KEPC UPDATE: Income tax Friday morning, idle funds, FY17 budget fix, school finance, higher ed, KanCare

In this issue …

  • Senate will take up House income tax bill Friday morning
  • House taps Treasurer’s idle funds
  • Bill to fix FY 2017 budget passes House
  • School finance hearings held
  • Fewer Kansas students pursuing higher education
  • KanCare expansion vote could come soon


Senate will take up House income tax bill Friday morning

As the Kansas Legislature approaches the official halfway point of the regular session next week, measures to balance the state budget are beginning to advance.

On a bipartisan vote of 76 to 48 Thursday, the Kansas House of Representatives passed a bill to raise income taxes, add a third tax bracket, eliminate the so-called March to Zero trigger mechanism, and restore the itemized deduction for medical expenses.  The bill raises an estimated $590 million next fiscal year.  It now goes to the Kansas Senate, which has scheduled a debate for Friday morning.

Here’s a link to how lawmakers voted. The bill is Substitute for House Bill 2178.

40 Republicans and 36 Democrats voted for the measure, while 44 Republicans and four Democrats voted no.

Observers noted that a re-established Republican-Democrat coalition worked together to pass the bill and challenge Governor Sam Brownback’s tax plan.  Brownback wanted to use mostly one-time money to shore up the budget while keeping his 2012 income tax cuts.

Brownback has attacked the House measure and threatened to veto it.

On Thursday afternoon the Kansas Senate debated a Democrat-written bill (SB 188), but a motion to advance it to a final vote failed by a vote of 10 to 30.  The Senate Democrat bill would have raised $702 million in FY 2018, significantly more than the House bill that will be debated Friday.

Here’s a link to the explanation of that bill.


House taps Treasurer’s idle funds

One proposal by Governor Brownback has been given reluctant preliminary approval by the Kansas House.

House Bill 2161 liquidates the long term investment fund through the Pooled Money Investment Board (PMIB) to raise $317.1 million to fill the FY 2017 budget gap (said to be about $350 million).  Lawmakers express a lot of distaste for this approach, but say it’s the only option to prevent deep budget cuts, especially to education.

Under the bill, the state would make annual loan payments of about $52 million for six years to pay the money back.  The first installment would be due June 30, 2019.

The measure, if passed, would fill most of the budget hole until any income tax increases would start flowing into the state when 2017 taxes are due in 2018.

A final vote on HB 2161 will take place Friday morning in the House of Representatives.


Bill to fix FY 2017 budget passes House

In conjunction with HB 2161 (above), the House will also vote Friday morning on House Bill 2052, the rescission bill.

The bill makes adjustments to the current Fiscal Year 2017 budget to make it balance when passed in conjunction with the liquidation of the long term investment fund contained in HB 2161.

Here’s a link to an official Legislative Research explanation of the bill.

If both HB 2161 and HB 2052 pass on Friday, the Kansas House of Representatives will have accomplished something important.  It will have completed a House plan to fix the current year budget and deal with future budgets.

The Senate Ways & Means Committee has passed legislation dealing with the Treasurer’s idle funds and the FY 2017 budget rescission, but it has not been taken up yet by the full Senate.

A word of caution: although the House actions are significant to solving the state’s problems, the crisis facing the T-WORKS transportation program remains unsettled.  With the money taken from KDOT and funds expected to be taken from transportation-designated sales tax, highways and bridges face a bleak future.

Those familiar with KDOT believe significant erosion of roads and bridges will occur within the decade (if not sooner) without restoration of funding.


School finance hearings held

The first of three bills competing to be the next school finance formula had hearings this week in the House Committee on K-12 Education Budget.

House Bill 2270 was developed over the past two years by Representative Melissa Rooker (R-Fairway) and Senator Laura Kelly (D-Topeka).

Rooker and Kelly are proposing a new formula that is similar to the previous formula, which was repealed in 2015 for the current block grant system.

Some of the new ideas in the bill:

  • Enrollment count would be based on the previous year’s numbers
  • Kindergarten students are counted as full-time if it’s an all day program
  • The way at-risk weighting is determined changes: based on census information
  • Virtual school aid would be based on the “foundation student aid amount”
  • Capitol outlay budget help from the state would require local districts to levy a minimum of four mills local effort

The Legislative Research Department estimates the state would need to increase K-12 funding by $336.5 million in FY 2018 under the measure, with increases of about $200 million each year afterward for the next three years.


Fewer Kansas students pursuing higher education

Handouts compiled by Kansas State University officials for a meeting this week concerning University admissions contained some alarming information.

The percent of Kansas high school students pursuing higher education in Kansas has dropped from 83.6 percent in 2012 to 72.1 percent in 2016.  That an 11.5 percent drop.

The information was compiled by the Kansas State University Office of Undergraduate Admissions using a variety of reports.  The information was assembled for a qualified admissions presentation for the Kansas Board of Regents.

State budget reductions in support for higher education over the past several years have resulted in increased tuition costs.  Some believe that’s one reason that higher education enrollment is down 1.2 percent this year in Kansas.

Respected economic studies have indicated that a higher level of education in the population results in higher economic growth, which makes the latest revelations troubling.


KanCare expansion vote could come soon

The House Committee on Health and Human Services held hearings last week on HB 2064, which expands Medicaid in Kansas.

The committee might take a vote on the measure at its meeting Friday afternoon.  The agenda lists “action on bills previously heard.”  The measure takes effect in 2018.

Here’s a link to more information.

One key to passage is that if federal Medicaid funds are ever reduced, the program would be terminated over a 12-month period.  That’s designed to deal with detractors who argue that Medicaid expansion is bad because the federal government will default on its commitment and the state will be left holding the bag.

In previous years, legislative leadership has prevented Medicaid expansion from coming out of committee or even coming up for a vote on the floor.  That may change with many new members and new leadership.


Bill tracking

Here’s our latest bill tracking on measures we think are of interest to our readers. You should be able to click on the bill number and be taken to the Kansas Legislature’s web site page for that particular bill.  You will be able to see all actions taken, read the bill, and read any supplemental notes (layman’s descriptions) and fiscal notes (how much does the bill cost the state) that have been prepared.