Top Kansas Republicans push flat tax proposal, pan Medicaid expansion
TOPEKA — After declaring themselves a united family, “like brothers and sisters,” the top Republicans in the Legislature announced they will work together to resurrect and pass a massive flat tax plan in the first weeks of the upcoming legislative session.
“I may be a little bit aggressive in this,” said House Speaker Dan Hawkins, a Wichita Republican, during a Thursday news conference announcing their plans. “But I want to see it teed up within the first few weeks. It’s not going to be at the end of the year. We already know the facts. We already know what it takes.”
The plan in question, a flat tax proposal that would have primarily benefited the state’s wealthiest residents, narrowly failed last session, in what Hawkins said was the “biggest disappointment” of the session.
Democratic Gov. Laura Kelly vetoed the proposal, known as Senate Bill 169, and Republican efforts to override the veto fell short by just one vote in the Senate. The legislation would have implemented a 5.15% income tax rate for all Kansans, decreasing revenue by an estimated $330 million each year. The legislation would have also accelerated $40 million in annual tax cuts for corporations and provided $40 million in residential property tax relief.
In the first iteration of the bill, the top 20% of Kansas wage earners would have received about 70% of the total $764 million tax cut.
The modified plan Kelly vetoed would have offered more than $250 per month in savings to Kansans who earn more than $250,000 per year. But individuals who earn between $25,000 and $75,000 would have received only about $5 to $8 per month in tax relief.
Senate President Ty Masterson, an Andover Republican, denied the flat tax disproportionately favored the wealthy, pointing to the property tax provision as proof the plan would help all Kansans.
“These comments about somehow it benefits the wealthy, you have to get yourself in quite a good mental contortion to get there,” Masterson said. “It was a benefit for everybody just on that face value alone.”
Masterson blamed media reporting, saying it was false to the characterize the bill as a plan that benefits the wealthiest Kansans.
“You don’t always get accurate information coming through the general flows of information, through this standard sources of media,” Masterson said.
To give more property tax relief, Hawkins said leadership would also revive plans to shave off several of the mill levy taxes used by the state to finance public schools. Republican-proposed legislation last year would have exempted $100,000 of the assessed value on residential property from the 20-mill tax used by the state to finance public schools, taking away nearly $150 million annually in state revenue.
Hawkins didn’t go into specifics on the amount of mills he wanted to remove in the coming session, but he said the state would need to dip into the state general fund for education finances to make up the loss.
“We’re going to trim some of our mills off, probably two to three mills will come off,” Hawkins said. “And then we’ll have to fund education out of SGF. That won’t be there anymore.”
Others have pointed to the Local Ad Valorem Tax Reduction Fund as a tool to help local governments keep their property taxes low without reducing education funds. LAVTRF payments have been suspended since 2002, but renewal of the initiative could be used to distribute funds to rural counties with the highest property tax mill levy.
Hawkins said the plan wasn’t feasible and had “failed miserably.”
“It was a great slush fund for the county,” Hawkins said. “They could do whatever they wanted with it.”
Both Republicans said they would fight Medicaid expansion, an issue Kelly has promoted for years and has said will be her top priority for the upcoming session.
“Expanding Medicaid and ensuring that every Kansan has access to affordable, high-quality health care is the smartest, sanest way to keep our state moving forward,” Kelly said Wednesday, announcing the start of her statewide Medicaid expansion tour.
Hawkins and Masterson called the governor’s campaign a “welfare” tour for “able-bodied adults” who “choose not to work.”
Medicaid expansion would increase eligibility to adults younger than 65 with incomes up to 138% of the federal poverty level. Expanding Medicaid would unlock an estimated billion dollars in annual federal aid and give around 150,000 Kansans, including 40,000 children, access to affordable health care.
Kansas is one of 10 remaining states that hasn’t adopted expansion.
When asked by news reporters if they would consider making a deal with Kelly, trading their flat tax proposal for Medicaid expansion, Hawkins and Masterson said it was not an option.
Masterson said the governor was just using the issue to score political points.
“It feels to me that’s just politics on her side … she sees that as an issue she’d win on in some areas, so I think that’s why it’s there,” Masterson said.
Hawkins said Medicaid expansion was his “red line.”
“Medicaid expansion, they think it’s a panacea, but it’s not,” Hawkins said.