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: school finance, Medicaid expansion, income tax, recission, senate cmte budget, gas tax, STAR Bonds, property tax, early break

In this issue …

  • Lawmakers and educators try to understand House school finance bill
  • Medicaid expansion goes to the full Senate
  • House Tax Committee may move ahead on income tax
  • Rescission bill in conference
  • Senate Committee passes a budget
  • House holds hearing on 11 cent gas tax increase
  • STAR Bonds out of House committee
  • Property tax lid changes
  • Will lawmakers break early?
  • KEPC Bill Tracking

 

Lawmakers and educators try to understand House school finance bill

A long-awaited school finance bill was unveiled this week by the House K-12 Education Budget Committee.  The bill was not available in print until Wednesday and hearings were held Thursday and will continue today (Friday) and Monday.

The quick timing has caught many school officials off guard because it came during Spring break.

Committee Chairman Larry Campbell (R-Olathe) wants the committee to begin working the bill Monday and hopes to have something voted out of committee by Thursday.

Although similar to the previous formula, House Bill 2410 also has differences.

Lawmakers and education groups are trying to understand how it works and what it does.

Here are some of the highlights:

  • 107 of the 286 school districts lose money, mainly because of declining numbers of students
  • The state would only spend an additional $75.6 million next year. Many education groups and lawmakers say this number is too low and will not satisfy the Kansas Supreme Court
  • It appears this formula relies more heavily on local property taxes to fund schools, depending on the will of local school boards
  • School boards could raise property taxes for local enhancements and extracurricular activities
  • School districts would receive $5,320 per student. About 80 percent ($4,170) would come from the state, while about 20 percent ($1,150) would come from local property taxes that would be required to be levied
  • Any school district whose enrollment declines more than five percent from the previous year would base their budget on 95 percent of the preceding year’s enrollment
  • Beginning in the 2018-19 school year, the September 20 and February 20 enrollments would be averaged for budget purposes
  • All day-kindergarten would be phased in by 2019-20
  • Vocation weighting would be eliminated and $100 per full-time equivalent student would be transferred from the general fund to pay for vocational education
  • Virtual state aid remains the same as it is now
  • At-risk weighting remains the same as it is now
  • Transportation state aid is reduced $4.3 million
  • High density at-risk and bilingual state aid are included

Want to know what this means for your school district?

Here’s a link to the Kansas State Department of Education spread sheet. To see whether your school district gets or loses from the state, look at column 14 in the SF17-091 (State Foundation Aid) spreadsheet.

If you really want to delve into everything about the bill, here’s the link to the full KSDE web page on it.

This is not an easy review and not for the faint of heart.

The committee chairman, Representative Larry Campbell (R-Olathe) says this is just a starting point.  It is widely believed there are enough votes on the committee to significantly change the measure.

 

Medicaid expansion goes to the full Senate

After only brief discussion Thursday, the Senate Public Health and Welfare Committee passed out a bill that expands Medicaid in Kansas by a vote of 6 to 2.  The bill is House Bill 2044.

Supporters of Medicaid expansion are confident the bill will be passed by the full Kansas Senate.  The question is whether Governor Sam Brownback will veto the measure.  He continues to say he opposes it.  The question then becomes whether there are enough votes to override his veto.

Complicating the situation is the legislation in Congress to repeal the Affordable Care Act (Obamacare).  As proposed, the legislation would freeze Medicaid.

House Bill 2044 is currently exactly the same bill that came over from the House of Representatives. There were no amendments. That means if the Senate passes it without amendments, it will go directly to the Governor for his consideration.

 

House Tax Committee may move ahead on income tax

The House Taxation Committee may be weary of waiting on the Kansas Senate to come up with a new income tax bill and appears to be poised to come up with another plan of its own. However, one representative deeply involved in the issue tells us the House will let the Senate struggle a bit longer.

Committee Chairman Steven Johnson (R-Assaria) told the committee this week he would like the members to consider looking at perhaps four income tax brackets in a new bill. Johnson said the committee would use the bill vetoed by Governor Brownback (HB 2178) as a base.

The 2012 income tax cuts moved Kansas from three brackets to two. HB 2178 returned to three brackets.

There is another bill currently in the Tax Committee similar to HB 2178 that could be used for a new income tax measure.

The committee may also put forth a flat income tax with one rate, somewhere around 5 percent.

 

Rescission bill in conference

The budget bill that reconciles the current state budget is in a conference committee of House and Senate members. They will try to iron out differences in each version. The bill does not cut K-12 or higher education.

It is House Bill 2052. The bill essentially relies on internal borrowing to balance the budget and leaves an ending balance in the bank of about $50 million.

The current budget year is FY 2017.  It ends on June 30.

 

Senate Committee passes a budget

Meanwhile, the Senate Ways and Means Committee passed a budget Thursday for the next two years with little fanfare.

It’s Senate Bill 189, the so-called “mega budget” bill. The guts of the bill contain a state budget for Fiscal Years 2018 and 2019. Because school finance and income tax increases are still in the works, the budget does not contain K-12 funding or some other items. Those will be added later once the revenue and education pictures become more focused.

The bill now goes to the floor of the Kansas Senate. The house and senate have very few committee meetings next week and are expected to be spending most of their time on the house and senate floors debating bills.

 

House holds hearing on 11 cent gas tax increase

The House Taxation Committee held a hearing Thursday on a bill to increase the motor vehicle fuels tax by 11 cents a gallon.  It’s House Bill 2382.

A bill raising the tax by five cents a gallon had a hearing a week ago in the Senate Assessment and Taxation Committee.

 

STAR Bonds out of House committee

A bill that extends STAR Bond financing until 2022 has passed the House Appropriations Committee and will be debated in the full House of Representatives.  Without the bill, STAR Bonds could no longer be used as an economic development tool.

STAR Bonds provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas and use the sales tax revenue generated by the development to pay off the bonds.

The bill is HB 2184.  It contains some other changes:

  • The bill allows STAR Bonds projects costs to include expenses for the renovation and expansion of an historic theater
  • Language is eliminated in the law that allows a county commission or school board to object to a proposed STAR bond district, if it is determined the district would have an adverse effect on property tax revenues
  • The Secretary of Commerce would no longer be required to approve a city or county option to use all or a portion of transient guest tax revenues to be pledged for principal and interest payments on the STAR bonds.
  • The bill eliminates some outdated language about the NASCAR facilities in Wyandotte County.

Meanwhile, reliable legislative sources tell us the Senate Commerce Committee has ended its look at economic development incentives and may not make any changes to programs like HPIP and PEAK.  A quick check of next week’s agenda shows no committee meetings scheduled.

 

Property tax lid changes

Here’s one of those crazy things that happens in the final weeks of a legislative session.

The Senate Assessment and Taxation Committee held hearings last week on a bill to repeal the local property tax lid.

Senate Bill 167 was completely gutted in committee Thursday of any mention of the tax lid.  It has now become a bill that requires County Appraisers be elected to four year terms, beginning in 2018!

There are also several provisions in the bill having to do with how appraisals will be conducted.  Attorneys familiar with government appraisal of property believe some of those provisions are probably unconstitutional.  The bill is still in the Senate committee.

The committee has an 8:30 a.m. meeting scheduled this morning (Friday) to hear from the Revenue Department’s Property Valuation Division (PVD).  PVD may inform them of problems with the bill.

The House Taxation Committee has held hearings on a House Bill 2376, which changes the local property tax lid from requiring an election to only requiring an election when 10% of the voters sign a protest petition asking for an election.

Our best guess is that this bill will be passed out of the committee, but with changes that lower the number of signatures needed on a protest petition.  It will then probably sit on the agenda for debate in the full house until some of the other major issues of the session (school finance, taxes, and the budget) have some movement.

 

Will lawmakers break early?

Next week’s schedule indicates the Legislature will NOT meet on Friday.  Lawmakers were originally scheduled to be in session the next week (the week of April 3).  There are rumblings around the Statehouse (usually reliable) about how that week could be a short one.  Depending on how much has been accomplished, legislative leadership may decide to hold the First Adjournment early to save more days for the veto session.

The veto session is scheduled to begin May 1 this year.

 

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.

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