Given that Kansas’s state budget currently points towards a nearly $3 billion surplus, it’s inevitable that legislators have ideas about passing some of that surplus on to Kansans in the form of tax cuts. Of those ideas, some are much better than others.
On the first day of the 2024 legislative session, Governor Laura Kelly presented her own proposal, supported by a few key Republican legislators. It would increase state property tax exemptions and state income tax deductions, as well as provide tax credits for child care. It aims to eliminate the food tax outright, and establish a sales tax holiday for school supplies in August.
It’s a good plan, one the legislature should take seriously—more seriously, at least, than the Republican leadership’s plan to once again push for a flat tax, with all incomes, from the highest to the lowest, taxed at the exact same rate. Flat taxes do have some bureaucratic advantages—they make tax filing much simpler, and tax revenues more predictable—but they are also almost invariably regressive, with the tax burden comparatively falling harder on the poor than the rich.
Despite that unfairness, they’re favored by many, particularly businesses. Nationwide, the popularity of flat tax structures fluctuate: this year Georgia is instituting one, while Massachusetts is abandoning theirs. But either way, Kelly has insisted that the flat tax idea is a non-starter for Kansas, and the unless the Republican leadership can regain the support of their dissenters, the votes to override Kelly’s veto simply won’t be there.
So does that exhaust all possible tax reform options? It does not—because Kelly’s proposal doesn’t include what is probably the best idea out on the legislative table.
Remember that the point of taxes is to fund government programs which we, as citizens, see as benefiting our communities and thus worth paying for—police, fire, health care, sewer, parks, and more. A large portion of those costs are most directly borne by counties and cities, many of which are facing serious budget difficulties, leaving them with the option of either cutting needed programs or increasing local property and sales taxes (or both).
Thus one of the most responsible ways Kansas can help its citizens is by returning to a practice that worked very well for a slow-growth state like ours for more than 70 years: return a portion of state sales taxes to local governments through the Local Ad Valorem Tax Reduction Fund.
The LAVTR doesn’t attract much attention; it’s a government policy that functions behind the scenes, helping municipalities make their budgets and encourage economic innovation by keeping local programs funded and costs low. Because it doesn’t put money directly into the pockets of individual citizens, it’s not an obvious political pitch. But those Kansas legislators with a sense of history and who see the need to keep local governments healthy as the national economy changes, haven’t forgotten about it. Governor Kelly shouldn’t either.
Putting the LAVTR, which went dormant during the early 2000s, back into the tax discussion won’t be easy; some leading legislators, being protective of their state power over what Kansans might locally prefer to see their tax money spent on, see it as little more than a slush fund. But if Governor Kelly and others really want to use this moment to think about tax changes that will both save money as well as help make public programs across the state more fiscally sustainable, reviving the LAVTR would be a great first step.
Dr. Russell Arben Fox teaches politics at Friends University in Wichita.