MESSAGES FROM THE GOVERNOR

House Substitute for Senate Bill No. 37

An Act concerning taxation; relating to income tax; modifying tax rates for individuals; eliminating the income limit to qualify for a subtraction modification for social security income; increasing the Kansas standard deduction and the Kansas personal exemption; relating to privilege tax; decreasing the normal tax rate; relating to property tax; increasing the extent of exemption for residential property from the statewide school levy; decreasing the rate of ad valorem tax imposed by a school district; abolishing the local ad valorem tax reduction fund and the county and city revenue sharing fund and providing for certain transfers to the state school district finance fund; relating to sales and compensating use tax; reducing the state rate of tax on sales of food and food ingredients; modifying the percent credited to the state highway fund from revenue collected; amending K.S.A. 65-163j, 65-3306, 65-3327, 75-2556, 79-1107, 79-1108 and 79-1479 and K.S.A. 2023 Supp. 72-5142, 74-8768, 79-201x, 79-2988, 79-32,110, 79-32,117, 79-32,119, 79-32,121, 79-3603, 79-3603d, 79-3620, 79-3703 and 79-3710 and repealing the existing sections; also repealing K.S.A. 19-2694, 79-2960, 79-2961, 79-2962, 79-2965, 79-2966 and 79-2967 and K.S.A. 2023 Supp. 79-2959 and 79-2964.

Message to the Legislature of the State of Kansas:

Kansans need responsible, comprehensive tax relief. As I said in my last veto statement of the Legislature’s nearly identical tax bill, ‘I cannot sign into law a bill that jeopardizes our state’s future fiscal stability.’

I have given the Legislature several roadmaps to fiscally responsible tax cuts since January. Instead, they played political games with reckless tax policies, and I vetoed them. I said irresponsible tax policies would lead to a special session.

So here we are. While I applaud the spirit of bipartisanship, this tax cut package, passed at the 11th hour of the last day of the Legislative session, misses the mark. Its proposed cuts and the excessive spending by the Legislature endanger all the progress we’ve made in restoring services for Kansans, funding our public schools, and investing in our infrastructure.

Additionally, to favor a specific business, a tax abatement scheme was floated to put taxpayer dollars into that business’ pocket at the expense of local government services. That’s wrong. Taxpayer dollars should not be diverted to political donors under the guise of tax cuts.

Kansans expect us to map a responsible future because we have come a long way, together. Our financial ratings have been upgraded. We have paid down debt. We paid $224 million for new projects in cash, saving Kansans $90 million in interest that would have otherwise accumulated through bonds. Education is being funded. We went from zero to a reasonable rainy-day fund for the inevitable emergencies we will face. Kansas is being noticed for its sense of responsibility. Don’t toss all that.

The lack of a fiscally responsible tax cut bill jeopardizes other tax policy passed before adjournment, such as legislation to support Kansas’ film and digital media industry. The Legislature cannot overpromise tax cuts without considering the overall cost to the state for future years. We cannot start with our expenses and then look at our income. Families and businesses do not budget like that; neither should Kansas.

Therefore, pursuant to Article 2, Section 14(a) of the Kansas Constitution, I hereby veto House Substitute for Senate Bill 37, House Bill 2096, and House Bill 2097.

Laura Kelly, Governor

Dated May 16, 2024.