KEPC WEEKLY UPDATE: Budget debates, tax hearings, employment lags, renewable energy, school finance & formula

In this issue …

  • Budget debates next week
  • Tax hearings continue
  • 2014 Kansas employment growth lags the region
  • KanCare expansion hearings draw big crowds
  • Renewable energy – three hearings
  • The school finance vote
  • New school formula plan available Friday


Budget debates next week

The Kansas Legislature is expected to take up the House and Senate budget bills next week. A lot will be packed into debate on the floors of both chambers as lawmakers will only be meeting through Wednesday. In fact, there’s some discussion of trying to get done Tuesday evening.

Wednesday, March 25, is the deadline for bills to pass the second House. In other words, most bills (unless exempted) must be out of the House and Senate in some form or they are dead for the session (but they do carry over into next year).

The lawmakers will return Monday, March 30 through April 3, which is the date set for First Adjournment, the break prior to returning in late April for the veto session.

The House budget is in HB 2370. It totals $6.4 billion, but expected state revenues do not cover that amount without some revenue increases. The initial estimate puts the House budget at about $133.6 million short.

The House budget includes $3 million to hire an outside consultant to look for efficiencies in programs.

The House Appropriations Committee also added $3.7 million and $60 million in bonding authority to renovate and expand Seaton Hall at Kansas State University, which contains the College of Architecture, Planning and Design. That program is considered one of the top of its kind in the country. Ironically, it is located in a building in dire need of renovation.

The budget passed by the Senate Ways & Means Committee is in House Bill 2135.

It is also underfunded and requires some sort of revenue infusion or further cuts.

The chairs of both the House and Senate Tax Committees have said they will wait to see the budgets, April revenues, and the April consensus revenue report before working any tax bills in committee.


Tax hearings continue

Meanwhile, hearings in the tax committees continue on a variety of ideas to balance the budget.

On Tuesday, the House Taxation Committee heard testimony on HB 2399, which increases sales and compensating use tax rates to 6.3% (from the current 6.15%) beginning July 1. All new revenue would go to the state general fund rather than the current distributions. The state highway fund would receive the same number of dollars as currently. Any excess due to the increase goes to the state general fund.

The increase would sunset on July 1, 2018, returning the sales tax to the current 6.15%.

The Senate Assessment and Taxation Committee held a hearing Thursday on a bill to add the sales tax to residential and agricultural utilities. It’s Senate Bill 261.

To no one’s surprise, there was no one to testify in support of the bill. Chairman Les Donovan (R-Wichita) admitted he had requested the bill be introduced to take a look at exemptions.

Virtually every utility and consumer group opposed the bill.

Despite busy days on the floor of the Senate debating bills, the Tax Committee has some hearings scheduled next week.

Senate Bill 233 is the Governor’s bill to increase tobacco and cigarette taxes. That hearing is Tuesday.

Senate Bill 234 is the Governor’s bill on changes to the income tax law, including providing a tax amnesty, creating a budget stabilization fund, changing the method of buying down the income tax, and speeding up itemized deductions. It’s a tax increase bill bound to be controversial. That hearing is Wednesday.

On Thursday, the House Taxation Committee held a hearing on HB 2409, the bill that eliminates the $20,000 property tax exemption from the statewide school levy for residential property. There were no supporters and one written opponent. Eliminating the exemption would raise $45.2 million.

One final tax note: Representative Don Hineman (R-Dighton) has introduced legislation in the House Taxation Committee that attacks the deficit problem by increasing income tax rates, the original cause of the state’s budget problems. No printed version of his bill was available as of this writing.


2014 Kansas job growth lags the region

Figures released Tuesday by the U.S. Bureau of Labor Statistics (BLS) indicate Kansas job growth for 2014 was only 1.25%, the second lowest in the region for that year.

The numbers were contained in the news release entitled, “Regional and State Employment and Unemployment Summary.

Although Kansas unemployment was a low 4.2% in January, the job growth figures were lackluster compared to the rest of the country, but particularly the 7-state region normally used for comparison purposes by the Brownback Administration.

Kansas employment in January of 2014 was 1,382,000. In January of 2015, it was 1,399,300 (preliminary) for a total increase of 17,300.

That’s about 1.25%.

Here’s how that stacks up with the rest of the states in the region for the same period in rank order.

  • Colorado – 2.93% growth
  • Arkansas – 2.27% growth
  • Iowa – 1.61% growth
  • Missouri – 1.59% growth
  • Oklahoma – 1.50% growth
  • Kansas – 1.25% growth
  • Nebraska – 1.23% growth


KanCare expansion hearings draw big crowds

The House Health and Human Services Committee held two days of hearings on KanCare (Medicaid) expansion this week, drawing very large crowds of what appeared to be mostly supporters. In fact, Chairman Dan Hawkins (R-Wichita) noted a “huge” volume of written testimony in support of the bill.

The measure takes advantage of provisions of the Affordable Care Act (Obamacare), which would pay for much of the expansion.

Tom Bell of the Kansas Hospital Association, the organization that organized the supporters, led off the testimony and also made concluding remarks.

Bell said the plans pay for themselves in the long run and that the issue will not go away. Bell said, “Mr. Chairman, I’d ask you to think about the hospital in Western Kansas that is trying to hire a rural doctor. He’s considering Kansas and Eastern Colorado. Kansas recently increased their uncovered population by 2% while Colorado decreased theirs by 6%.”

A common theme has been that expanding KanCare will help keep rural hospitals open.

Other testimony from supporters:

Newton Medical Center CEO Steve Kelly (Chair of the Governor’s task force on the creation of KanCare) said the state will save money in the long run through prevention and better management. He noted Medicaid expansion covers working people and helps them become independent of government programs. Kelly said legislators need to set aside the stigma attached to the Affordable Care Act. The issue, he said, was not about agreeing with the act.

Governor Brownback’s former Secretary of KDHE, Dr. Robert Moser, testified in support. He emphasized that the expansion would benefit hard working people who make too much to qualify for assistance but too little to afford health care.

Opponents concentrated on the price tag, saying that health insurance for thousands of additional Kansans through the Affordable Care Act and KanCare expansion is irresponsible.

They included Jeff Glendening, State Director for Americans for Prosperity.


Renewable energy – three hearings

Both the Senate and House Taxation Committees held hearings this week on bills that sunset the lifetime exemption of property taxes on renewable energy utilities at ten years. Previously the exemption was unlimited. The 10-year-limit is retroactive.

Senate Committee Chairman Les Donovan (R-Wichita) spoke on SB 257, saying he asked for the legislation. Donovan said no other state has a lifetime exemption, and he’s not aware of any businesses that have a lifetime property tax exemption.

Opponents said the change sends a negative message to wind producers, who have the ability to site future projects in Oklahoma and Texas. They also said changing the exemption amounts to a breaking of a contract with the developers of the projects.

Donovan seemed open to changing the bill to remove the retroactivity.

A companion bill (HB 2396) was heard in the House Taxation Committee Thursday.

Kimberly Svaty of the Wind Coalition said her group especially opposes the way the bill is drafted. Seven projects that have signed purchase power agreements are in various stages of construction. The bill would impact those projects.

The exemption was passed in 1999 and the first wind farm was in operation by 2001, according to Karin Brownlee, representing NextEra Energy.

Meanwhile, a bill which sunsets the Renewable Energy Standards Act on July 1, 2016 had a hearing in the House Energy and Environment Committee. The act requires major utilities to increase their use of renewable energy to 15% by 2016 and 20% by 2020. This would eliminate those requirements.

Last year, there were several attempts to pass a similar measure, but all failed in the Kansas House.

Final action on the bill was scheduled in committee for Wednesday, but that was cancelled. Some believe that’s an indication there’s not enough support for the bill. The bill is House bill 2373.


The school finance vote

By now, you know that the legislature has passed the bill that eliminates the current school finance formula and puts a two year block grant program into place.   It’s on its way to the Governor, who is expected to sign it.

Here’s how the House and Senate voted on House Substitute for Senate Bill 7.

The Senate vote was Monday and on roll call, the vote was:

Yea – (25):

Abrams, Arpke, Baumgardner, Bruce, Denning, Donovan, Fitzgerald, Holmes, King, Knox, LaTurner, Lynn, Masterson, Melcher, Olson, Ostmeyer, Petersen, Pilcher-Cook, Powell, Pyle, Smith, Tyson, Wagle, Wilborn, Wolf,

Nay – (14):

Bowers, Faust-Goudeau, Francisco, Haley, Hawk, Hensley, Holland, Kelly, Kerschen, Longbine, Love, McGinn, Pettey, Schmidt,

Absent and Not Voting – (1):


The House vote was last Friday and on roll call, the vote was:

Yea – (64):

Anthimides, Barker, Barton, Boldra, Bradford, Bruchman, Brunk, Campbell, Carpenter, Carpenter, Claeys, Corbet, Couture-Lovelady, Davis, DeGraaf, Dove, Esau, Estes, Garber, Goico, Grosserode, Hawkins, Hedke, Highland, Hildabrand, Hoffman, Houser, Huebert, Hutchins, Hutton, Jones, Jones, Kahrs, Kelley, Kiegerl, Kleeb, Lunn, Macheers, Mason, Mast, McPherson, Merrick, O’Brien, Osterman, Pauls, Powell, Proehl, Read, Rhoades, Rubin, Ryckman, Ryckman Sr., Scapa, Schwab, Schwartz, Seiwert, Smith, Suellentrop, Sutton, Thimesch, Todd, Vickrey, Whitmer, Williams,

Nay – (57):

Alcala, Alford, Becker, Billinger, Bollier, Burroughs, Carlin, Carmichael, Clark, Clayton, Concannon, Curtis, Dierks, Doll, Edmonds, Ewy, Finch, Finney, Francis, Frownfelter, Gallagher, Gonzalez, Hemsley, Henderson, Henry, Hibbard, Highberger, Hill, Hineman, Houston, Jennings, Johnson, Kelly, Kuether, Lane, Lusk, Lusker, Moxley, Ousley, Patton, Phillips, Rooker, Ruiz, Sawyer, Schroeder, Sloan, Swanson, Thompson, Tietze, Trimmer, Victors, Ward, Waymaster, Whipple, Wilson, Winn, Wolfe Moore,

Absent and Not Voting – (3):

Ballard, Bridges, Peck,


New school formula plan available Friday

Wasting no time coming up with a new school finance formula after the block grants expire in two years, Senate Education Committee Chair Steve Abrams (R-Arkansas City) has introduced a bill, which is expected to be printed by sometime Friday.

Abrams plans to meet with education lobbyists and others at nine this morning to talk about his proposal.


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