KEPC UPDATE: Short week, KDOT, internet sales tax, NCSL update, STAR bonds, hearings, bill tracking

In this issue …

  • Legislature ends break with a short week
  • House Appropriations conflicted on how to proceed with KDOT budget
  • Collecting internet sales tax could raise $78 million for state next year
  • NCSL official gives update on federal tax changes
  • Hearing on new STAR bonds bill will be Tuesday
  • Hearings of interest next week


Legislature ends break with a short week 

The Kansas Legislature returned to Topeka on Wednesday after a five-day “turnaround” break marking the mid-point of the session.

It was a somewhat slow week as Democrats prepared to hold their annual Washington Day meetings at Topeka’s Downtown Ramada and Convention Center.

On Thursday, lawmakers learned that state tax revenues were $24.2 million more than expected in February.  The state’s experts and others aren’t sure whether that additional money is coming from last year’s income tax increase or changes in late December to federal income tax law.


House Appropriations conflicted on how to proceed with KDOT budget

The full House Appropriations Committee heard recommendations on the Kansas Department of Transportation budget Thursday from subcommittee Chairman J.R. Claeys (R-Salina); but Democrats and some Republicans want to hold off on accepting the recommendations until there’s a better idea of what the state needs to spend on K-12 education.

The subcommittee report would take $102.2 million for KDOT from the state general fund for FY 2019, not the highway fund, which has been “raided” extensively for several years to pay for other spending.

Representative Henry Helgerson (D-Wichita) objected, saying he had problems dedicating money until he knows what education funding needs to be.  Most everyone who spoke on the topic wants to shore up KDOT, but not short-change education.

Claeys said putting the money in the budget sends a “strong signal” that the committee wants the T-WORKS transportation plan passed in 2010 to be completed.

Representative John Alcala (D-Topeka) offered an amendment that would delay decisions on the Transportation Department budget until the Omnibus bill (generally the last big budget bill of the session).

Helgerson supported that motion.

“We need all the cards on the table before we make a decision,” Helgerson said.

Chairman Claeys opposed the delay, claiming, “This is a vote to make T-WORKS happen!”

Alcala’s motion failed on a voice vote.  The Appropriations Committee will continue working the KDOT budget Monday.


Collecting internet sales tax could raise $78 million for state next year

The House Taxation Committee held a hearing on a bill Thursday that could result in more sales tax revenue being collected by Kansas.

House Bill 2756 creates the Kansas Main Street Parity Act.  It requires some out-of-state retailers and “marketplace facilitators” to begin collecting Kansas retail sales and use taxes on sales to Kansas.

A marketplace facilitator is defined as a person who facilitates sales by an internet retailer.  The seller does not have to have a physical presence in Kansas.

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.

With Congress seemingly unable to deal with the issue of internet sales, seven other states have turned to this type of legislation, according to the National Council of State Legislatures.

It is estimated by the Kansas Department of Revenue that the bill could raise an additional $78 million for the state in FY 2019 and about $93 million in FY 2020.

Trey Cocking of the League of Kansas Municipalities estimated the bill could raise anywhere from $45 million to $64 million for cities in Kansas.


NCSL official gives update on federal tax changes

Max Behlke, Director of Budget and Tax for the National Council of State Legislatures, spoke to the House Taxation Committee this week about the new federal tax law that went into effect on January 1.

Behlke said it was the largest tax bill ever to go through Congress.  He called it a “corporate tax bill with individual provisions.”  Behlke said Washington politicians had hoped to make tax law simpler “but really made it more complicated.”

In particular, he said there are international tax reform elements that will impact states, but no one knows exactly how.  Behlke said some states are reacting to the federal law, but he advised, “Patience this year will be your friend before moving forward.”


Hearing on new STAR bonds bill will be Tuesday

A new STAR bonds bill just introduced last week will have a hearing in the Senate Commerce Committee on Tuesday.

Senate Bill 432 creates a three member “underwriting commission.”

Here’s the exact pertinent language from the bill:

“The commission shall evaluate and approve or deny applications for STAR bond projects and shall provide the secretary of commerce and the applying city or county with a written decision including the reasons for the decision.  The commission shall limit its analysis and decision to the financial viability of the proposed project.  The decision of the commission to deny an application shall be final, however the city or county may reapply, or when permitted by the commission, provide additional information or make modifications to the project plan for the commission’s consideration.”

Approved projects would be forwarded to the Kansas Secretary of Commerce.

Some cities, counties, and economic developers strongly object to the bill.

Here’s a link to the actual bill.


Hearings of interest next week

Here’s an overview of some of what’s going on next week

  • The Senate Ways and Committee subcommittees on the budget will continue to meet to review budget proposals for individual departments
  • The House Appropriations Committee will review recommendations from its subcommittees on individual agency budgets
  • On Monday, two education committees from the House and Senate will meet jointly. The House K-12 Budget Committee and Senate Select Committee on Education Finance will hear a presentation from Dr. Jesse Levin.  Levin is involved with the Peer Review of Legislative Post Audit and Augenblick and Meyers studies on K-12 funding.  The presentation will be via Skype
  • On Tuesday and Wednesday, the House Taxation Committee will hold a hearing on HB 2740, which would require increases in property taxes to fund schools. The current required mill levy for schools is 20 mills.  It would go to 26.76 mills in school year 2018-19; 32.82 mills in school year 2019-20; and 38.43 mills in school year 2020-21.  Increasing property taxes is unpopular and the bill is not given much chance of passage, but anything can happen when the legislature is in session.  There is no estimate yet on how much money it could raise.


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.