15 June 2015

The headlines all read similarly: “The Kansas Legislature Passed the Largest Tax Increase in Kansas History!”  The liberals all scream the same line and are even preparing for a takeover on the back of the supposed failure of the Republicans in the Legislature.  It will be a message that will be given to the public.  This message is the fire that will spread.  Before I go on I want to make something clear: I was not in Topeka when the fire was created but I am here now to help do something about it.


As a freshman legislator I feel I have been put in the worst possible position and yet challenged to make the best possible decisions for my district and my state.  I do not take this responsibility lightly but prayerfully and with as much discernment and insight as I possibly can under the circumstances.  While I recognize the need for cooperation and teamwork towards the achievement of an end result, I was not sent to Topeka to be liked or to do what is politically expedient or “safe”.  Voters sent me here to lead, speak for, and serve the people of my district and the state of Kansas. 


I hope that everyone who reads this newsletter understands that there is more going on in the Legislature than what the media relays and more than what I am able to fit into this newsletter regarding all that occurred over the last several days and hours leading up to the votes that took place on the budget and tax bills.  The media obviously will paint a very different picture than the one I and other conservatives will give and the left will certainly do its best to destroy every effort to make things right.  I encourage you to get the facts, ask questions, and please take the time to find the truth. 


I stayed the night in Topeka after the Senate approved the bill that came out of the House.  At the hotel there was a young desk clerk with whom I had a conversation pertaining to the latest work completed in the Legislature.  His last comment to me was that he did not think there were “reasonable” people in Kansas who would understand what we did.  I told him I thought otherwise, that there were thinking people - Kansans who I believe are reasonable, those who will set emotions aside and reason through what we have done and understand that we did the best we could do. 


That is the answer I have for anyone who asks the question, “Why did you raise taxes on us?”  We conservatives did our best in the worst situation keeping in mind that if we did nothing or allowed a different plan go forward, Kansas would be far worse than it is with the bill that passed. 


Believe me when I say that raising taxes is nothing I and the other conservatives wanted to do.  That was one of the reasons, if not the main reason, the session went historically long.  One group of legislators not only wanted to raise taxes on all citizens but on small businesses retroactive to 2012.  It was not right nor was it the best course of action for our state.  (You can see a recent article from Forbes Magazine that attests to this on my Facebook page.)  Another group of legislators made a point to do and contribute absolutely nothing.  What was their objective? Failure.  They were out to ensure the failure of the Governor, the Republican Party, and even the state at any cost to further their own agenda - and that includes some with an “R” by their names.  Ask yourself some questions: Why wouldn’t people want to protect their state? Why wouldn’t those who claim to be on the side of the poor vote to protect them? Why wouldn’t people vote to protect education especially since it is part of their supposed platform?  I have heard the behind-the-curtain stories and they are pathetic. 


Another contested topic was that there was not enough spending cut from the budget.  This issue was highly debated and a huge point of contention for us on the conservative side.  One side note: over the summer there will be an efficiency study to show where respective cuts can be made to run the state more efficiently and save money.  I eagerly await this report however we needed that information during the session.  Thanks to the conservative push, we did achieve $50 million in spending cuts.  That was something we conservatives in the House fought and stood for in our plan and we got it amongst some other items in the bill.


Here is some of what was at stake with the non-passage of the tax bill:

The state’s bond rating was in jeopardy with the non-passage of this bill.

Education funding for K-12 and higher education would have been in jeopardy with the non-passage of this bill.

Health and Human Services would have been in jeopardy with the non-passage of this bill.

Positive things that came out of the bill:

$50 million cut from the state budget

Low Income Exclusions – Individuals in the lower income bracket were taken off the income tax rolls (approx. 338,000 people across the state. For Leavenworth County that is about 31% or 8,584)

Property Tax Relief- A property tax lid has been put in place- (Property tax on homes has continued to increase and now this will no longer happen without a vote of the people if tax exceeds the rate of inflation.)


What follows is some additional information from Senator Greg Smith that will be helpful in understanding what has occurred with the new legislation and what it means for the state.



Answers to Frequently Asked Questions (Senator Greg Smith District #21)

Senate Substitute for House Bill 2109


HB 2109 would revise an income tax subtraction modification for certain pass-through non-wage business income to require that guaranteed payments from businesses are counted as income in determining Kansas adjusted gross income.


HB 2109 will also help provide relief to low income Kansans by lowering the food sales tax to 4.95% next summer, sales tax for all other purchases would be at 6.55%. The reason for the year delay is to allow retailers time to become fully operational on the split sales tax.   


HB 2109 also includes tax amnesty from penalties and interest on the following taxes: privilege, income, estate, cigarette, tobacco products, liquor enforcement, liquor drink, severance, state sales, state use, local sales, and local use taxes. The delinquent taxes would have to be paid in full in the time period of September 1, 2015 to October 15, 2015 to qualify for amnesty. 


HB 2109 would keep income tax rates for 2015 at 2.7% for the bottom tax bracket and 4.6% for the top bracket through 2017.  In 2018 the tax rates would drop to 2.6% for the bottom bracket. The top bracket would remain at 4.6% It also would require those individuals claiming a tax credit have a valid social security number for the entire taxable year. Exceptions include military spouses who are filing jointly.


HB 2109 raises cigarette taxes by $.50 a pack (1 July, 2015). The tax increase will increase funding for Kansas University Medical Center Cancer Center.


HB 2109 would collect $471 million in tax receipts for FY 2016 - fully funding government and holding K-12 education dollars harmless.  No tax receipts are generated from the sales tax exemptions in this bill.


How does the bill change sales tax in Kansas?

HB 2109 raises the General Sales tax from 6.15 to 6.55. This applies to all transactions that involve the assessment of sales tax effective July 1, 2015. On July 1st, 2016, the sales tax on food will drop to 4.95%, thereby lowering the effective sales tax rate for an average family. This will provide much needed relief for all Kansans, particularly for the less fortunate and seniors on a fixed income. It should also be noted that if this bill were to become law and food sales tax is at a separate rate than that of the general sales tax, it is hard to imagine the sales tax on food will be increase in the future. Another item of note is that sales tax is paid by anyone who purchases an item in Kansas - not just Kansans.


Why does the bill wait one year before lower food sales tax to 4.95%?

There were two reasons. The first was to allow for a sufficient collection of funds to allow for the buy down of the food sales tax rate.  The second was to give retailers the time to make necessary arrangements for the new, bifurcated sales tax on food.


What does 2109 do for property tax relief?

HB 2109 would require local municipalities (cities & counties) to receive voter approval for any property tax increase that exceeds the rate of inflation. The measure would take effect in 2017. According to the Kansas Realtors Association If this provision had been law from 1997 to 2013, this could have prevented up to $5.3 billion in property tax increases on Kansas property owners. HB 2109 will continue to make government more transparent by allowing the voters the opportunity to vote on property tax increases.


Does 2109 provide income tax relief for individual tax payers?

Yes.  In order to continue down the path to making Kansas a "Zero Income Tax State," HB 2109 includes a provision to buy down state income taxes as state revenue increases (commonly referred to as a "ratchet"). Starting in 2017, with some exceptions, if state revenues increase 3% over the previous year, and after payments for Medicaid and KPERs are made, excess revenue will be used to buy down the top and bottom income tax rates on a dollar for dollar match. 


How much income do the sales tax exemptions provide for the state?

None.  This provision does not take place until 2019 and only after a thorough four-year process of analysis, committee hearings, and testimony from those groups who benefit from a sales tax exemption. In 2011 Kansas Legislative Post-Audit recommended a sunset of certain exemptions. The goal is to not simply eliminate these exemptions but with the billions of dollars steered away from the general tax base, many Senators felt it was prudent to examine the exemptions as recommended by the audit. The audit is an extensive review of exemptions and is a three-part study.  The exemption provision was designed after a study conducted by the Division of Kansas Legislative Post-Audit (which is a research and auditing arm of the Kansas State Government). This reputable study examined and suggested that certain exemptions not be sunset due to their potential impact on the Kansas economy. It is available online. In order to follow through with this recommendation, HB 2109 calls for a commission to re-evaluate said exemptions set to sunset in 2019.


Certain tax exemptions will not sunset in December 2019. They are:

Churches/Religious Organizations

Business to Business Transactions

Agriculture Machinery and Equipment

Certain Health Care related purchases including: prescription drugs, insulin, prosthetics or orthopedic appliances prescribed by a doctor, medical supplies and equipment purchased by nonprofits, and educational materials.


What is the tax commission mentioned in the bill and what do they do?

The Tax Study Commission will meet over the next four years. Their mission is to thoughtfully and carefully review the state's tax exemptions. The bi-partisan commission will be made up of Legislators. Members of organizations that benefit from tax exemptions would be able to come before the commission to discuss their status. Many envision that the vast majority of exemptions will be continued. However, extensive study is in fact needed.


Will rent and utilities be taxed under this new bill?

No, they will not sunset in 2019 because under Kansas statutes they are not actually exempted. Kansas levies a 0% tax on those items and will continue to do so now and into the future. A 0% tax is not considered an exemption from tax under current law.


Why did the Senate enact a school voucher plan?

There are no school vouchers in HB 2109. There is, however, a technical fix to an already existing tax credit scholarship program. The original program allows corporate sponsors the ability to set up a scholarship fund for the purposes of helping low-income students escape "failing schools," as designated by the Kansas Department of Education. The Scholarship program can be used to pay for a students' tuition at a limited number of private schools. Under 2109, the language of the original program is updated in order to allow that private schools do not charge tuition to needy students. This does not involve public funds and takes no money from public schools


If you have any questions, comments or concerns please feel free to contact me at your convenience. 


Until next time - God’s best to you! 





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