Kansas governor denounces legislature's action to raise taxes

Reuters News
Posted: Jun 07, 2017 4:23 PM

(Reuters) - Kansas Governor Sam Brownback on Wednesday criticized the state legislature for overriding his veto of a bill that hikes income tax rates to plug budget holes, saying it will hurt the state's efforts to spur economic growth.

"I think we've taken a big step backwards," the Republican governor told reporters.

Brownback quickly vetoed the bill passed by the legislature on Monday, saying the $1.2 billion it would raise over the next two fiscal years marked the biggest tax increase in Kansas history.

Both chambers of the Republican-controlled legislature overrode Brownback's veto late on Tuesday.

The measure essentially rolls back income tax rate cuts the state enacted in 2012 that led to budget shortfalls. The higher rates are expected to raise $591 million in fiscal 2018, which begins July 1, and $633 million in fiscal 2019, according to a legislative analysis of the bill.

Kansas' structural budget pressures led S&P Global Ratings to revise the outlook on the state's AA-minus credit rating to negative from stable earlier this year.

David Hitchcock, a S&P analyst, said on Wednesday the credit rating agency would take a look at the tax hike in the context of Kansas' final budget and its response to a court ruling on school funding.

Lawmakers this week also passed a plan to comply with a March 2 Kansas Supreme Court ruling that found the school funding system falls short of a constitutional requirement for adequacy. The ruling set a June 30 deadline for the enactment of a constitutional funding method.

(Reporting By Karen Pierog; editing by Diane Craft)