By RACHEL MIPRO
TOPEKA — Kansas lawmakers want to use an expected budget surplus to address the state’s “Social Security gap,” which they say is driving retirees out of the state.
Kansas taxes income from Social Security benefits, with an income tax exemption for those earning $75,000 in federally adjusted gross income or less. Critics of tax policy say retirees are being put under unnecessary financial pressure.
At the legislative hearing on taxes on Friday, Senator Caryn Tyson, R-Parker, said she favored doing away with Social Security income taxes altogether. Tyson and other legislators have tried to pass legislation on this issue in recent years.
Most recently, in 2022, lawmakers sought to pass House Bill 2597, which would have exempted several thousand dollars in retirement income and would have allowed that amount to increase annually with the Internal Revenue Code’s cost-of-living adjustment.
“All committee members, we certainly made an effort, a great effort, to address this last year and in previous years,” Tyson said. “If there is any sort of social security tax, that comes into play and discourages people at different levels from not working. We engineer behavior through our tax structure.”
With Kansas running a record surplus of more than $2 billion this fiscal year and expecting a surplus of $400 million next year, lawmakers are trying to decide what to do with the extra money.
Surplus estimates for the 2023-2024 general state fund were prepared by the Department of Budget and the Kansas Legislative Research Department using a consensus process. The governor and legislature use these estimates when creating the annual budget and spending blueprint.
For fiscal year 2023, the November estimate is up $794.2 million from previous April estimates. Total tax estimates increased by $773 million, and other revenue estimates increased by $21.2 million, bringing the revised estimate for fiscal year 2023 to $9.701 billion.
The initial estimate for fiscal year 2024 is $10.124 billion, an increase of 4.4% over the estimate for fiscal year 2023. The amount of total taxes is estimated to increase by 0.9%, following an increase in 2023.
Governor Laura Kelly campaigned for reelection on a platform to speed up the repeal of Kansas’s 6.5% grocery sales tax, fully fund special education and work to reduce the Social Security income tax clip. Kelly’s budget will be released in January and it is expected that some of these issues will be addressed in the budget.
D-Baldwin City Senator Tom Holland said Social Security issues should be a priority in the upcoming legislative session.
“In terms of Social Security, I’m very interested in tackling the cliff problem,” Holland said. “That’s a real problem for me, for people who have paid into Social Security, especially for senior citizens who have no other additional sources of income. I think it is imperative that they have access to those funds.”