on Social Security benefits, an income tax cut through indexing the standard deduction to inflation and an acceleration of axing the state sales tax on food.

SB 8 also had tax credits for adoption, changes to the homestead program, ended sales taxes on manufacturer coupons plus telecommunications, and created a net operating losses subtraction modification, among other tax policy changes, including to property valuation notices.

The "government competition" tax break, which opponents said was targeted to benefit Wichita businessman and Republican donor Rodney Steven II and Genesis Health Clubs, was the most controversial piece of SB 8.

More: While Genesis Health Clubs had late, unpaid taxes, Kansas lawmakers approved a tax break

The Kansas Department of Revenue indicated state and local governments would collect less property tax revenue had it passed, but it was unable to provide an estimate for how much because there is no data on what properties would receive the tax break.

Another controversial piece was a proposed income tax credit for donations to anti-abortion counseling centers, with the program maximum of $10 million in credits per year. Boosting both public and private funding to the facilities, which are also known as crisis pregnancy centers and pregnancy resource centers, had been a top priority of Kansans for Life.

More: How Kansans for Life plans taxpayer money to benefit anti-abortion pregnancy centers

'Garbage governance' and late-night voting

The bill was one vote short of a veto-proof majority in the Senate.

Sen. Mark Steffen, R-Hutchinson, abstained from voting, calling it "a hodgepodge of bills and issues put together haphazardly without a common theme."

"Kansas deserves thoughtful, methodical governance, not 'garbage governance' via a chaotic process," he said.

It was eight votes shy of a supermajority in the House, which had a few absent lawmakers and a handful voting no as a statement against late-night legislating. The House's debate and voting on SB 8 lasted well past 3 a.m. on Good Friday.

House tax committee chair Rep. Adam Smith, R-Weskan, admitted that he had not read the 127-page legislation. The text of the bill had only been finalized a few hours earlier.

More: Sleepy Kansas politicians write laws until 4:30 a.m. on last day of regular session

"Look how late it is, we've got members that are asleep," House Minority Leader Vic Miller, D-Topeka, said during debate. "Is that because I'm not riveting enough or because it's 3:30 in the morning? And when I yell, I still can't wake them up. This is crazy. This is no way to pass anything, let alone a bill that is 18 or 19 bills that we've not had a chance to have hearings on or have a full debate."

Kelly did sign House Bill 2002, a bundle of six noncontroversial bills. It enacts sales tax exemptions for area agencies on aging and the suicide prevention headquarters and grants Grant and Dickinson counties authority to increase sales taxes to finance public safety projects. It also has provisions on electronic property tax documents, mass appraisal courses and tax warrant release filing.

This article originally appeared on Topeka Capital-Journal: Laura Kelly vetoes tax breaks for Genesis, Kansas anti-abortion donors