KEPC UPDATE: School funding, property tax, review of eco devo plans, convention of the states, internet sales tax, STAR bonds, income taxes

In this issue …

  • School funding delayed until studies are released
  • No support for property tax increase for schools
  • Tax Committee votes for regular review and disclosure of economic development programs
  • Convention of the states debated in Senate; fails
  • Proposal to collect more internet sales tax moves forward
  • Lawmakers question STAR bonds expansiveness
  • Hearings on income tax increases and cuts scheduled for next week


School funding delayed until studies are released

This week, the Chairman of the House K-12 Education Budget Committee said he will delay working the bulk of the school budget until later on in the session.

Representative Fred Patton (R-Topeka) said he plans to work on other parts of the school budget, such as special education, and teacher professional development.  The big part of the budget will be worked in a separate bill later.

The legislature is waiting on a report from Texas A and M professor Dr. Lori Taylor.  She’s been hired to conduct a cost study.  This week, Dr. Jesse Levin of the American Institutes for Research , who has been hired to do a peer review of Taylor’s study.  This week, he testified via Skype about previous school finance studies.

The two reports are due to the Legislature on March 15.  That’s a Thursday, so it seems likely that the lawmakers will take the weekend to digest the information before beginning committee discussion on Monday, March 19.


No support for property tax increase for schools

No one showed up to support a bill that would increase property taxes to support K-12 education, but several opponents testified against House Bill 2740 in the House Taxation Committee.

Opponents included:

  • Steve McCloud of the Kansas Farm Bureau, who said agriculture taxpayers prefer to pay income and sales taxes
  • Ken McCauley of the Kansas Corn Growers Association, who said property taxes are not a fair way to fund education
  • The Kansas Chamber’s Eric Stafford, who cited of poll of the organization’s members that indicates they prefer property taxes to be reduced
  • Daniel Heady of the Kansas Wheat Growers and the Kansas Ag Alliance, who said the farm economy is struggling and property tax increases would hurt farmers more
  • Kansas Association of Realtors’ Patrick Vogelsburg. He said a property tax increase will impact the housing market
  • Randy Stuckey, Agribusiness Retailers Association
  • Lucas Heinen, Kansas Soybean Association
  • Mandy Roe of the Kansas Cooperative Council
  • Dan Murray of the National Federation of Independent Business
  • Mike Beam of the Kansas Livestock Association
  • Jeff Glendening of Americans for Prosperity
  • Dave Trabert of the Kansas Policy Institute
  • John Donnelly of the Kansas Farm Bureau


Tax Committee votes for regular review and disclosure of economic development programs

The House Taxation Committee has passed out a substitute bill that requires public disclosure of certain economic incentive data.  The measure is HB 2572.

The substitute bill was proposed by Representative Kristey Williams (R-Augusta).

The original bill required the Secretary of Administration to publish selected economic development program data on the KanView website.  It also established a new Joint Committee on Taxpayer Transparency, which would advise the Secretary of Commerce.

After discussions with the Commerce Department and others, Representative Williams offered the substitute bill.

The new bill does not create a joint committee and gives the Commerce Department the responsibility to publish the information (not the Department of Administration).  It now also applies to many more programs.

The House Tax Committee passed another transparency bill this week.  HB 2753 sets up a periodic review for certain tax credits, incentives, and sales tax exemptions for the Insurance Department, Commerce Department, and Department of Revenue.

Each review would be required to provide a description of each incentive and an estimate of the economic and fiscal impact of each.  The report is required to be on the website of each agency on or before March 1st of every year.


Convention of the states debated in Senate; fails

A measure calling for a convention of the states to amend the U.S. Constitution has failed in the Kansas Senate.  SCR 1611 required a 2/3 majority (27 votes), but the final vote was 22 to 16.

If three-fourths of state legislatures would ratify changes to the Constitution, they would take effect.  Supporters of the constitutional convention want to add a requirement that prevents deficit spending and debt by the federal government.  Opponents are concerned that a constitutional convention cannot be limited to a specific topic and that anything in the U.S. Constitution could be changed, added, or eliminated.


Proposal to collect more internet sales tax moves forward

House Bill 2756 creating the Kansas Main Street Parity Act has passed out of the House Taxation Committee.

It requires some out-of-state retailers and “marketplace facilitators” to begin collecting Kansas retail sales and use taxes on sales to Kansas.  The bill is primarily aimed at internet sales.  Some collect Kansas sales tax.  Others do not.

Businesses with at least $50,000 in Kansas internet sales in the current year or last year must begin collecting the tax if the bill becomes law.

Here’s a link to a description of the bill as it came out of the committee.


Lawmakers question STAR bonds expansiveness

The Senate Commerce Committee continued hearings this week on bills dealing with STAR bond changes and restrictions this week.  There has been no progress moving the bills forward yet, and more discussion is planned.

The restrictions are contained in Senate Bill 434, which was supported by the Kansas Speedway.  That was a surprise for many local governments and economic development organizations.  Opponents included economic development organizations.

Here’s a link to the fiscal note on the bill, which includes a description.

There was a lot of questioning by Senators concerning projects in Johnson County.


Hearings on income tax increases and cuts scheduled for next week

Some income tax bills will be heard in the House Taxation Committee next week:

  • HB 2761 allows an individual to itemize deductions in Kansas despite not itemizing on their federal return. As of this writing, there is no estimate on the impact on the budget.
  • HB 2661 changes the corporate income tax rate and surtax.  The changes would bring in an estimated $117 million more in FY 2019 and FY 2020.  Here’s a link to the fiscal note that describes the changes.
  • The bill was introduced by Representative Tim Hodge (D-Newton)
  • House Bill 2569 would double the standard deduction on individual income tax in Kansas.  It would cost the state $208.8 million. Here’s a link to the fiscal note.
  • House Bill 2618 would increase Kansas income taxes for those with income over $500,000 and for those with income over a million dollars.  It would raise an estimated $307.5 million next year and the year after. Here’s a link to the fiscal note.


Bill tracking

Here’s our latest bill tracking on measures we think are of interest to our readers.  All of these bills are held over from 2017.  As new bills of interest are introduced, I will add them to the list.

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.