TOPEKA, Kan. (AP) -
Democratic Gov. Laura Kelly this week faces a key test of her power to shape the state budget and keep moderate Republicans on her side as the GOP-controlled Kansas Legislature prepares to consider overriding her vetoes of spending and tax relief measures.
Lawmakers are set to convene Wednesday to conclude any final business and adjourn for the year. The day is their only chance to enact a Republican tax relief bill and several budget items over vetoes that reflected Kelly’s belief that the measures would create future budget problems.
Republicans have the two-thirds majorities needed in both chambers to override vetoes, so Kelly needs at least a few moderate GOP defections. The votes will come only a week after skittish moderate Republicans abandoned a push with Democrats for Medicaid expansion, causing a plan backed by Kelly to fail.
“We have to rely on moderate Republicans,” said House Minority Leader Tom Sawyer, a Wichita Democrat. “It is a test, and hopefully they will come down on the side of fiscal sanity.”
The tax bill would reduce taxes for individuals and businesses paying more in state income taxes because of changes in federal tax laws at the end of 2017. It has near-universal support among Republicans, but Kelly contends the tax reduction - roughly $240 million over three years - would “decimate” the budget. Republicans say that the tax bill is a matter of fairness, preventing a tax hike that came without legislative action.
Kelly also vetoed an extra $51 million payment to the state pension system for teachers and other state workers. She argued that the state should dump the dollars into its cash reserves as a cushion against a future economic downturn.
Republican leaders argue that a long-term gap in funding for the state pension system remains a cloud over the state’s finances so that an extra payment is worth doing.
Senate Majority Leader Jim Denning, a conservative Overland Park Republican, said he also suspects Kelly wants to pad the state’s cash reserves now so that she can tap those dollars to cover extra spending later.
“My assumption is she plans to do a lot of deficit spending going forward,” Denning said.
Even with Kelly’s vetoes of several spending items, the budget for the fiscal year beginning in July is more than $18.3 billion. It includes extra funding for public schools, social services, higher education, prisons and pay raises for state workers.
This year’s budget debate was in sharp contrast to spending debates after lawmakers slashed income taxes in 2012 and 2013 at former Republican Gov. Sam Brownback’s urging and saw persistent shortfalls follow. Lawmakers reversed most of the tax cuts in 2017 and Kelly ran successfully for governor last year largely against Brownback’s fiscal legacy.
Kelly has cast top Republicans’ pursuit of tax relief this year as a return to Brownback policies, appealing to GOP moderates who helped reverse the Brownback tax cuts. State Rep. Don Hineman, of Dighton, said he and other moderate Republicans are “happy that we seem to be returning to the days of fiscal stability.”
But Hineman said the tax bill appeals to moderates because the state never intended to collect the extra revenue.
“It was a windfall to the state,” Hineman said. “It’s kind of a correction.”
Kansas could face budget problems whether Republicans override Kelly’s tax relief veto or not. Legislative researchers project a $221 million shortfall at the end of June 2022 without the tax relief and a $466 million shortfall if it is enacted, though changes in the economy could make those numbers better or worse.
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