Democratic Gov. Laura Kelly on Wednesday proposed giving Kansas residents who filed state income tax returns last year a one-time rebate of $250, dropping the idea on a skeptical Republican-controlled Legislature as she faces a tough reelection race.
The governor had given no public hints that she was considering such a proposal, and she's already called for eliminating the state's high-for-the-U.S. sales tax on groceries. Her successful 2018 campaign for governor emphasized her opposition as a state senator to an earlier and nationally notorious experiment in slashing state income taxes under GOP Gov. Sam Brownback that was followed by persistent budget shortfalls.
But Kelly said Kansas can afford one-time rebates because the payments won't permanently reduce state revenues. The state budget is in dramatically better shape than it was before lawmakers repealed most of the Brownback-era tax cuts in 2017, with tax collections exceeding expectations for all but three months since then.
The governor's statement on the proposal touted her management of the state's finances and efforts to attract business development, which are likely to be prominent themes in her reelection campaign.
“We can return money to taxpayers,” Kelly said in her statement, adding that the “significant savings for every family” would be delivered by next summer — just months before the November general election.
Kelly's plan would provide $250 to individual tax filers and $500 to married couples filing jointly. The rebates would go to 1.2 million Kansas residents, costing the state about $445 million. People would get the rebate even if they didn't owe taxes for the year, Kelly's office said.
The Legislature would have to approve the plan after convening Jan. 10 for its next annual session. GOP lawmakers are expected to have their own proposals for cutting income taxes permanently.
Republicans were immediately skeptical of Kelly's plan, both because of its timing and because the tax relief would not continue after next year. Senate President Ty Masterson and House Speaker Ron Ryckman Jr. said they prefer permanent tax cuts.
Republicans are confident that they can unseat Kelly next year, banking on frustration with Democratic President Joe Biden's policies energizing conservatives and causing other GOP-leaning voters to vote against Kelly. Masterson, an Andover Republican, said Kelly's latest plan show she had an “election year revelation.”
Ryckman, an Olathe Republican, said: “Kansans are smart, they can see right through Laura Kelly’s attempt to throw $250 their way right before her election.”
Republicans also were skeptical because Kelly has vetoed three GOP proposals to cut income taxes, each time suggesting that Republicans were fiscally irresponsible and trying to repeat the Brownback tax experiment. GOP lawmakers this year overrode Kelly's veto of individual and corporate income tax cuts worth roughly $95 million a year.
And Kelly has repeatedly called for caution amid monthly revenue surpluses. After tax collections exceeded expectations by 3.1% in November — even after fiscal forecasters boosted their projections — Kelly said, "While our state revenue numbers continue to be encouraging, maintaining fiscal responsibility is paramount moving forward.”
While Senate Minority Leader Dinah Sykes, of Lenexa, said she and fellow Democratic senators would “champion” the governor's plan, it wasn't immediately clear that Kelly's proposal had universal support among Democrats.
Jonathan Cole, a liberal Manhattan community activist, almost immediately tweeted that the proposal is “horrible politics.”
“What a perfect opportunity to have Republicans attack you for ‘buying’ votes,” he said.
Meanwhile, eliminating the state's 6.5% sales tax on groceries has broad, bipartisan support. The proposal would cost the state roughly $450 million a year in revenues — but Kansas' tax on groceries is the second only to Mississippi's among U.S. states. Only six states tax groceries at the same rate as other consumer goods, according to the Federation of Tax Administrators.
The presumed GOP nominee for governor next year, state Attorney General Derek Schmidt, called for reducing or eliminating the tax on groceries last month, a few days before Kelly formally unveiled the plan she'd been working on. Schmidt's campaign manager, C.J. Grover, accused Kelly on Wednesday of attempting an “election-year makeover.”
But Sykes said Kelly's proposal on income taxes will “give Kansas families a leg up.”
“It provides relief for all Kansans in every corner of the state,” Sykes said.
