The Kansas tax reform legislation of 2012 is often called ‘the Brownback Tax Plan’, but in some circles, it’s called ‘the Morris Plan’. Governor Sam Brownback signed the $3.5 billion 5-year tax cut, but legislative insiders say Senate President Steve Morris refused to allow it to be scaled back for political reasons.
Governor Brownback’s original tax reform plan would have provided $352 million in tax relief over five years, but the House passed another plan over to the Senate that would cost just over $1 billion. The, in a battle of bare-knuckle politics, the left-leaning Senate would soon multiply the impact of the governor’s proposal by a factor of ten.
Morris could have allowed Senate negotiators to reduce the tax cut significantly, and the former Speaker of the House, Mike O’Neal, says the House would have gone along. But that didn’t happen, as explained in this excerpt from What was Really the Matter with the Kansas Tax Plan. The book is published by Kansas Policy Institute, which also owns The Sentinel.
Excerpt beginning on page 60 of the book
A Senate-amended version of the governor’s tax proposal, now deemed Senate Sub HB 2117, reached the Senate floor on March 20. The full Senate amended it further. In a 2017 interview with this book’s authors, Governor Brownback said Senate members added poison pills that removed all of the pay-fors in an effort to kill it. He believes they bumped the costs and sweetened the tax cuts, so they could be on record voting for a tax cut on a bill no one thought would ever see the light of day as law.
On the floor, senators adopted amendments to drop a recommendation to maintain the sales tax rate of 6.3 percent, allowing it to drop to 5.7 percent. (During the same session, the Senate killed a proposed amendment to lower the sales tax rate even further to 5.3 percent.[i]) They approved an amendment to keep all of the itemized tax deductions, and adopted another amendment to increase the standard deduction for joint tax filers from $6,000 to $9,000.[ii] The end result was a bill that would garner a $231 million shortfall in year one, and a whopping $4.5 billion shortfall throughout the six-year period ending in 2018.[iii]
Former Senate President Steve Morris said several senators thought the mortgage interest deduction and the charitable contribution deductions were important to Kansans—no matter what ultimately happened with the legislation.
“Those two things made the fiscal impact worse,” he recalled. It nearly died with a dead-even Senate vote of 20–20.[iv] Morris voted against the bill, but he would vote in favor of the legislation when the Senate reconsidered it a few hours later.
David Kensinger, who was then the governor’s chief of staff, is convinced the tie vote was intentional.
“The Senate took out the ‘pay-fors’ one-by-one. Mortgage deduction. Sales tax. Everyone who is working against the governor gets to vote for a tax break. The intent was to make the bill unworkable,” Kensinger said. “That’s the perfidy of what the Senate leadership was doing to kill the bill.”
There is no tie breaker in the Kansas Senate. The legislation flat lined, but the Senate moved to reconsider the legislation a few hours later. Morris said that immediately following the tie vote, his assistant told him the governor wanted to speak with him.
“He pleaded and pleaded and pleaded for us to reconsider,” Morris said. “He went on to say that he knew we couldn’t do that. It would bankrupt the state, …it was terrible public policy, and it would never become law. But he had to have something to go to conference with, because it was towards the end of the session and there were no other tax bills around.”
Morris says he voted in support of the legislation the second time as a favor to the governor because the governor promised the tax cut would be significantly reduced before he signed it.
Five years later Kansas City columnist Steve Kraske wrote about that fateful meeting of Morris and Brownback between the Senate’s tie vote and a second vote to reconsider, “Brownback doesn’t recall it that way. But it’s hard to imagine any other reason why Morris, a moderate, would sign off on such a huge cut absent that promise.”[v]
Kensinger says that’s garbage; the Governor’s Office played hard ball. Two of the twenty who voted against the amended governor’s tax plan were interested in other legislative items they hoped to see pass during the 2012 session. Kensinger will not say which lawmakers or what pieces of legislation they discussed, but Kensinger called a few legislators to the Governor’s Office.
“I made it very clear to them if the governor’s priorities didn’t advance, their priorities weren’t going to advance,” Kensinger said.
He said those senators told Morris they wanted to reconsider the amended governor’s tax plan.
“Steve Morris was going to lose a motion to reconsider later that afternoon,” Kensinger said. “Knowing he was going to lose, Morris released his caucus. Nine Republicans that voted against it in the morning, voted for it that afternoon.”
Morris, along with nine other Republicans switched their votes on the second attempt at passing HB 2117. It passed 29–11.
After the Senate passed the tax plan, Morris said it was “unworkable.”
“It will be a difficult process for those in the conference committee to come up with something that will pass muster,” Morris told the Star.[vi]
Democrats also didn’t see that particular plan coming together. Senate Minority Leader Anthony Hensley said the bill passing the Senate was the result of Brownback’s “backdoor arm twisting.”
Hensley added, “The plan we’re left with is a five-year, $3.7 billion plan that will shift the tax burden onto middle class families and seniors living on fixed incomes to the detriment of public education and property tax relief.”[vii]
Republicans weren’t enamored with it either. Former Speaker O’Neal said he understood why the Senate didn’t want that plan.
“I didn’t want it either, to be perfectly honest,” O’Neal said. “Because it didn’t have the ‘pay-fors,’ you’d really have to crunch the budget tight the next year, which didn’t happen, but we’re getting ahead ourselves.”
By the end of the day on March 21, a separate comprehensive tax plan had passed each chamber via gut-and-go procedures. The Senate-amended versions of the governor’s plan (Senate Sub HB 2117 and the House Republican plan (House Sub SB 177) were sent to conference committees, where three House members and three Senate members were tasked with negotiating terms of one plan or the other.
The House could pass the “poisoned” version of Brownback’s plan by concurring with the Senate’s bill, or the Senate could do the same by concurring with the House Republican plan, or the chambers could reach a solution through the conference committee process.
Instead, both pieces of legislation just languished.
“It just sits there for the rest of the legislative session,” Brownback recalled. “We’re trying to get the House to pass the Senate’s, but they won’t because it’s a big tax cut. But [the House] can’t get the Senate to do anything different. . . . It’s going back and forth until finally one morning, we started hearing rumors.”
The rumor was that the Senate was going to adopt an agree-to-disagree motion on the conference committee of the House bill, and then refuse to re-appoint a new conference committee, effectively killing the Republican House plan.
That, Brownback said, made the House mad, and the House still had another tool in its arsenal. Members could concur with the “poisoned” Senate bill, effectively passing tax reform.
“[The House] probably wouldn’t have passed that bill if they hadn’t gotten mad,” Brownback said.
On May 9, the Senate set to work attempting to kill the Republican House plan with a motion to agree to disagree on the Senate floor. Meanwhile, the House was attempting to concur with the Senate bill.
“There got to be a race, which in the legislature racing is—neither body works fast—it’s like a turtle race is what you’d compare it to,” Brownback said.
Morris described the start of the dueling filibusters differently.
He said the day the conference committee report went to the Senate floor, “the governor asked the House to concur with what we passed—what he told us would never become law. While we were debating a revised conference committee report, the House ultimately passed that concur. At that point it was a done deal. The governor obviously went back on his word.”
Both chambers worked feverishly. In the Senate, House allies attempted to keep the clock running on a motion to agree to disagree, while moderates in the House attempted to keep the clock running on a motion to concur with the Senate plan.
O’Neal thought it was a battle the House would lose, because there are 125 members in his chamber and only forty Senate members.
“And under our rules, once we get to the vote, each member has up to a minute to explain their vote,” O’Neal said.
An early call of the question ended debate, but House moderates were running out the clock explaining their votes. O’Neal was looking for an opportunity to close the roll. House members push buttons on their desks to light up a board. When and if the lights went dark for any moment, O’Neal could make his move.
“There was a small lapse in time where there was no light on,” O’Neal recalled. And the House Speaker called the roll.
One representative came out of his seat, and the sergeant-at-arms had to stop him.
“He wanted to kill me,” O’Neal said. “He wanted to cause me physical harm.”
It was over. Once the legislation reached the governor’s desk, Brownback would have ten days to sign it, veto it, or let it become law without his signature. In the meantime, the Senate and House could continue negotiations on the other, more preferable plan.
Brownback says Senate leadership came to his office asking him to veto the legislation.
Morris contends, however, that Brownback promised the bill would never become law on the day the Senate passed it.
“They won’t tell me what they’ll pass,” Brownback said of Senate leadership. “So I’m left with the option of either vetoing the bill because it’s too big, and not having any promise of any tax cut, or signing a bill that’s much larger than I proposed.”
Brownback issued a public statement, asking lawmakers to compromise on the other bill. They had ten days.
“As with all bills approved by the Kansas legislature, I will carefully review and consider HB 2117. It would create tens of thousands of new jobs and combined with spending restraint, will help to reverse a lost decade of declining employment,” Brownback said. “I am prepared to sign the bill, but I encourage Kansas legislators to continue their work on reforming our state’s tax policy and to consider some of the alternatives I proposed in my original pro-growth tax reform to offset the cost.”[viii]
Still, Morris said the Senate brought several proposals to conference committee. Minutes of what occurred in conference committee don’t exist, but Morris recalled the Senate offering suggestions for a more reasonable tax cut. Instead, Morris said the House negotiators only offered solutions very similar to what had already passed.
O’Neal said the goal of passing the other bill was simply for leverage in the negotiations for the House Republican plan. He recalled House negotiators offering all kinds of goodies trying to get the Senate to agree to the House Republican plan.
“I was basically giving the conference committee Christmas tree ornaments to get them to go along with it,” O’Neal said.
For example, he offered $45 million in property tax relief and a proposal to add $50 million in additional school funding without weighting it. Three senators who were likely opposed to any tax-relief proposal hailed from Johnson County, which would have benefitted immensely from both proposals.
“[The Senate] turned every single one of them down,” O’Neal recalled, “with the most conservative people in the building throwing money at the schools and the most moderate people in the building turning it down.”
Morris said he had regular conversations with the governor about school finance throughout the 2012 session. Morris said he was concerned that schools were being shortchanged, and there was a pending lawsuit. He said those discussions fell on deaf ears.
“The next week, I’d have the same conversation as if I’d never talked to him before,” Morris recalled. “It was like Groundhog’s Day.”
The governor’s staff continued advocating for the conference committee to reach a compromise. State Budget Director Steve Anderson said lawmakers had two “beautiful choices,” as he urged House Republicans to consider endorsing the plan under negotiations.[ix]
“It’s kind of like the Miss America contest,” Anderson told Republicans during a caucus meeting. “You have two beautiful options, but the one I would put the crown on would be the conference committee report.”
Meanwhile, O’Neal said day one, day two, day three, passed. And then day four and five passed with no movement.
“Frankly, we would have done just about anything,” he recalled. “We had such an aggressive plan on the governor’s desk that it wouldn’t have taken much to please [the House].”
The governor issued a public ultimatum on May 16, a few days after the House won the battle of the filibusters.
“In regards to reforming our state’s tax policy, either send me the bill that came out of the conference committee last week, or I am going to sign HB 2117 when it arrives on my desk,” Brownback said in a statement.[x]
The Senate called Brownback’s bluff. On May 18, the Senate, by a narrow vote, of 18–21, decided not to consider the conference committee compromise.
Still, Brownback was anguished about signing the bill.
“The fiscal note was much higher than I had proposed and man, I chewed on that, prayed on that for about as long of period of time as I had,” Brownback recalled.
O’Neal nudged him.
“He almost didn’t sign it,” the former House Speaker said. “My guilty secret is, I leaned on him hard to fulfill the promise that he made to our caucus, that if we couldn’t come to an agreement, he would sign it.”
Brownback said he ultimately decided the people could be trusted with their own money.
“I will put my money with the people more than the government any day, and that’s what I ultimately came down with,” he said. “This is letting the people have more of their own money, and we will work our way through.”
Brownback publicly announced he would sign HB 2117 on May 18.
“It is unfortunate that the Kansas Senate has refused even to debate a tax compromise bill that would have provided Kansans tax relief,” his statement read. “However, strengthening the Kansas economy cannot wait. We will have pro-growth tax reform in Kansas this year that will create tens of thousands of jobs and make our state the best place in America to start and grow a small business.”[xi]
[i] Pilcher-Cook, Mary. Proposed Amendment to S Sub for HB 2117. http://www.kslegislature.org/li_2012/b2011_12/measures/documents/fa_2012_hb2117_s_5114.pdf .
[ii] Supplemental Note on S Sub for HB 2117. March 20, 2017. http://www.kslegislature.com/li_2012/b2011_12/measures/documents/supp_note_hb2117_04_0000.pdf.
[iv] Journal of the Senate, pg. 1947. March 21, 2012. http://www.kslegislature.com/li_2012/b2011_12/chamber/documents/daily_journal_Senate_20120322102847.pdf.
[v] Kraske, Steve. “Massive tax cuts were the result of Brownback’s lie.” The Kansas City Star. June 8, 2017. http://www.kansascity.com/opinion/opn-columns-blogs/steve-kraske/article155148679.html.
[vi] Cooper, Brad. “Kansas Senate lines up behind tax cut proposal.” The Kansas City Star. March 21, 2012. Accessed from the Kansas City Star archives.
[viii] Brownback, Sam. Statement on passage of S Sub for HB 2117. May 9, 2012. Accessed from https://governor.kansas.gov/governor-brownback-tax-reform-will-create-jobs-and-economic-growth/.
[ix] Shields, Mike. “House poised to vote on compromise tax bill.” Kansas Health Institute. May 17, 2012. http://www.khi.org/news/article/House-poised-vote-compromise-tax-bill.
[x] Brownback, Sam. Statement on tax legislation. May 16, 2012. Accessed from https://governor.kansas.gov/governor-brownback-supports-tax-conference-agreement/.
[xi] Brownback, Sam. Statement on signing HB 2117. May 18, 2017. Accessed from https://governor.kansas.gov/governor-brownback-will-sign-pro-growth-tax-legislation.