In the nearly eight months since Republicans controlling the Kansas Legislature and Democratic Gov. Laura Kelly agreed to the terms of phasing out the state’s sales tax on food, grocery prices have rocketed and the extra 6.5% charge on groceries remained in place.
Now, freshly reelected and frustrated with the deal she negotiated, Kelly wants to ditch the phaseout for a quicker and complete end to a tax that takes the biggest bites out of households with the least money.
That sales tax is scheduled to creep down to 4% on Jan. 1 and Kelly says that’s too slow. In the meantime, prices for groceries in the Midwest increased by more than 13% over the last year.
Brian Walker, president and CEO of the Kansas Food Bank in Wichita, said the upcoming phase-down could help poorer families, but wiping out the surcharge entirely would help even more.
“It makes sense to us now,” Walker said, “to cut the whole thing and really provide the relief that this bill was meant to provide to folks.”
On Monday, Kelly called for lawmakers to make several tax cuts that she says will save Kansans $500 million over three years. She said the cuts are possible because the state has more than $2 billion in budget surplus.
The headline of that plan is eliminating the food sales tax for good. It’s the same plan she proposed a year ago and a promise she made on the campaign trail this fall. At times in recent years, both Kelly and leading Republicans have boosted that same idea.
Along with the food sales tax, the governor’s proposal eliminates taxes on diapers and menstruation products. Kelly also proposed reducing income taxes on Social Security for retirees and creating a three-day tax holiday for back-to-school purchases.
Kelly contends the original food tax proposal was the victim of election-year politics. While Republican lawmakers generally support tax cuts, they also didn’t want to give Kelly a policy win right before her bid for reelection.
But now that the election has passed and Kelly won another four years in office, she pledged to work with Republicans to get it done.
Yet those lawmakers may not see much political incentive to give Kelly what she wants.
Alexandra Middlewood, a political scientist at Wichita State University, said the phaseout will align nicely with the state’s 2024 elections, when every seat in the Kansas House and Senate will be up for election. Currently, the tax is set to drop to 2% in 2024 and zero on Jan. 1, 2025.
With that timeline, Republicans may wait on the phaseout — putting off action until an election year rather than now — and use it as a campaign piece to try to retain the GOP supermajority in the Legislature.
“It’s more to their advantage,” Middlewood said, “to elongate it or to keep it the same way that it is currently and to try to gain some political advantages from that in the next election.”
Republicans have so far remained coy on their plans for taxes in the upcoming session. House Speaker Dan Hawkins, a Wichita Republican, said in a statement that Kelly’s proposal will be considered, but suggested House Republicans are more interested in tax cuts that “will benefit all Kansans.”
But Brett Hartford, executive director for Lawrence food bank Just Food, argues reducing the food sales tax does benefit all Kansas.
Just Food mostly provides supplemental groceries to the people it serves, and in the last six months, about 30,000 homes used the food bank. But everyone needs to buy groceries.
“That would be a huge relief for everybody in Kansas,” Hartford said, “but especially for people that are needing supplemental groceries like our customers.”
Meanwhile, one of Kelly’s other tax cut proposals — reducing income taxes on Social Security for retired seniors — may be more appealing to lawmakers. Republican Derek Schmidt proposed exempting pensions, Social Security and private retirement distributions from state income tax as part of his campaign for governor that ultimately lost to Kelly.
Middlewood said Kansas Republicans have historically been more interested in cutting income taxes. The tax reduction on Social Security could be something that Republicans could stomach.
“So you could see that they won’t play ball on the grocery tax,” Middlewood said, “but they’re willing to make some concessions on some of the other tax cuts that have been proposed.”
Dylan Lysen reports on politics for the Kansas News Service. You can follow him on Twitter @DylanLysen or email him at dlysen (at) kcur (dot) org.
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