The Kansas House on Wednesday approved $3.7 billion in tax cuts that advocates say are critical to jolting the state's economy.
But critics fear the plan could leave Kansas billions of dollars in the red by 2017.
The House voted 64-59 to approve a variation of Gov. Sam Brownback's tax plan that slashes personal income taxes, eliminates income taxes for many small businesses and lops about a half-cent off the state sales tax.
The bill now goes to the governor's desk.
Although the vote hands Brownback a big win, the governor signaled he might settle on a less costly tax plan that had been working its way through the Legislature when the House went with what some called the "nuclear option."
"I am prepared to sign the bill," Brownback said. "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."
Passage of the plan set off a firestorm of complaints that the tax package would leave gaping holes in the state budget and lead to severe cuts in services.
"It sends our state to hell in a handbasket. It's a travesty," said Sen. Anthony Hensley, a Topeka Democrat and the Senate minority leader. "It's just terrible tax policy."
But backers of the tax cuts said Kansas needed to take a big step toward energizing its economy and make it more competitive with other states. And they also have questioned the validity of dire financial projections for budgets that are several years away.
"I really do believe we have to be bold with respect to the approach we take on taxes if we're going to get bang for the buck," said Rep. Lance Kinzer, an Olathe Republican. "In some ways, the path that makes the least sense is just some small, piecemeal measure that allows us to go home and say we passed a tax cut."
The heart of the plan would eliminate taxes on non-wage business income for 190,000 limited-liability companies, sole proprietorships and the like.
Although the legislation eliminates many tax credits, it would keep deductions for charitable contributions and interest on home mortgages.
The House endorsed a plan approved in March by the Senate, which extensively rewrote Brownback's tax proposal in such a way that it would be more costly to the state and potentially more difficult to pass in the Legislature.
House members, though, called the Senate's bluff and passed that aggressive plan, even while a compromise was being debated in the other chamber. Analysts have projected that the compromise, forged by a conference committee of House and Senate members, would leave the state in the black.
Asked about the predicted budget cuts caused by the "nuclear option," Republican state Rep. Marvin Kleeb of Overland Park turned his attention to the compromise.
Kleeb said that the compromise, which would phase in a number of tax reductions, "would provide sensible, reasonable tax reform that would help grow the state economy and grow jobs."
"That's the bill we all want here on the House side," said Kleeb, the vice chairman of the House tax committee. He supported the tax reeducations approved Wednesday.
Both chambers engaged in a series of procedural moves Wednesday to gain the upper hand until the House finally broke through and approved a plan, causing the Senate to pull the plug on its tax debate.
Passage of the bill stirred tensions in the Legislature with many lawmakers upset about the long-term consequences of the tax plan.
Figures compiled by state fiscal analysts show it would cost the state $3.7 billion over five years, leaving the state with a $270.3 million deficit by as early as 2014 and a $2 billion deficit by 2017.
"I can't believe we would roll the dice in such an irresponsible way," said state Rep. Ann Mah, a Topeka Democrat. "The people of Kansas are not stupid cows. They will know how reckless we were today and we deserve to be held responsible."
Brownback has made tax reduction one of the cornerstones of this year's legislative session.
The House vote essentially hands Brownback a political victory after his administration steered the tax bill through a Senate chamber controlled by moderate Republicans who have bucked his agenda.
But there was some speculation that Brownback might hold off signing the bill in hopes the Senate might agree to the compromise tax plan.
And House Speaker Mike O'Neal held out hope that the Senate might eventually agree to a compromise.
"The Senate has made it clear they do not want to reform taxes this session and we hope this will encourage them to reconsider giving the (compromise plan) more consideration," O'Neal said.
Within hours of the vote, Senate President Steve Morris was already signaling his chamber would be willing to talk more about taxes before the legislative session is supposed to end Friday.
"Negotiation is good," Morris said. "But we'll see what happens on that. I don't think anything's too late. Most things are still alive until the last gavel comes down."
The plan approved Wednesday almost died in the Senate until Brownback stepped in and the chamber did an about-face.
Morris said Brownback pleaded with the Senate to reconsider the tax bill after the chamber had voted 20-20 to sink it. The governor wanted a bill to begin negotiations with the House, Morris said, so the Senate complied as a courtesy to the governor.
But then the House on Wednesday did the unexpected and passed the big tax-cut bill.
"We thought ... it would be unthinkable for anybody to consider passing that (the bigger tax bill). It has such a terrible fiscal note," Morris said.
Senate Vice President John Vratil, a Leawood Republican, said he didn't think the Senate was in much of a position to negotiate because House members who voted for the bill Wednesday presumably are willing to live with the results.
"They passed a tax bill. Why would they negotiate?" Vratil asked.
In the aftermath of Wednesday's vote, a number of special-interest groups weighed in on the implications.
The House-approved bill "will provide an immediate boost to Kansas families and businesses," said Derrick Sontag, state director of Americans for Prosperity. The vote, he said, "was a step in the right direction to reverse the failed economic policies of the past."
Meanwhile, the Working Kansas Alliance, a labor group, predicted the tax cuts would gut schools, cost state employees their jobs and undermine other state taxpayer services.
"Absolutely nothing in this tax bill will address the tax that impacts more working families than any other: property tax. In fact, this tax bill guarantees that property and sales taxes will go up across Kansas," the group said.