Republican and Democratic lawmakers are backing the idea of creating a back-to-school tax exemption, but defining school supplies could become a sticking point as the legislation is crafted.
“I want to give the kids of Kansas, their families, what they need,” said Senator Oletha Faust-Goudeau, D-Wichita. “The essential and necessary elements they need to be successful in their education and future.”
The Senate has three bills addressing the issue: SB 21, SB 29, and SB 55. The House Tax Committee held hearings on Thursday on all three bills and may begin finalizing the differences soon.
“I look forward to working with all the Senators on this. I think we’re going to get a good product,” said Sen. Caryn Tyson, R-Parker, and chair of the Senate Taxation and Evaluation Committee.
Meanwhile, Gov. Laura Kelly furthered her tax cut plan with two public appearances in Johnson County and one in Wichita. On Wednesday, Kelly appeared at Hillcrest Clothing Bank in Lenexa with an emphasis on the back-to-school tax exemption.
“For parents across the state, this will make preparing for back to school more convenient,” Kelly said. “Buying school supplies can be difficult. The inventory list is long, the expenses add up. Kids always seem to outgrow their school clothes before you’ve cut the tags.”
Moreover:Laura Kelly pushes food sales tax cut again. Will she be able to convince the entrenched Republicans?
Is clothing a back-to-school purchase?
Whether to include clothing – and how to define it – may be the most controversial aspect of the legislation.
Senator Molly Baumgardner, R-Louisburg, was skeptical of the definition of “cool” clothing.
“I think we could probably get rid of garters, suspenders, belts, wedding dresses, and we could add some of these other things,” Baumgardner said.
Sen. Virgil Peck, R-Havana and tax commission vice chairman, noted that his bill eliminates certain items of clothing: “baby getting blankets, diapers, wedding dress. I removed the chalk from the board and instead put blackboards and markers. I don’t know how many schools still use blackboards, but maybe some.”
“I don’t know how many people are going to buy a wedding dress to get ready for going back to school,” she said. “No guy would do that — well, he shouldn’t — and hopefully we won’t have young women getting married before they’re out of school.”
Baumgardner also noted that sewing equipment and supplies aren’t included.
“So we’re saying that a parent can’t choose to make clothes for their kids and get the discount with that,” she said. “And we’re also saying that if a student is enrolled in home economics, he can’t get that discount for those items that he might need.”
Moreover:These tax cuts will take priority this legislative session as Kansas enjoys a $2.3 billion surplus
Simplified definitions of compliance mandates
A key component is whether lawmakers want to stay in compliance with the simplified sales and use tax deal. The interstate compact is designed to simplify tax compliance for businesses while increasing tax collection on sales involving a buyer in one state and a seller in another. The agreement includes standardized definitions to ease the burden on resellers.
But not everyone likes the definitions set by the group
Senate Minority Leader Dinah Sykes D-Lenexa said the definition of dress is based on compliance with Streamlined, but she suggested working with the Kansas Department of Revenue to address the concerns.
A tax memo indicates that Peck’s bill could cause compliance issues.
Peck said he’s willing to discuss ways to make the legislation Streamlined compliant. He acknowledged that he “brings big benefits to Kansas,” but believes lawmakers “have some flexibilities … because they want us probably worse off than we’d like to be.”
“I reintroduced the school sales tax holidays, I never cared if they were Streamlined compliant in the past, I still don’t really care,” Peck said.
Moreover:Designed to ease burden of sales tax collection, interstate compact comes under scrutiny in Kansas
Kansas lawmakers to decide the finer details
Estimates of the final cost to state coffers – and savings to taxpayers – will depend on what happens. Lawmakers have several decisions to make.
The Faust-Goudeau bill, SB 21, is limited to school supplies, school teaching supplies, and school art supplies. The Peck bill, SB 29, adds clothing, clothing accessories or equipment, prescribed computer software, personal computers, and school computer supplies. So does the Sykes bill, SB 55, which is also the governor’s proposal.
The Faust-Goudeau bill has a $100 limit on single items. The Sykes bill has $100 limits on most school supplies, with $300 limits on clothing and computer software, and a $2,000 limit on computers. Any item over the limit would not receive any tax exemption.
Peck’s bill has no cap, which a tax note indicates would substantially increase its cost.
The Faust-Goudeau bill is estimated to cost about $480,000 in its first year. The Peck bill is estimated to start at $9.3 million annually.
A tax memo was not yet available on the Sykes bill, but the governor’s office had previously estimated that his plan would amount to $5.5 million in sales tax relief.
Local sales taxes would also be affected, but the expected amounts have not been calculated.
The duration of the tax exemption is also under discussion. The Faust-Goudeau bill has a two-day period starting on the first Friday in August. Both Peck and Sykes bills have a four day period starting on the first Thursday in August. There was also division among supporters over whether the holiday should last more than a weekend.
The start date also needs to be decided. The Peck and Kelly bills implement the tax exemption in 2023. The Faust-Goudeau bill waits until 2024.
The proposals have no way to verify whether purchases are for educational purposes, meaning anyone who purchases an exempt product during the tax holiday will receive the benefits.
Extensive sales tax exemption support
Education groups are supportive, with administrators and teachers’ unions supporting the idea.
“This bill can help families,” said Jim Karleskin, a lobbyist for the United School Administrators of Kansas and retired Holton superintendent with $336. “This bill can help teachers and administrators. The main thing is that it can help kids, and that’s the biggest motivation for me to be for it. It boosts our state’s economy, it keeps money in Kansas” .
Stacey Knoell, executive director of the Kansas African-American Affairs Commission, is a former middle school math teacher.
“The student population that I served in inner-city Kansas City, Kan., didn’t have the school supplies. It wasn’t available to them,” Knoell said. “So I can speak from personal experience that I went to Walmart and bought as a math teacher, surprisingly enough, a lot of pencils to provide to my students. Also, I have two small children, not small now, but 12 and 14, so I think this kind of tax exemption would definitely help parents.”
League of Kansas Municipalities lobbyist Spencer Duncan, who is also a member of the Topeka City Council, said the league is advocating for a tax exemption after past opposition. While the group generally prefers to lower the base tax rate, they have weighed it against the “greater good.”
“We changed that position,” Duncan said. “We will always be concerned that too many exemptions over time will create too much of a burden for the few paying for the many, and obviously we want a fair tax base over time.”
As the league opposes extending the holiday to more than one weekend, Kansas Appleseed executive director Jami Reever expressed concern about people living from paycheck to paycheck.
“What about those families whose paycheck doesn’t fall on the right Friday of the tax holiday,” he said. “Some will lose any of those tax savings.”
Duncan was also one of many who acknowledged that at least some Kansans are leaving the state for back-to-school shopping, particularly in Missouri, which means Kansas businesses are losing commerce while local governments potentially lose some tax revenues.
Missouri’s tax holiday lasts for three days, starting the first Friday in August, with exemptions for school supplies, clothing, computers and other items.
“As a kid, I loved going back to school shopping and buying those new shoes and all that,” Sykes said. “Then, as a mother, I think my kids didn’t enjoy it as much as I did because they weren’t in the pool with their friends. We crossed the state line to Missouri to shop in a sea of red carts. My kids they had their own checklist trying to find all the supplies.”
“I spent a lot of Missouri dollars on back-to-school supplies and computers,” she said.
Tyson said he recalled trying to create a tax holiday a decade ago when two Johnson County colleagues “said they don’t know anyone who would cross the state line to save a few cents. I said, ‘Oh, you shall go no further and looking at the license plates.'”
Oklahoma also has a sales tax exemption, as do about 15 other states, Peck said.
“Not only are our merchants losing sales of school supplies, clothing, computers, but we know that when a family goes grocery shopping, they’re going to spend the day. They’re going out to eat. They’re going to buy fuel,” Peck said. “These are taxed items that we don’t receive a state tax on.”
Karleskint, who is a former Republican lawmaker from Tonganoxie, said he expects lawmakers to find “a good mix of all three” of the bills.
“Whether it’s two days or four days, whether it’s art supplies or clothing, I would say yes to everything,” Knoell said.