House blocks bill ‘cynically’ bundling big-business tax breaks with aid to disabled veterans

Rep. Patrick Penn, a Wichita Republican and U.S. Army veteran, recounted his experience in Afghanistan and Iraq to urge lawmakers to avoid tainting property tax relief for disabled veterans with policy helping Walmart and Genesis Health Clubs to dodge property taxes. Penn is seen here during a March 5, 2024, debate in the House. (Sherman Smith/Kansas Reflector)

TOPEKA — U.S. Army combat veteran and state Rep. Patrick Penn begged Kansas House colleagues to reject a bill  that featured a pair of controversial provisions slashing commercial property taxes and jeopardized property tax relief for veterans with disabilities.

Penn, a Wichita Republican, supported a motion to send House Bill 2096 back to House and Senate negotiators so they could strip out the objectionable big-business elements. He wasn’t alone in seeking to cleanse a bill otherwise viewed favorably because it would deliver property tax relief to elderly homeowners, individuals making use of vehicles ranging from electric wheelchairs to boats and to servicemembers who returned home from war in Afghanistan or Iraq with permanently changed minds and bodies.

Penn wasn’t alone in condemning negotiators willing to risk a gubernatorial veto of property tax reform for totally disabled veterans by including a provision granting giant retailers such as Walmart and Home Depot benefit from a “dark-store” theory in which property tax assessments were calculated as if commercial buildings were vacant.

He joined a contingent also objecting to a “government competition” section in the bill inspired by owners of the Wichita-based Genesis Health Clubs. Genesis and the company’s lobbyist and legislative allies have been keen to help the company argue for a property tax exemption if forced to compete against recreational facilities opened with tax dollars by cities, counties, schools, townships and other public entities.

“I’m going to beg you to support this motion to send this back,” Penn said. “I stand before you disillusioned and incredulous and, yes, angry. I absolutely, with complete respect, categorically refuse to give certain health clubs an advantage or break on the backs of disabled vets and struggling families.”

The tax rebuke

During marathon legislative debate on Friday night, the House heard pleas from Penn and others to adopt the motion initiated by U.S. Air Force veteran and Garden City Rep. Bill Clifford, a Republican. The affirmative decision kicked the bill back to a House and Senate conference committee for further work.

Clifford said this particular bundle demonstrated what sort of bad legislative maneuvering could occur during late-night sessions in the Capitol.

“As a veteran, I am insulted that we are being put in a position to vote against our fellow veterans,” he said. “There are many good things here. We’re not here to cynically vote for things so that bad things can happen.”

Rep. Pat Proctor, a Leavenworth Republican and retired U.S. Army colonel, said 20 organizations representing Kansas veterans considered property tax relief their top priority. He said the 3,500 veterans who exited active duty each year at Fort Riley, Fort Leavenworth and McConnell Air Force Base were moving to Texas, Florida, Nevada and Alaska because those states offered property tax breaks to disabled veterans.

“All veterans are very deserving of our respect and honor,” said Rep. Adam Smith, the Weskan Republican and chair of the House Taxation Committee.

The fitness clubs and big-box retailers should go to the back of the line and avoid delaying passage of property tax benefits needed by disabled veterans in Kansas, said Rep. Mari-Lynn Poskin, a Leawood Democrat.

Across the rotunda

A comparable motion was offered by Sen. Jeff Longbine, R-Emporia, to put the bill in hands of a conference committee so the quality pieces could be considered separately from the toxic pieces. His gambit failed 19-20. Subsequently, the bill was approved 23-14 by the Senate.

Senate President Ty Masterson, an Andover Republican, may have spared the bill a double-barreled dose of rejection by standing up to praise the Genesis’ property tax provision, which was previously broadened to target fitness clubs, restaurants and child care facilities in a bid to downplay ties to Genesis and develop broader appeal.

“Truth is, government shouldn’t compete,” Masterson said. “I’m proud to stand with that provision. I knew there’s certain people that try to make it about certain individuals, but it’s really about competition.”

The practice of bundling popular bills with unpopular subject matter has become routine in the Kansas Legislature. If there was willingness to reconsider components the HB 2096, House and Senate tax negotiators could meet in late April when the Legislature returned from a three-week break. The legislation could be narrowed to appease dissenters, the package could be abandoned or House and Senate leadership could reload and try again with the same deal.

“We shouldn’t be using our veterans as bait,” said Sen. Jeff Pittman, D-Leavenworth. “I know that seems like a strong word.”

Democratic Gov. Laura Kelly vetoed a bill in 2023 that contained the government competition element, but GOP Sen. Caryn Tyson of Parker said the new bundle should be advanced regardless of Kelly’s intent.

“What we need to do for our constituents is not worry about what the governor is going to veto,” said Tyson, who chairs the Senate Assessment and Taxation Committee. “We have government entities that are competing against private businesses. That is not what government is for.”

Those poison pills

Under the Veterans’ Valor Property Tax Relief Act, the state would create a refundable income tax credit starting in the 2024 tax year for veterans determined to be totally disabled, permanently and totally disabled or unemployable under federal disability provisions. The relief would amount to 75% of property taxes assessed and timely paid 0n residential property owned by the veteran.

Unlike a tax break law applying to the elderly that set annual income and home ownership value caps, the veterans who applied wouldn’t be subject to those limitations. The anticipated cost of the tax relief act was $10.8 million in the upcoming fiscal year, $11 million in 2026 and $11.2 million in 2027.

The so-called Genesis tax break would be available statewide to fitness facilities, child-care operations and restaurants. It would deliver a real and personal state property tax exemption to businesses in cities where a government facility owned or operated a rival less than 5 miles apart.

Businesses wouldn’t qualify for the tax break if the government operation was there first. In addition, the applying business would have to be current on state and local taxes to qualify. In the past, Genesis has been tardy 0n property tax payments in several counties.

(This story was edited to make clear Rep. Bill Clifford, a Garden City Republican, offered the motion to send the tax legislation back to a committee of House and Senate negotiators for removal of controversial sections.)

The post House blocks bill ‘cynically’ bundling big-business tax breaks with aid to disabled veterans appeared first on Kansas Reflector .