In this issue …
- The day after: fallout from “nuclear option”
- Budget work
- M & E delay and other bills
The day after: fallout from “nuclear option”
How many jobs will it take to pay for the income tax cut passed by the House of Representatives?
Here’s an estimate we came up with.
- Assuming each job will pay $50,000 a year (very generous assumption)
- Assuming each new job produces 9% in income and sales tax to state government (also very generous)
- That means $4,500 a year will go to state government for each new job.
53,222 new jobs will have to be created in the next two years or so to fill the $242.2 million shortfall to the state budget caused by the legislation (just to bring the ending balance to zero).
In March, 2012, the private sector employment in Kansas was 1,097,100. That means employment growth would have to be 4.85% in the next two years. That’s aggressive, but not impossible.
To fill the Fiscal Year 2018 budget gap of $2,475,100,000 predicted by the latest Legislative Research fiscal note, it would take 550,022 new jobs.
That means Kansas jobs would have to grow 50% over the next six years (an average of 8.3% a year).
How does that compare to Texas job growth over the past 10 years? According to the U.S. Department of Labor, Texas private sector job growth over the past 10 years was 14.79%, or an average of 1.479% per year.
Kansas would have to grow over 5 and a half times as fast as Texas has been growing to get to a zero ending balance.
Or, cut the budget.
There is speculation the Governor may be concerned about having to live with the bill passed by the House on Wednesday.
According to Hawver’s Capitol Report on Thursday:
“There was no tax conference committee meeting today, though the governor is urging lawmakers to reconvene the tax conference committee to come up with a bill with a substantially lower pricetag than the bill that the House passed to the governor Wednesday.”
Meanwhile, lobbyists are keeping an eye on a possible vehicle for a new tax bill. That bill is in conference committee. Senate Substitute for House bill 2157 is a tax bill authorizing an optional single-factor (sales) income tax apportionment formula we’ve told you about before. Corporations that relocate to Kansas and employ ten or more full-time employees would qualify. Sales of goods or services outside of Kansas would be income tax exempt.
However, it may also be that the bill is being considered without being a vehicle. A company is reportedly waiting in the wings to use the bill.
The conference committee on the budget has met at least three times Thursday and was expected to meet into the evening. The committee appears to be making progress.
M & E delay and other bills
The Kansas House has passed a bill which delays solving a problem involving how certain machinery and equipment is classified. It’s the Montgomery County Appraiser tiff over whether certain property is machinery and equipment or real property. The delay passed 103 to 21.
It is House Substitute for Senate Bill 59.
The House also spent time working on redistricting legislation on Thursday and a career technical education bill that became something of a vehicle for school finance amendments. The last we heard, it was given preliminary approval.