KEPC UPDATE: School finance fix, revenues up, tax cuts, labor force declines

In this issue …

  • School finance fix waits for legislators this week
  • State revenues are up
  • Senate wants more tax cuts
  • Kansas labor force declined over the past year


School finance fix waits for legislators to return

As Kansas Legislators return to the Statehouse for the clean-up session on Thursday, they will have to put the finishing touches on the state’s budget.  Those are usually contained in the omnibus appropriations bill at the end of the session.  It’s clean-up, catch-all measure that looks at everything that’s passed, how much it costs, and adjusts funding.

But the big work will be fixing the $80 million error in the school finance bill and hoping the Kansas Supreme Court will accept it.  There’s disagreement on whether that will be the case.

After legislators held their first adjournment late on April 7th, the Kansas State Department of Education noticed an error in the bill, Senate Bill 423.  $80 million lawmakers thought was included in the bill was not included.  Here’s a link to a summary of the bill prepared by the Legislative Research Department.

The bill barely passed with the exact number of votes for a majority in both the House and Senate.  Even with the error that was discovered afterward, Governor Jeff Colyer signed the legislation and called for lawmakers to add the $80 million for quick fix.

Once a follow up bill has been passed and sent to the Governor, he’s expected to sign it, setting up a hearing before the Kansas Supreme Court in May. If the court rules the legislation unconstitutional, it has said it will not allow state funds to be spent on an unconstitutional formula after July 1.  That means schools will not get their state aid and will not be able to stay open.

If that happens, a special legislative session is a certainty.


State revenues are up

There was some good news for the state in April when expected state revenues were adjusted upward.  Fiscal Year 2018 revenues were adjusted upward $217.1 million, or 3.2 percent.  Fiscal Year 2019 revenues were adjusted upward $316.7 percent, or 4.7 percent above the previous estimate.

The biggest change came in individual income tax collections, which are now expected to be 36.5 percent over the actual individual income tax collected in 2017.

Here’s a link to the estimating document released April 20th. 

A more detailed explanation of why the consensus revenue estimating group made the upward changes is expected to be released later this week.


Senate wants more tax cuts

Working against using that new revenue for schools and other state needs is a bill that returns a lot of money to taxpayers in the form of several tax changes.

House bill 2228 started as a property tax measure that passed the House.  Senators rewrote the measure to turn it into a tax cut bill.  Senate President Susan Wagle (R-Wichita) and Senate Majority Leader Jim Denning (R-Overland Park) want the tax cuts.  It appears that leadership in the Kansas House of Representatives is willing to allow House members to vote on the concept.

Here’s a link to a description of the bill as it passed the Senate:


Kansas labor force declined over the past year

The March labor report from the Kansas Department of Labor shows unemployment is down over the past year, from 3.7 percent in March, 2017 to 3.4 percent in March of 2018.  It also shows job growth is up slightly over the period.

What’s particularly troubling in the report is that the labor force is shrinking. Over 5,900 people are no longer in the workforce over the year (seasonally adjusted).  The labor force participation rate stands at an estimated 63.3 percent, down 0.4 percent from a year ago.

The labor force participation rate is a measure of the active portion of an economy’s labor force.  It refers to the number of people who are either employed or are actively looking for work.

Here’s a link to the full March report.


A note about our next newsletter

Because the legislature returns on Thursday afternoon, there will likely be nothing to report by the usual publication time of the KEPS News on Thursday evening/Friday morning.  I will probably send something out Monday or Tuesday of next week.


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.