KEPC UPDATE: Budget cuts, taxes & ed, gas tax, TABOR, eco devo, property tax, rural jobs, Medicaid, sales tax, upcoming

In this issue …

  • Senate rejects budget cuts
  • Taxes and education: where are we?
  • Hearing on gas tax increase for transportation is today
  • TABOR constitutional amendment hearing is held
  • Economic development under the magnifying glass
  • Property tax lid hearings
  • Rural jobs bill gets okay from House
  • Medicaid expansion hearing Monday and Tuesday
  • Bill would put sales tax on some services
  • Some bills of interest for next week

 

Senate rejects budget cuts

The Kansas Senate overwhelmingly rejected across the board cuts to the current year state budget, including proposed cuts to education.

Senate President Susan Wagle proposed the two percent across-the-board cuts.  They excluded debt service and caseload obligations.

Wagle argued that school districts could use their reserve funds to fill the void.  She said education cuts would be confined to non-instructional activity.  That would have meant positions like school counselors, librarians, and school nurses could be affected, but not football coaches.

Wagle said it was apparent that the legislature was going to pass an income tax increase this year.  She said the size of that tax increase would be less if there were some cuts.  The Wagle Amendment would have cut $104 million from the budget.  That would have included a $64 million cut from schools.

On a recorded vote, Wagle’s amendment failed 7 to 33.

Here’s a link to how senators voted on the Wagle amendment.

Two other amendments to cut the budget also failed.  They were proposed by Senator Dennis Pyle (R-Hiawatha).

The bill was House Bill 2052, designed to balance the Fiscal Year 2017 budget.  Fiscal Year 2017 ends on June 30.  This is the so-called rescission bill.

About 9:15 Thursday night, the Senate passed the entire bill (HB 2052) by a vote of 27 to 13.  The bill has already passed the House.  It will now likely go to a conference committee to iron out differences between the House and Senate.

 

Taxes and education: where are we?

Here’s a quick update on where we are on tax and education spending, as we understand how things are going at this time.

  • The Kansas House of Representatives passed an income tax bill and overrode Governor Brownback’s veto. The Kansas Senate passed the bill, but fell three votes short of an override.
  • The ball is now in the Senate’s court. The House will wait for the Senate to pass an income tax bill and send it over.  However, hearings on a couple of “flat tax” income tax bills that have only one rate for everyone will be held next week.
  • Senate President Susan Wagle has said the Senate won’t begin work on a new income tax bill until after the rescission bill is passed.
  • The Kansas Supreme Court decision on school finance will likely require any income tax bill to raise more than the bill that passed the legislature but was vetoed by the Governor.
  • Meanwhile, the House K-12 Education Budget Committee has been working to build a “consensus bill.” Listening to discussions, Committee Chair Larry Campbell (R-Olathe), working with House Education Committee Chair Clay Aurand (R-Belleville) will attempt to write a school finance bill built on the previous formula’s idea of a base budget and weightings.  Campbell says when the bill is introduced, he will hold hearings. The bill is expected to be introduced next week.
  • Senate President Wagle has formed a Senate Select Committee on Education Finance. Its first meeting was Thursday afternoon.  Four more meetings are scheduled next week.

 

Hearing on gas tax increase for transportation is today

Last week, we told you about the two motor fuels tax increase bills that were introduced.  Hearings have now been scheduled on the bills, which would try to salvage the 2010 T-WORKS program that has been decimated over the past six years by raids to fund other parts of the budget.

Senate Bill 224 is a five cent a gallon increase.  The hearing is Friday morning in the Senate Assessment and Taxation Committee.  Senate Vice President Jeff Longbine (R-Emporia) requested the bill.  It would raise an estimated $100 million.  The increase would be effective July 1 of this year.

House Bill 2382 would raise the motor fuels tax by eleven cents a gallon.  That hearing is scheduled for Thursday of next week, March 23, in the House Taxation Committee.  In addition to the amount of the increase, the House bill would change the formula for distribution.  Cities and counties would continue to get their current distribution, but most of the increase would go to the state’s T-WORKS program.

The current Kansas gasoline tax is 24 cents per gallon.

 

TABOR constitutional amendment hearing is held

Only one person gave stand-up testimony in support of a proposed tax and spending limitation constitutional amendment at a hearing Wednesday.  Senator Ty Masterson (R-Andover) said it was his proposal.

Under his proposal, state tax increases would require a 2/3 supermajority of the House and Senate; state spending and revenue limits would be imposed; and the limits could only be exceeded by a vote of the people.

Supporting the amendment with written-only testimony were the Kansas Policy Institute and Americans For Prosperity (perhaps sensing it has no chance of passage this year).

Among opponents were the Kansas Center for Economic Growth, the Kansas- National Education Association, the Kansas Association of School Boards and me, representing the Kansas Economic Progress Council.

I pointed out that Colorado’s TABOR (Taxpayer Bill of Rights) is being challenged in the federal courts as unconstitutional.  I also pointed out the many problems Colorado is having as the result of TABOR.

My conclusion was, “The danger of spending limitations is they can prevent you from doing what needs to be done.  They take the responsibility away from elected officials, the representatives of the people.

“Decisions will be made through a difficult process, and sometimes decided by the difficulty of that process, rather than by evaluating the issues.”

 

Economic development under the magnifying glass

The Senate Commerce Committee has been delving into the economic development programs and incentives of the state, asking if they work and/or if they need to be changed.

Several days of hearings, including questions and answers, have been held on STAR Bonds, PEAK (Providing Employment Across Kansas), and HPIP (High Performance Incentive Program).

Secretary of Commerce Antonio Soave will discuss the programs on Wednesday.  He will also discuss the ROZ program (Rural Opportunity Zones).

 

Property tax lid hearings

A bill that repeals the local property tax lid legislation from 2015 had a hearing in the Senate Assessment and Taxation Committee Thursday.  The bill is SB 167.

Senator Randall Hardy (R-Salina) introduced the bill.  Hardy testified that as a former Salina City Commissioner, he always had the best interest of taxpayers in mind.  He said he believes in local control and that the property tax lid is imposing an artificial barrier that has saddled local governments.

Eric Sartorius, the Executive Director of the League of Kansas Municipalities, said the bill is contradictory to democracy.  He said the election provision to opt out of the lid doesn’t allow local governments to have actual data to help decide if elections are needed.  He also pointed out the cost of elections is an issue.

The Kansas Association of Counties also supported the repeal.

Americans For Prosperity, the Kansas Chamber of Commerce, the Kansas Association of Realtors, and the Kansas Policy Institute opposed the measure.

A hearing was also held Thursday on House Bill 2376 in the House Taxation Committee.  It changes the local property tax lid from a requiring an election to only requiring an election when 10% of the voters sign a protest petition asking for an election.

The same groups basically testified as at the Senate Committee.  However, the House Taxation Committee hearing was described as much more contentious.

 

Rural jobs bill gets okay from House

On a vote of 97 to 22, the Kansas House passed and sent to the Senate the “Ad Astra Rural Jobs Act,” House Bill 2186.  It offers tax incentives to finance business projects that create jobs in rural areas.  The tax incentives would go through certain types of investment companies.

The Department of Commerce would have to approve the investment companies and their business plans.

 

Medicaid expansion hearing Monday and Tuesday

The Medicaid expansion bill that passed the Kansas House 81 to 44 will have a hearing in a Senate committee on Monday.  House Bill 2044 is expected to draw testimony from many supporters in the Senate Public Health and Welfare Committee.

Proponents will be heard Tuesday, while opponents are scheduled to be heard Tuesday.

The bill is HB 2044.  Here’s a link to the supplemental note describing what’s in the bill.

 

Bill would put sales tax on some services

A bill that puts a sales tax on certain services will have a hearing Tuesday in the House Taxation Committee.  It is House Bill 2384.  Here are the services:

  • Emergency road services (towing)
  • Investigative services (detective agencies)
  • Security guards and patrol services (body guard services)
  • Security system services, except locksmiths (alarm system monitoring services)
  • Certain non-residential cleaning services
  • Dating services

There is no fiscal note available on the bill, so we don’t know how much money it would bring in.

 

Some other bills of interest for next week

The so-called Mega Budget bill will be worked next week in the House Appropriations Committee.  HB 2364 is the big budget bill for Fiscal Years 2018 and 2019.

A bill that institutes a 3.9% flat income tax will have a hearing in the House Taxation Committee.  It is House Bill 2385.

A bill that institutes a 5% flat income tax will have a hearing in the House Taxation Committee.  It is House Bill 2395.

 

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.