Senate committee advances bill cutting taxes; KASB has serious concerns

Republican senators Thursday advanced a tax cut bill primarily aimed at helping corporations. KASB testified as neutral on SB 22, but expressed serious concerns with the legislation because of the impact it could have on school funding.

The measure was approved on a voice vote by the Senate Select Committee on Federal Tax Code Implementation and will next be considered by the full Senate, possibly next week. Republicans supported the measure while the committee’s two Democrats voiced opposition. Gov. Laura Kelly has urged the Legislature to hold off on tax cuts because of the state’s fragile budget situation.

SB 22 would reduce revenue to the state by $191.6 million in the next fiscal year. The measure would make a number of corporate tax changes and also allow Kansans to itemize their state tax deductions even if they didn’t itemize on their federal returns. Of the $191.6 million tax cut, $137.2 million would go to corporations and $54.4 million to individuals, according to a state fiscal note.

In written testimony, KASB said the fiscal impact of the bill was uncertain and that legislators should first approve the inflation adjustment to K-12 funding cited by the Kansas Supreme Court in the Gannon litigation.

“KASB urges the Legislature to adopt the inflation adjustment to the school finance plan it has already approved for 2019 through 2023 as soon as possible, to settle the lawsuit, determine levels of K-12 funding and complete the rest of the budget, and allow school districts to plan for their own budget levels.

“The Legislature can then determine the actual cost of tax changes – which we understand are still uncertain for many proposals – and their impact on the state budget and other important state programs.”

Here is a link to the complete testimony.

During the committee meeting, Republicans said the tax cuts were needed to preserve business interests in Kansas, while Democrats said the loss of revenue would lead to revenue shortfalls, the same as what happened when former Gov. Sam Brownback cuts taxes in 2012.

KASB testified that during the Great Recession and then through the Brownback tax cuts, Kansas school funding slipped behind other states and inflation.

“Low taxes will not help Kansas economically if Kansans lack the educational levels required for high skill, high wage jobs. `Low tax states’ may have higher population growth, but they may also have lower per capita income and higher poverty if they can’t produce higher educational outcomes.

“Kansas homeowners certainly would like to benefit from tax deductions on their homes and other exemptions, and businesses want favorable tax treatment to invest and expand. But they also want to benefit from strong public schools in their neighborhoods and communities, as well as other public services.”

KASB will be monitoring developments on this tax bill and others closely throughout the legislative session. KASB urges education advocates to speak with their senators about this bill.

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