Kelly proposed a $250 rebate to individual tax filers and $500 to married couples filing together. Even those who didn’t owe taxes would receive the rebate, Kelly’s office said. The rebates would cost the state about $445 million.
The governor said the state is able to pay the one-time rebates, as they wouldn’t permanently decrease state revenues. The state budget is in much better shape than it was before lawmakers reversed a majority of former GOP Governor Sam Brownback’s tax cuts in 2017, with tax collections surpassing expectations.
“We can return money to taxpayers,” said Kelly in her statement regarding the proposal. She said the “significant savings for every family” would be distributed by next summer, just months before the November general election.
Kelly’s statement showed her handling of the state’s finances and attempts to attract business development, which could be major focuses in her re-election campaign.
Senate Minority Leader Dinah Sykes, a Democrat, said Kelly’s proposal regarding income taxes will “give Kansas families a leg up.”
Democratic House Minority Leader Tom Sawyer, of Wichita, said that with the state’s current financial health, “We need to make sure hard-working families benefit as soon as possible.”
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 sales tax on groceries. Her successful 2018 gubernatorial campaign emphasized her opposition as a state senator to an earlier and nationally notorious experiment in slashing state income taxes under Brownback that was followed by persistent budget shortfalls.
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, due to 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 shows 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 top Democratic lawmakers promised strong support, it wasn’t immediately clear if Kelly’s proposal had universal support among members of her party.
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 the Kansas tax on groceries is second-highest among U.S. states, trailing only Mississippi’s. 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 on which she’d been working. Schmidt’s campaign manager, C.J. Grover, accused Kelly on Wednesday of attempting an “election-year makeover.”
The Associated Press contributed to this report.