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: Ended & unbalanced, prop tax lid, STAR Bonds/Bioscience, Budget process improvements, Angels, Eco devo incentives

In this issue …

  • Lawmakers end session with unbalanced budget
  • Property tax lid passes
  • STAR Bonds changes/Selling the Bioscience Authority
  • Bill tries to improve the budget process
  • Angel investor extension passes
  • Bill sets fees for economic development incentives

 

Lawmakers end session with unbalanced budget

The 2016 Kansas Legislative session ended at 3:28 a.m. Monday morning with passage of a budget adjustment measure that relies on giving the Governor authority to make cuts to balance the budget.  Without the cuts to be made by the Governor, the budget is not balanced.

The cuts will affect just about all state spending with the exception of K-12 education.  However, Governor Brownback has the ability to veto the proviso that protects K-12.

The budget relies on taking $185 million from the state highway fund and delaying $92 million in payments into KPERS.

Higher education is cut about three percent.

One element that led to passage was a prohibition on privatizing Osawatomie and Larned State Hospitals without legislative approval.  Another proviso says the Brownback Administration cannot demolish the Docking State Office Building in Topeka without legislative approval.

The late finish was caused by difficulty rounding up the votes needed for passage.  The budget bill passed the House first 63 to 59 (63 is the bare minimum needed for passage in the House of Representatives).  The Senate passed the budget 22 to 18, one more than necessary for a majority.

With this legislation (and assuming the Governor’s sweep of highway money and delay of KPERS), the ending balance is $27.4 million (0.4%) for Fiscal Year 2016, which ends June 30.

The Fiscal Year 2017 ending balance would be $81 million (1.3%).

The budget bill is contained in Senate Bill 249.  Here is a link to a description of what’s in the bill, written by legislative staff.

The Kansas Department of Revenue is expected to announce later today whether April revenues were above or below the latest estimates, which were made April 20.

The Kansas House of Representatives rejected a bill Friday that would have returned income tax to pass through income of business.  That would raise about $250 million in income taxes, beginning in tax year 2017.

The vote was 45 to 74.

 

Property tax lid passes

The Kansas Legislature passed and sent Governor Sam Brownback a compromise bill that substantially changes last year’s property tax lid legislation.  The bill was a compromise worked out between local government and business groups.

In what was an anti-climax, the Senate passed the bill Friday 37 to 3.

The House passed it later 112 to 5.

Recall that an agreement on property tax lid legislation had been tentatively reached between local government and business groups when the legislature left town for the First Adjournment break.

Property tax revenues could grow based on a five-year rolling average of the Consumer Price Index (CPI).  There are several exemptions, such as spending on public safety.

To go higher than the allowed growth rate, cities and counties would be required to have a vote.

Here’s the legislative research brief on the bill, House Bill 2088.

 

STAR Bonds Changes/selling Bioscience Authority

House Bill 2632 makes changes to STAR Bonds.  It passed the legislature Sunday.

Lawmakers wanted to tighten up oversight.  Some were upset by Governor Brownback’s behind-the-scenes moves to use expiring STAR Bond revenue to lure the American Royal to Kansas City.

The bill makes several changes that appear to be minor.  STAR bond districts are prohibited from including real property that was part of another STAR bond project and district unless approved by the Secretary of Commerce prior to March 1, 2016.

There are also some other limitations.

The bill also authorizes the State Finance Council to oversee sale of the Kansas Bioscience Authority or substantially all of its assets.

Here’s a link to the brief on the final legislation from the Kansas Legislative Research Department.

 

Bill tries to improve the budget process

Lawmakers have sent Governor Brownback a bill that requires a revised state budget process and also sets up a “rainy day fund” for the state

House Bill 2739 directs the Administration and legislative staff to begin the new process before next year’s legislature begins.

They must prepare a “program service inventory” which includes:

  • Identification of programs by function and purpose
  • State or federal authority for the programs
  • An indication of whether the programs are mandatory or permissive
  • Program history and objectives
  • Any state matching or maintenance of effort requirements for federal money
  • Prioritization of all programs and subprograms
  • A description of the consequences of not funding each program

The bill also establishes the Budget Stabilization Fund, beginning July 1 of 2017.  Spending from the fund could not take place without an act of the Legislature or approval from the State Finance Council.

 

Angel investor extension passes

Senate Bill 149 extends the Angel Investor Tax Credit Program from 2017 to 2022.

It’s an economic development program that offers qualified investors transferable state income tax credits of up to 50 percent.

The bill also includes some minor income tax tweaks, including a check off on income taxes that allows taxpayers to contribute to the local school district of their choice.

 

Bill sets fees for economic development incentives

The Legislature sent the Governor a bill that establishes administrative fees for various economic development programs.

House Bill 2509 gives the Commerce Secretary discretionary authority to assess and collect the following amounts:

  • Up to $750 for applications to the Kansas Industrial Training, the Kansas Industrial Retraining, Promoting Employment Across Kansas (PEAK), and the Job Creation Fund
  • Up to one percent of the amount of STAR bonds issued, not to exceed $200,000, plus any actual administrative costs that exceed the fee (payable from the bond proceeds)
  • Up to one percent of private activity bonds issued, not to exceed $200,000, plus any actual administrative costs that exceed the fee. The costs would be payable by the issuer, bond proceeds, or both
  • Up to two percent of funds transferred to the State Affordable Airfare Fund

 

 

KEPC UPDATE: Lawmakers return, biz income tax, property tax, STAR Bond, S&P, Question

  In this issue … Lawmakers return Business income tax bills: more questions than answers Property tax lid almost finalized Is Star Bond legislation frozen? S&P puts Kansas on watch Question   Lawmakers return Kansas legislators returned to Topeka for the veto session this week facing an estimated $290 million budget hole over the next […]

[Continue reading…]

KEPC UPDATE: Revenues plunge, Governor announces actions, KDOT half billion

In this issue … Revenues plunge Governor announces actions KDOT will delay half a billion in projects   Revenues plunge The official revenue estimates for the State of Kansas were reduced dramatically Wednesday, forcing the Brownback Administration to announce major cuts to transportation.  The Governor also proposed options that include cuts to K-12 and higher […]

[Continue reading…]

KEPC UPDATE: Adjourned, school finance, property tax, mental health services

In this issue … Legislature adjourned until veto session School finance fix sent to Governor Brownback Property tax lid almost settled Mental health beds a local problem due to state problems   Legislature adjourned until veto session The 2016 Kansas Legislature adjourned Thursday afternoon and will return to the Statehouse in a little over a […]

[Continue reading…]

KEPC UPDATE: Tax Foundation, property tax lid, school finance fix, USD winners and losers, STAR Bond bill, adjourn next Thurs?

  In this issue … Tax Foundation critical of Kansas business pass through exemption Committee passes property tax lid School finance fix is in turmoil How to know if your school district is a winner or loser with the Senate bill STAR Bonds bill moves after Senate veto override: includes sale of Bioscience Authority Leadership […]

[Continue reading…]

KEPC UPDATE: Where we are; ed plans, biz tax bills, tax lid, ed bill drama, regents report, USD cash balances, tax transfer bill

In this issue … Where we are Chairs working on education plans Business income tax bills surface Tax lid hearings held Controversial education bill hearing cancelled Regents outline higher education cuts School district cash balances Sales tax transfer bill still in committee   Where we are With just two weeks left in the regular legislative […]

[Continue reading…]

KEPC UPDATE: Stunning revenue report, higher ed cuts, property tax, debt, Bioscience Authority

In this issue … Stunning revenue report smacks Legislature Cut to higher education hurts the economy Property tax hearings next week Putting the brakes on debt Winding down on the Bioscience Authority Following a seven day break marking the midway point of the 2016 Kansas Legislature, lawmakers returned to Topeka Wednesday for a short week […]

[Continue reading…]

KEPC UPDATE: 2nd half starts Weds, shorter session, property tax lid

In this issue … Legislature returns for 2nd half on Wednesday What’s working against a shorter session? Property tax lid hearings coming up   Legislature returns for 2nd half on Wednesday State legislators return to Topeka Wednesday (March 2) after an unusual seven day break marking the midpoint (or turnaround) of the 2016 Kansas Legislative […]

[Continue reading…]

KEPC UPDATE: Budget to Gov, school finance, efficiency, calendar, STAR Bonds, common core

In this issue … Legislature sends budget to Governor School finance is still on the table Committees move forward on efficiency study Days cut from session as calendar is revised STAR Bonds are limited in the budget Common Core bill voted out of committee   Legislature sends budget to Governor Facing limited revenues and a […]

[Continue reading…]

KEPC UPDATE: school finance, house budget, efficiencies, tax lid, deadlines

In this issue … Court to Legislature: Fix school finance or schools will close House passes budget Efficiency proposals take the spotlight Mayors oppose tax lid Busy week for bill introductions as deadlines loom   Court to Legislature: Fix school finance or schools will close The Kansas Supreme Court has ruled last year’s block grant […]

[Continue reading…]