Tax Study Released Today

A new study on the ramifications of lowering the state income tax was released today at a statehouse news conference. Bernie Koch, executive director of KEPC, and study author Dr. John Wong presented findings at the statehouse today. The study finds that, for every 1 job created, 1.63 are lost due to study released today finds that a lowering of the income tax would result in a loss of 1.63 jobs due to a reduction in overall state spending. The study was commissioned by the Kansas Economic Progress Council.

The press release is available here, and the ful text of the study is available here.

Dr. Wong’s slide deck is available here.

KEPC UPDATE: Income tax hike, school surcharge, tax cut trigger, 20 mils for schools, tax lid, gas tax, school finance, service sales tax

In this issue …

  • Gone for Mothers Day but then straight through
  • Income tax hike fails in Senate
  • House Chairman introduces new income tax bill with school surcharge
  • Oklahoma repeals tax cut trigger mechanism
  • 20 mills for schools moves without tax abatement change
  • Property tax lid change advances
  • Committee will work on gas tax increase
  • School finance update
  • Sales tax on services still being talked up
  • BILL TRACKING

 

Gone for Mothers Day but then straight through

Senate Majority Leader Jim Denning (R-Overland Park) told Senators Thursday afternoon they would be coming back at 8 a.m. Friday morning, but there will be no floor work.  He also announced they will not be working on Saturday and Sunday (over the Mothers Day weekend).

However, Denning said that beginning Monday the Senate will work 7 days a week until the session is over.

We have not heard the plans of the House of Representatives.

 

Income tax hike fails in Senate

By now you’ve heard that an income tax bill failed to receive a majority of votes in the Kansas Senate this week.

The vote was 18 to 22 on House Bill 2067.  The bill raised enough to cover most of the needs of the budget with the exception of K-12 education.

Those voting for the bill (including two Democrats) generally believed it was okay to come up with education money in a separate second bill once school finance is decided.

Those opposing the bill did so for different reasons.  Conservatives said it was too much.  The majority of Democrats want to do school finance first.

 

House Chairman introduces new income tax bill with school surcharge

The day after the income tax defeat, House Taxation Committee Chairman Steven Johnson (R-Assaria) came up with another income tax bill that he introduced in committee.  This one aims toward raising all of the money necessary for the budget, including education as many legislators demand.

Johnson said the bill would be very similar to House Bill 2178, the bill the legislature passed but Governor Brownback vetoed.  The one difference will be an education “surcharge” to be placed on top of the base rates.  Lawmakers could plug in a surcharge rate established on what was needed to satisfy the Kansas Supreme Court that funding was constitutional.

The motion to introduce in House Taxation Committee was only conceptual and no bill or bill number is yet available.

 

Oklahoma repeals tax cut trigger mechanism

The Oklahoma Senate has passed and sent to the Governor a bill that repeals that state’s trigger mechanism to lower income tax rates.  By a vote of 32 to 9 on Monday, the bill was sent to Governor Mary Fallin, who is expected to sign it.

The trigger mechanism was added to the law in 2014.  When collections increase by $100 million, the individual rate would drop from 5 percent to 4.85 percent.  The Sooner State is facing an $878 million budget deficit next year.

 

20 mills for schools moves without tax abatement change

Senate Bill 146, which extends the 20 mill statewide property tax levy for schools, passed out of the House Taxation Committee Thursday afternoon with a key change taken out.

The bill had previously passed the Senate.

In the Senate version, beginning in school year 2017-2018, any new property tax exemptions granted by the State Board of Tax Appeals for property financed by industrial revenue bonds or for economic development purposes (pursuant to the Kansas Constitution) for which the public hearing was not held prior to May 1, 2017, would no longer apply to the statewide 20 mill school finance levy.

Previously exempted property would continue to be eligible for exemption from the levy.

Opponents of that provision said that would harm economic development.  Those testifying in opposition to that provision included Erik Sartorius of the League of Kansas Municipalities; Trent Armbrust of the Kansas Economic Development Alliance; Ashley Sherard of the Lenexa Chamber of Commerce; and Jason Watkins of the Wichita Regional Chamber.

Watkins said he’s not sure all Senators understood the ramifications of the amendment when it was added in Senate floor debate.

 

Property tax lid change advances

A bill that exempts certain employee benefits from the local property tax lid passed out of the House Taxation Committee Thursday.  The measure is HB 2424.

In addition to exemptions in the law currently for law enforcement, fire protection or emergency medical services, these items are added by the bill: increases in employer contributions for

  • social security
  • workers compensation
  • unemployment insurance
  • health-care costs
  • employee benefit plans and employee retirement and pension programs

 

Committee will work on gas tax increase

At its next meeting on Monday, the busy House Taxation Committee will work on House Bill 2412, which raises the motor fuels tax by five cents a gallon.

The bill would raise an estimated $84.6 million in Fiscal Year 2018, which begins July 1, 2017.

But it’s not just gas at the pump that would change.

E-85, diesel, LP gas, compressed natural gas, and liquefied natural gas would also see tax incrases.

Certain motor fuel permits used by industry would also be increased.

 

School finance update

The House K-12 Education Budget Committee continues to work on substantive changes to school finance.  Much of the work is based on the former school finance formula which was replaced by a two-year block grant program, now declared unconstitutional by the Kansas Supreme Court.

Lately, the committee has been discussing accountability and at-risk student performance and how that should be addressed in a new formula.  Local property taxes and how they should be used are also part of the mix.

No bill has yet passed out of any legislative committee.

The Senate appears to be waiting on the House before taking any action.

 

Sales tax on services still being talked up

As the House Taxation Committee continues to tackle a variety of issues, removing certain sales tax exemptions on services are surfacing in connection with House Bill 2384.

Always a thorny subject, a side group of committee members are trying to put together a list to consider.

The lawmakers are Representative Kristi Williams (R-Augusta); Representative Dan Hawkins (R-Wichita); and Representative Jack Thimesch (R-Spivey).

In a handout delivered to the House Tax Committee, they listed $285 million that could be raised by taxing certain services.

Here’s part of the list:

  • Barber shops
  • Beauty salons
  • Manicure/pedicure personal services
  • Gym memberships
  • Dating services
  • Towing
  • Parking Garage/Parking
  • Limousine and cab rental
  • Detective services
  • Security services
  • Non-residential cleaning services
  • Pet daycare
  • Mini storage/self storage
  • Custom computer software
  • Collection agencies
  • Expanded lawn services
  • State owned cabins
  • Residential and agriculture utilities
  • Coin operated laundries

There’s also an extensive list of personal services.  Here are just a few:

  • Steam and Turkish baths
  • Hair removal
  • Ear piercing
  • Hair replacement
  • Hair weaving
  • Massage
  • Saunas
  • Sun tanning
  • Tattoo services
  • Astrology services
  • Baby shoe bronzing
  • Bail bond services
  • Concierge services
  • Escort services
  • Fortune telling services
  • House sitting services
  • Life coach services
  • Locker rental
  • Palm reading
  • Party planning
  • Personal fitness trainers
  • Psychic services
  • Shoeshine parlors and services
  • Singing telegram services
  • Wedding chapel services (excluding churches)
  • Wedding planning

 

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.

KEPC UPDATE: Working on the weekend, income tax, school finance, property tax abatements, STAR Bonds

In this issue … Is the Kansas Legislature working this weekend? Income tax: talk but no action yet     School finance still in process 20 mills renewed with change to property tax abatements STAR Bonds action Bill tracking   Is the Kansas Legislature working this weekend? As the first week of the 2017 legislative veto […]

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KEPC UPDATE: Legislature returns, income tax, school finance, budget in works, Medicaid expansion, TRIP study, legislative post audits, bill tracking

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KEPC UPDATE: Flat tax crushed, FY17 budget, school finance, Medicaid

In this issue … Senate crushes the flat tax Legislature moves toward first adjournment with FY 17 budget House committee has a school finance bill What about Medicaid expansion? Bill Tracking   Senate crushes the flat tax By a vote of 3 to 37, the Kansas Senate flattened a proposal for a 4.6 percent “flat” […]

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KEPC UPDATE: June 30 deadline looms – what now?, raise income taxes, new biz filings debunked, blistering attack on bix exemption, hearing on tax lid

In this issue … Court gives legislature until June 30 to fix school funding What now on school finance? Ruling means more pressure to raise income taxes KCEG debunks arguments on new business filings Tax Foundation publishes blistering attack on business exemption Hearing Wednesday on property tax lid   Court gives legislature until June 30 […]

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KEPC UPDATE: Unthinkable, taxes & budget, Medicaid expansion, turnaround, surprises

In this issue … Unthinkable? Where we are on taxes and budget Medicaid expansion passes House We are at the turnaround Is a surprise coming? Bill Tracking   Unthinkable? At the halfway point of the 2017 Kansas Legislature, lawmakers have taken actions that would have been unthinkable heresy by the 2016 Kansas Legislature, which was […]

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