Kansas lawmakers want a new tax cut plan. That may help effort to lure Chiefs, Royals

Kansas lawmakers are mounting a final effort to pass tax cuts ahead of the anticipated end of session Tuesday night. The outcome may decide the fate of an incentives proposal to lure the Kansas City Chiefs and Royals across state lines.

The Legislature on Monday failed to override Democratic Gov. Laura Kelly’s veto of a wide-ranging package that would have moved Kansas from three state income tax brackets to two and ended taxes on Social Security income.

Legislative negotiators outlined a potential new plan, inserted into SB 37, on Tuesday afternoon similar to the the legislation vetoed by Kelly. The governor’s office signaled the new proposal was unacceptable.

Several lawmakers have suggested an audacious plan to authorize full public financing of new stadiums for Chiefs and Royals is more likely to advance if a new tax package passes.

“What the complicator is all these vetoes on the tax bill from the governor,” Senate President Ty Masterson, an Andover Republican, told The Star. “Because you get the sense, oh, you want to do something for the Chiefs but you don’t want to do anything for our people? So that’s what’s complicating things.”

Masterson added, “We’re looking to see if we can put another bipartisan tax package together.”

After the House voted to override Kelly’s veto on Friday, the Senate fell one vote short on Monday. The vetoed plan would have set the top state income tax bracket at 5.55% and 5.15% for the bottom bracket, with $23,000 taxable annual income serving as the dividing line between the two rates. For married couples, that dividing line would be $46,000.

The plan contained other tax changes, including raising the personal exemption allowance for dependents, lowering the statewide mill levy for schools, and accelerating the elimination of the state sales tax on food to July 1, in addition to ending taxes on Social Security income.

Kelly said the measure was too expensive when she vetoed it, citing the anticipated $460 million annual cost of the bill as well as the costs of additional tax bills passed by lawmakers. She has called for the cost of tax cuts not to exceed roughly $425 million a year.

The new plan outlined on Tuesday would set the bottom tax bracket rate at 5.2% while raising the standard deduction amounts. After a first-year cost of $641 million, the plan is projected to cost between $462 million and $472 million a year during the first five years.

“Governor Kelly will veto the tax plan agreed to in Conference Committee Report for Senate Bill 37. She will call the Legislature back into special session if this is the tax plan sent to her desk,” Kelly chief of staff Will Lawrence said in a statement.

Kelly has promised to call a special session if lawmakers don’t pass tax relief she will sign. A special session later this spring or summer could complicate campaigning for incumbent lawmakers, who would have to spend time in Topeka and would be restricted in soliciting contributions while the Legislature was meeting.

Sen. Caryn Tyson, a Parker Republican who chairs the Senate Tax Committee, praised the new plan.

“This legislation helps low-income and medium-income families more than anyone else,” Tyson said.

The veto override failed minutes before Rep. Sean Tarwater, a Stilwell Republican, rolled out a plan to attract the Royals and Chiefs from Missouri after Jackson County voters rejected a stadiums sales tax in early April. The proposal would authorize up to two supercharged STAR – Sales Tax and Revenue – bond districts for major professional sports teams.

STAR bonds are a state-run program that allows municipalities to finance the development of major projects. Municipalities issue bonds to pay for construction, which are then paid off by future sales tax revenues.

But the proposal includes key differences from a typical STAR bond district. Most significantly, the proposal allows for 100% of the project to be financed through STAR bonds, instead of the typical 50%. The term of the bond would run 30 years.

“If we can get a tax package, it will help,” Tarwater said. “It’s embarrassing to go home without a tax package. You can’t build a stadium for somebody and then not give everybody a tax break.”

Tarwater has said he has not spoken to the teams. The Star reported over the weekend that both the Chiefs and Royals are in the early stages of determining a Plan B after the failed Jackson County vote, which saw residents reject a ⅜-cent sales tax by 58% to 42%.

The teams are likely to now pursue separate plans. Chiefs chairman and CEO Clark Hunt said “it makes sense” for the teams “to work independently” moving forward.