At Tuesday’s House Taxation Committee, Rep. Ken Corbet (R-Topeka) expressed frustration that the committee seems to favor government interests over taxpayer interests.

“I am sick and tired of taxpayers getting the short end of the stick from this committee.”

Unfortunately, evidence of Corbet’s sentiment was front and center at Thursday’s hearing.  Rep. Jim Kelly (R-Independence) introduced an amendment to SB 294 to delay implementation of the Truth in Taxation law by a year.  The Senate passed the bill unanimously in February but it sat idle for weeks in the House Taxation Committee.

Corbet objected to Kelly’s amendment, saying. “If you want to kill this bill, then amend it.”

Legislators know that passing a different version of the Senate bill forces a conference committee meeting to resolve differences, and they know that’s not likely to happen with the Legislature only meeting for a single day to wrap up the session on May 21.  In addition to Corbet, representatives Croft, Mason, Rahjes, and Thimisch voted against the amendment.  The chairman doesn’t vote unless necessary to break a tie, but everyone else voted for the amendment and it passed 16-5.

Those speaking in favor of the amendment, including Rep. Jim Gartner (D-Topeka), said they didn’t want to burden local officials with something new when they still may be dealing with the coronavirus situation.  That ‘something new’ is merely sending a notice to taxpayers to let them know how much they want to raise property tax, and then holding a public hearing to get input.

Taxpayers still have a good chance of getting the Truth in Taxation legislation passed, however.  The Senate Tax Committee this week put SB 294 in a House bill; if Senate leadership allows a vote and it passes, it goes to the House where it can only be voted up or down, with no amendments, provided House leadership allows members to vote on a motion to concur.

House Majority Leader Dan Hawkins (R-Wichita) controls the calendar and expressed support for property tax reform.

“There are many moving pieces right now and the legislature has a full plate due to the Governor’s continuous breaches of trust, but property taxes are a top priority of the House when we reconvene on May 21.”

Sales tax holiday for schools supply voted down

Rep. Chris Croft (R-Overland Park) offered an amendment to an online sales tax bill that would declare a 4-day sales tax holiday on school supplies in August.  The online sales tax bill is expected to increase state revenue by about $20 million, and Croft wanted to return some of that money to taxpayers.

Rep. Barbara Wasinger (R_Hays) supported Croft’s amendment, saying, “Instead of taking all the time, we need to give the citizens some back.”

But Rep. Gartner opposed the amendment, saying his research showed that retailers boost prices on merchandise qualifying for a sales tax holiday, so consumers don’t really save anything.

Rep. Stephanie Clayton (D-Overland Park) said border counties like Johnson County lose business because Missouri has sales tax holidays, but she opposed the amendment because she thinks students might not return in the fall, and the amendment “wouldn’t really help families.”

In the end, the majority of committee members opposed the amendment, with the predominant theme being ‘government needs the money.’  It failed by a vote of 7-14, with Representatives Mason, Corbet, Croft, Phillips, Thimisch, Toplikar, and Wasinger voting the sales tax holiday.  Representatives Gartner, Alcala, Baker, Clayton, Concannon, Eplee, Helgerson, Hineman, Kelly, Proehl, Rahjes, Stogsdill, Warfield, and Wolfe Moore voted against the school supply sales tax holiday.

That wasn’t the end of the committee choosing government over taxpayers, however.

Cash-strapped businesses must lend money to the state

Businesses that collect more than $40,000 in sales tax each month are required to pre-pay sales tax collections two weeks in advance.  Rep. Croft said that amounts to a rolling interest-free loan from businesses, many of whom are especially short on cash now.  He offered an amendment to change the law from ‘shall’ pay in advance to ‘may’ pay in advance.

Once again, many legislators took the side of government.  They acknowledged that it’s probably wrong to force businesses to loan money to the state, but said this isn’t the right time to change because the state is losing revenue.  That the state is losing revenue as a result of Governor Kelly’s shutdown orders wasn’t mentioned.

Rep. Dave Baker (R-Council Grove) said he’s been a longtime opponent of forcing businesses to prepay, but “at this time we need to be careful about reducing state revenue.”

Corbet sided with taxpayers, saying, “Businesses need all the breathing room they can get right now.  The state will survive the storm; it has many streams of revenue.  But I’m more worried about how many of these businesses will be here next year.”

The motion failed by a vote of 7-12, with Representatives Mason, Corbet, Croft, Eplee, Rahjes, Toplikar, and Wasinger voting to remove the prepayment requirement; Representatives Gartner, Alcala, Baker, Clayton, Concannon, Helgerson, Hineman, Kelly, Proehl, Stogsdill, Warfield, and Wolfe Moore voted against the amendment.

If not requiring businesses to loan the state money caused a cash flow crunch, the state would just borrow a little more in July, as it does every year.  And here’s the sadly ironic part – the state borrows the money from the Pooled Money Investment Board, which invests idle cash held by state agencies and local governments.  PMIB had $1.3 billion on hand at the beginning of the fiscal year.  But instead of borrowing from idle cash held by state and local governments, the state will continue to force cash-strapped businesses to advance it money.

Video of the hearing follows.

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