KEPC UPDATE: Tax bill Monday & USD state aid spreadsheet available

In this issue …
  • Tax bill expected to surface Monday
  • Spreadsheet now available showing school district aid in Senate bill
 
Tax bill expected to surface Monday
 
Monday is the 5th anniversary of the signing of the 2012 income tax cut bill by Governor Sam Brownback.  Monday also could be a key day in repealing that legislation.
 
We are hearing that phone lines were burning up over the weekend among legislators and others with talk of the resurfacing of a bill to eliminate the cuts and try to salvage the state budget. That legislation is expected to rematerialize in a House/Senate conference committee on taxes sometime Monday.
 
It is essentially what the tax conference committee agreed to on May 2 for Senate Bill 30.  In case you don’t remember, you are not alone.  So much has happened that it’s hard to keep track of the various proposals.
 
Here’s that agreement:
  • The business pass-through income exemption is repealed retroactive to January 1
  • The March to Zero trigger mechanism is repealed
  • Medical deductions are at 100 percent, beginning in 2018
  • The low income threshold is reduced from $12,500 to $5,000 for married filers and from $5,000 to $2,500 for single filers
  • The 2017 rates are contained in three brackets: 2.85 percent, 4.9 percent, and 5.1 percent
  • The 2018 rates increase to 3.0 percent, 5.25 percent, and 5.6 percent
  • The bill raises an estimated $514 million in FY 2018 and $548 million in FY 2019
 
An important point to remember is that there is strong bi-partisan belief that eliminating the business pass-through income exemption will raise considerably more money than the official estimate.
 
What happened to this plan? 
 
The House planned to run the bill but pulled back when it became apparent that it would not succeed without Democrat votes.  Some House Democrats are now said to be weighing whether to support the bill, thinking this may be the best chance for significant revenue as the veto session enters its fourth week and nears its 100th day.
 
It is possible that a three cent per gallon motor fuels tax increase for roads might be added to this package to attract more votes.
 
House leaders are saying privately that if this bill fails, the next proposal to surface will be a two tier plan that could pass with Republican-only support and would not be enough.  It would be augmented with other taxes.
 
The other revenue piece we are hearing is about the utility surcharge proposed in the Senate as part of a plan to raise money for school finance.  Instead of a surcharge, discussion is moving to a sales tax, which is more progressive.
 
Under the original idea, a $2.25 “school fee” would be added to residential utility bills and $10 on commercial bills.  Discussion has moved to a sales tax, which would mean consumers would pay based on their utility use.
 
Spreadsheet now available showing school district aid in Senate bill
 
The Senate Select Committee on Education Finance is scheduled to begin working its school finance bill Monday afternoon and Tuesday.  This follows four hours of testimony on Friday.  The bill is SB 251.
 
A new spreadsheet on what the bill does to local school districts indicates fewer than 40 districts will have a general fund loss.
 
On Friday, local governments and economic development officials showed up to oppose the bill’s language that prevents local government from abating property taxes for the statewide 20 mill levy for schools as well as the capital outlay levy.  Several said it would hurt economic development.
 
Computer runs are now available on the State Department of Education web page that show what SB 251 does for local school districts.
 
 
It’s under Senate Bill 251 as introduced – May 19, 2017 CORRECTED
 
The four documents describe the major policy provisions, overall estimated state aid, an explanation of the spreadsheet (SF17-210 – Column explanation) and the actual spreadsheet showing school districts (SF17-210 – State Foundation Aid). 
 
That last document is the one with the information most people want to know.