KEPC UPDATE: School finance, constitutional amendment, broadband task force, food sales tax

In this issue …

  • Senate and House pass different spending on school finance
  • Constitutional amendment passes committee
  • Broadband Task Force expected to pass
  • Transportation Task Force in conference
  • Food sales tax reduction might not move forward
  • BILL TRACKING

 

Senate and House pass different spending on school finance

School finance legislation broke loose from its moorings in the legislature this week as both the House and Senate passed different versions of a new school finance bill in an effort to satisfy the Kansas Supreme Court.

On Thursday, the Senate passed SB 423 by a vote of 21 to 18.  The bill spends about $275 million additional on K-12 education.  Here’s a link to how senators voted.

Here’s a link to what’s in the senate version of school finance.

Earlier in the week the House passed HB 2445, which spends about $520 million more on public education.  The vote was 71 to 53.  Here’s a link to how representatives voted.

Here’s a link to an explanation of what’s in the house bill.

As for what the bills do for individual school districts, the Kansas State Department of Education has prepared computer runs showing the amounts.  This will take a little effort to find the correct printout. Follow this link and then:

  • Click on SF 18-085 – Computer Printout to see an Excel spread sheet showing the impact of SB 423.  Column 8 is the increase in state general fund aid.
  • Click on SF 18-078 – Computer Printout (providing effects on school districts) to see what the House bill does to individual school districts.

The House of Representatives goes in at 1:30 Friday afternoon.  The senate returns at 10 a.m.  The plan would be to appoint a house-senate conference committee to iron out differences between the two bills.  That could not formally happen until the afternoon when the house returns.

There has been some discussion that lawmakers might work into the weekend, or even a few days next week.  However, it’s also possible that they might begin their spring break and return at the end of April to finish their school finance work.  But, that provides little time for a bill to pass and be prepared for presentation to the Kansas Supreme Court, which has set a hearing for April 30.

 

Constitutional amendment passes committee

There was some drama this week as senate leadership said they would not run a school finance bill until a constitutional amendment passed the House of Representatives to prevent the courts from ordering more spending on education.  In the end, the senate leadership capitulated.

Still, the House Judiciary Committee passed out HCR 5029 by a vote of 12 to 10.  The original version of the constitutional amendment would declare that the power to appropriate funding for education is exclusively a legislative power and not subject to judicial review.  There were strong objections to that from Democrats and Moderate Republicans.

If 2/3 of the House and Senate approve the constitutional amendment, it would go to a vote of the people.

The legislation was changed by the committee.  The explanatory statement that would appear on the ballot would read:

The purpose of this amendment is to provide that suitable provision for the financing for public education means that the provision is adequate and equitable.  Questions of adequacy of total funding of public education shall be determined by the legislature.

A vote for this proposition would require suitable provision for the financing of public education to be both adequate and equitable and would reserve the power to establish and resolve any question of the adequacy of the funding to the legislature.

A vote against this proposition would make no change in current law and maintain the current provisions regarding suitability of the provision made for the finance of education.

It appears the change would mean the courts could still take up the equity (or fairness) of school funding, but not the amount of money spent.

After the legislation passed out of committee, many were saying they were hearing overwhelmingly from Kansans that opposed the change, with little or no contact from anyone who supports it.

 

Broadband Task Force expected to pass

Both the House and the Senate have now overwhelmingly passed a bill creating a Broadband Expansion Planning Task Force.  The bill passed the Senate this week 40 to zero.

Because the House and Senate versions of the bill are different, a conference committee of three Senators and three Representatives has been named to try to work out the differences of opinion.  They are expected to come to an agreement and send the bill to Governor Colyer for his signature.

 

Transportation Task Force in conference

Another Task Force is also in a conference committee, which is reportedly having some difficulty coming to agreement.  It’s establishes the Joint Legislative Transportation Vision Task Force for Evaluation of the State Highway Fund and the State Highway Transportation System.

The conference committee has been disagreeing on whether to have subcommittees and what organizations should be included in the Task Force.  It is seen as a prelude to coming up with a new transportation program and continuing to finish the 2010 T-WORKS Program.

 

Food sales tax reduction might not move forward

Last week, a Senate committee passed out a bill that reduces the sales use tax rate on food and food ingredients.  Senate Bill 444 has not been scheduled for debate in the full Senate and it is unclear if and when that will happen.

The bill defines food and food ingredients to include substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.

Bottled water, candy, and soft drinks would be specifically included.  Sales of alcoholic beverages, dietary supplements, food sold through vending machines, tobacco, and certain prepared foods would b excluded and would not qualify for the tax reduction.

The bill may not come up because of its cost to the state general fund.

It reduces revenue by an estimated $152 million in Fiscal Year 2020, eventually growing to $317 million by Fiscal Year 2023.

 

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.

KEPC UPDATE: Education – $520M for schools, constitutional amendment, inspector general; one more week; STAR Bonds; HPIP; transpo task force; broadband

In this issue …

  • Committee proposes $520 million for public schools
  • Education constitutional amendment introduced
  • Attempt to create education inspector general fails
  • Legislature has one more week before break
  • Budget bills becomes STAR bonds debate
  • HPIP changes pass Senate
  • Transportation Task Force bill advances in Senate
  • Broadband changes pass Senate
  • BILL TRACKING

 

Committee proposes $520 million for public schools

What everyone at the Statehouse has been waiting for finally happened Wednesday night.  A school finance bill passed out of committee that puts significant dollars into the education formula in an effort to pass a funding bill that will satisfy the Kansas Supreme Court.

House Bill 2445 was amended by the House K-12 Education Budget Committee and is expected to be debated by the full House of Representatives on Monday. It passed out of committee without recommendation.

The bill would increase school funding by about $520 million.  That’s on top of the money directed to schools by last year’s education funding measure.

Representative Steve Johnson (R-Assaria) proposed the amendment.  Some lawmakers expressed hope that the plaintiffs in the school finance lawsuit will agree with the action.

 

Education constitutional amendment introduced

Meanwhile, a constitutional amendment to change the way schools are funded was introduced this Thursday.

A copy of the measure was not available as of this writing.   However, the title is, “constitutional amendment to declare the power to appropriate funding for education is exclusively a legislative power and not subject to judicial review.  This is seen as a way to prevent future school finance lawsuits.  It must pass both houses of the legislature by a 2/3 vote and approved by voters.

 

Attempt to create education inspector general fails

A school finance measure that makes some changes to the formula passed the Kansas Senate this week.

Senate bill 422 makes changes to:

  • Local Option budgets
  • At-risk weighting
  • The use of capital outlay

During debate, the Senate rejected some controversial amendments.

Senator Ty Masterson (R-Andover) tried to include language creating an Office of Education Inspector General, which would be part of the State Treasurer’s Office.  It would have added $228,300 to the budget to pay for it.

Masterson said education takes the largest amount of dollars for the state budget, so it needs regular audits.

Masterson’s amendment failed on a vote of 12 to 27.

 

Legislature has one more week before break

The Kansas Legislature is scheduled to end its regular session by Friday, March 6.  This normal break usually lasts at least a little over two weeks before the veto session begins.  This year, it’s scheduled for April 26.

There has been some discussion about cutting the break short this year to continue work on school finance.  Lawmakers are facing an April 30 deadline to pass a constitutional school funding measure.  That deadline was set by the Kansas Supreme Court.

Both the House and Senate have gone home for the week, choosing not to work over a three-day Easter weekend.

 

Budget bill becomes STAR bonds debate

Discussion of a budget bill in the Senate turned into a STAR bonds debate this week.  Senate Bill 269 eventually passed the Senate 34 to 6, but not after a lengthy debate on a couple of amendments to restrict STAR bonds, the controversial economic development program.

The program provides municipalities the ability to issue bonds to pay for the development of major commercial, entertainment, and tourism areas.  The revenue generated by the development is used to pay off the bonds.

Senator Tom Holland (D-Baldwin City) offered an amendment that would give municipalities until the end of June to have a development plan approved by the Commerce Department.  After that STAR bonds could not be used to construct new arenas, sports facilities or stadiums, including facilities to support amateur or professional sports activities.

Holland said STAR bonds have become a way to subsidize projects by certain local governments and developers.  The Senate Commerce Committee has been working on STAR bond legislation for many weeks but has been unable to agree on changes.

Holland’s amendment failed on a voice vote.

Senator Mary Pilcher-Cook also offered an amendment that failed.  It would say no Kansas state or local government official can enter into any financial arrangement in which they would benefit from a STAR bonds project.  Senators thought it was too vague and unworkable.

 

HPIP changes pass Senate

Another economic development bill has passed the Kansas Senate.

Senate Bill 430 makes changes to HPIP (High Performance Incentive Program).  It reduces the amount of HPIP tax credits earned by businesses.  The credits earned are reduced by 50 percent.  In return, they would continue to be available from 16 years to 25 years.

After the 16th year, only 10 percent of the credit could be claimed on tax returns.

 

Transportation Task Force advances in Senate

A special task force to come up with a new transportation program passed the Kansas House this week by a vote of 123 to one.

House Substitute for Senate bill 391 establishes the Joint Legislative Transportation Vision Task Force.

It would be made up of 27 members, including six members of the House and six Senators.  The rest of the group would come from various organizations.  Their mission is to evaluate system conditions, use of the State Highway Fund, current transportation funding and additional projects.

The Task Force must submit a report to the legislature on or before January 1, 2019.

 

Broadband passes Senate 40 to 0

The bill creating the statewide broadband expansion planning task force (Senate Substitute for House Bill 2701 passed the Senate this week 40 to zero.

A final report would be due in January of 2020 with a status report to the legislature in January of 2019.

 

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.

KEPC UPDATE: School finance, property tax, STAR Bonds, rainy day fund, HPIP, eco devo, broadband task force

In this issue …

  • House committee begins work on school finance
  • Bill would require more property tax for education
  • STAR bonds changes suspended
  • Rainy day fund passes committee
  • HPIP changes pass committee
  • Eco devo review bill is out of committee
  • Broadband task force bill moves forward
  • KEPC BILL TRACKING

 

House committee begins work on school finance

The House K-12 Education Budget Committee began work Thursday on a new school finance bill, despite not knowing how much money to put into the formula.  The bill is HB 2445.

The bill address equity issues identified by the Kansas Supreme Court; changes some Local Option Budget provisions currently in law; removes the minimum at-risk student weighting; and says the capital outlay fund can no longer be used for utilities or property and casualty insurance.

The committee ran out of time and will pick up their activity again next week.  At the same time, the Senate Education Finance Committee began work on some of the changes that the Kansas Supreme Court did not like.

Meanwhile, still trying to understand the school finance study commissioned by the legislature, lawmakers are now waiting for some cost estimates from the Kansas Department of Education.

Texas A & M professor Dr. Lori Taylor was hired to conduct the cost study.  Dr. Jesse Levin of the American Institutes for Research was hired to was do a peer review of Taylor’s study.  They both appeared before lawmakers on Monday to discuss the findings.

A first look seems to indicate it will take between $600 million and $2.1 billion to satisfy the Kansas Supreme Court, which has ruled the current funding formula unconstitutional.

The study says that, on average, for every one percent increase in the graduation rate, school funding needs to increase 1.5 percent.  This reinforces the argument by education supporters who have said for many years that money matters in educational outcomes.

It appears the state needs to agree on what levels of performance it must set before it can agree on a funding level.

The next step is to come up with school finance runs that show what each district would get at different levels of funding.

According to a March 20 story in the publication  Hawver’s  Capitol Report:

“Senate Majority Leader Jim Denning, R-Overland Park, said it might be Friday  before lawmakers receive the cost estimates in the study by former Kansan and now Texas A&M researcher Dr. Lori Taylor in a form that can be converted into the ‘runs’ that are the heart of Kansas school finance legislation.  Those runs show how much money each school district will receive from a school funding formula.”

“Nothing firm, but it looks like sometime next week to marry the Taylor information to actual school district enrollments and makeup of districts and even individual school buildings to come up with a formula-influenced or not by the new study – and figure out weightings for students who have learning handicaps, live in poverty or aren’t English language speakers.”

Here’s a link to the updated Taylor study.

 

Bill would require more property tax for education

Meanwhile, the Senate Education Finance Committee has been looking at a possible revenue source to help pay for new school spending.  The Committee held a hearing Tuesday on SB 422, which requires more property tax for education.

Under current law, school boards are allowed to set the Local Option Budget (LOB) at  maximum of 33 percent of their general fund budget.  SB 422 would require school districts to set their LOB at 30 percent of the general fund budget.

The bill also requires local school districts to allocate the LOB to at-risk programs in proportion to how much of their state aid goes to their at risk fund.

The committee has not taken any action on the bill as of this writing.

 

STAR bonds changes suspended

The Senate Commerce Committee has run out of time and has suspended discussion of any changes to STAR bonds.  Local governments and economic development officials did not like the proposal, saying it essentially would kill the ability to use STAR bonds in most cases.

It’s unclear if and when the issue will come up again.

STAR bonds are sales tax revenue bonds that provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment, and tourism areas.  The sales tax revenue generated by the development are then used to pay off the bonds.

 

Rainy day fund passes committee

The Ways and Means Committee of the Kansas Senate has given approval to a bill creating a budget stabilization/rainy day fund.  The fund would use money coming to the state when personal income taxes exceed certain revenue estimates.

Many states have a rainy day fund to help with violent swings in state revenues.

The measure, HB 2419, has already passed the Kansas House.  It now goes to the full Senate for debate.

The bill now declares that excess revenues would go 50 percent to the rainy day fund and 50 percent toward the Kansas Public Employees Retirement System (KPERS) unfunded liability.

The bill requires the Director of the Budget to consult with Legislative Research to certify the average estimated tax receipts from the three previous fiscal years.  The amount transferred to the fund is the excess of the average for the three years.  But the transfer cannot take place if the revenues are lower than the immediately preceding fiscal year.

The bill appears to say that the rainy day fund cannot be greater than eight percent of the preceding year’s state general fund receipts.

 

HPIP changes pass committee

Tax credits available through the Kansas HPIP (High Performance Incentive Program) would be extended to 25 years under Senate Bill 430, which came out of the Senate Ways and Means Committee this week.

Lawmakers have been concerned for several years that a large number of unclaimed credits that are allowed to be carried forward might be used by businesses in one year, leading to severe budget problems.

Senate Bill 430 reduces the HPIP credits that are unused from 16 to 25 years for those taxpayers who claimed a credit prior to January 1, 2018.

After the 16th year, the amount of tax credits used is limited to ten percent of the reduced amount.

HPIP provides a ten percent nonrefundable income tax credit for eligible capital investments that exceed either $50,000 in non-metropolitan counties, or one million in the five metro counties of Douglas, Johnson, Sedgwick, Shawnee, and Wyandotte.

 

Eco devo review bill is out of committee

A committee to review and evaluate economic development programs of the state is created by Senate Bill 448, which moved out of the Senate Commerce Committee on Wednesday.

The Joint Economic Development Incentive Review Committee would be required to develop an inventory of all Kansas economic development incentives, to be updated annually.  Incentives are to be evaluated at least once every five years by the Legislative Post Auditor and a public hearing would be required on the Post Auditor’s evaluations.

 

Broadband task force bill moves forward

Access to broadband, especially in rural areas, has been a growing hot issue for Kansas lawmakers and communities.  In order to get a handle on needs and how to pay for them, House Bill 2701 establishes the Broadband Expansion Plan Task Force.

It passed the Senate Utilities Committee this week.  It had previous passed the Kansas House of Representatives 117 to zero.

The Senate Committee made several amendments to the bill before passing it:

  • The Task Force would look at access to public right of way for setting up broadband in an area
  • The Task Force would also look at price caps for broadband service providers
  • Also to be considered, developing criteria for a statewide broadband map; and involving the aerospace industry as well as the Farm Bureau.
  • A wireless carrier would be included in the task force membership
  • Kansas municipal utilities would be included in the membership
  • A final report would be due in January of 2020 with a status report to the legislature in January of 2019

 

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.

KEPC UPDATE: Ed funding report, tax reaction, enterprise zones, Rural Opportunity Zones, labor report

In this issue …

  • Slow week as lawmakers wait for education funding report
  • House Taxation tackles reaction to federal changes
  • Lawmakers consider reinstating enterprise zone
  • Committee reviews Rural Opportunity Zone results
  • Monthly labor report

 

Slow week as lawmakers wait for education funding report

Many legislative committees did not meet this week, but activity will pick up next week as lawmakers review an education study that is expected to guide them through how they react to the Kansas Supreme Court decision that the current K-12 funding formula is unconstitutional.

Texas A and M professor Dr. Lori Taylor has been hired to conduct the cost study.  Dr. Jesse Levin of the American Institutes for Research has been hired to do a peer review of Taylor’s study.

On Friday afternoon, attorneys Jeff King and Curt Tideman will present an overview of the Taylor study to the Senate Select Committee on Education Finance and the House K-12 Education Budget Committee.

The Chair of the Senate Education Committee, Senator Molly Baumgardner (R-Louisburg) announced in the Senate Thursday that the study will be released at one p.m. Friday to the entire legislature in an e-mail.

 

House Taxation tackles reaction to federal changes

Two bills designed in response to the new federal income tax changes were heard in the House Taxation Committee Wednesday.

House Bill 2569 doubles the standard deduction on Kansas income tax beginning in 2018.  The federal change doubled the standard deduction.  It’s estimated the state change could cost the state as much as $200 million per year.

House Bill 2761 allows Kansas individuals to itemize deductions on their state taxes despite not itemizing on their federal return. Currently, to itemize in Kansas, the taxpayer must also itemize on their federal return.  That’s expected to cost the state an estimated $34 million.

Committee Chairman Steve Johnson (R-Assaria) said the committee will work bills on the concepts next week.

 

Lawmakers consider reinstating enterprise zone

Economic development issues continue to be reviewed in some legislative committees.

The House Appropriations Committee has scheduled a hearing on HB 2767 next Wednesday, which reinstates the enterprise zone program in Kansas.  The program was eliminated by a previous legislature, but is important to local economic developers.

The bill was introduced just last week.  Appropriations is a committee that is exempt from deadlines, so the bill could pass yet this session.

The bill would provide tax credits and certain sales tax exemptions to businesses that expand.  However, it only applies to designated nonmetropolitan counties.

 

Committee reviews Rural Opportunity Zone results

Some lawmakers are interested in expanding the Rural Opportunity Zone (ROZ) program to more areas of Kansas. That discussion came as the Senate Assessment and Taxation Committee reviewed the program on Wednesday.

The program is designed to attract new residents to rural areas of the state by forgiving individual income taxes for five years and, in some cases, help pay off education loans up to $15,000.

To qualify, the new resident cannot be a current resident of Kansas.

The program has grown steadily since it began in 2012.  In 2016, 494 people took advantage of the program.

The biggest category of professions that have applied is education.  Many school districts have used the program to attract teachers.  The second-highest category was health care.

The largest numbers are coming from Nebraska (171) and Colorado (170).

 

Monthly labor report

Kansas continues to grow jobs at a slow rate, according to the latest Department of Labor report.

Total nonfarm jobs grew 0.6 percent from January of 2017 to January of 2018.  Information jobs declined 3.0 percent.  Construction jobs declined 2.4 percent.

The strongest growth was in transportation, warehousing and utilities with a 7.3 percent growth rate.

Here’s a link to the job growth information.

 

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.

KEPC UPDATE: School funding, property tax, review of eco devo plans, convention of the states, internet sales tax, STAR bonds, income taxes

In this issue …

  • School funding delayed until studies are released
  • No support for property tax increase for schools
  • Tax Committee votes for regular review and disclosure of economic development programs
  • Convention of the states debated in Senate; fails
  • Proposal to collect more internet sales tax moves forward
  • Lawmakers question STAR bonds expansiveness
  • Hearings on income tax increases and cuts scheduled for next week

 

School funding delayed until studies are released

This week, the Chairman of the House K-12 Education Budget Committee said he will delay working the bulk of the school budget until later on in the session.

Representative Fred Patton (R-Topeka) said he plans to work on other parts of the school budget, such as special education, and teacher professional development.  The big part of the budget will be worked in a separate bill later.

The legislature is waiting on a report from Texas A and M professor Dr. Lori Taylor.  She’s been hired to conduct a cost study.  This week, Dr. Jesse Levin of the American Institutes for Research , who has been hired to do a peer review of Taylor’s study.  This week, he testified via Skype about previous school finance studies.

The two reports are due to the Legislature on March 15.  That’s a Thursday, so it seems likely that the lawmakers will take the weekend to digest the information before beginning committee discussion on Monday, March 19.

 

No support for property tax increase for schools

No one showed up to support a bill that would increase property taxes to support K-12 education, but several opponents testified against House Bill 2740 in the House Taxation Committee.

Opponents included:

  • Steve McCloud of the Kansas Farm Bureau, who said agriculture taxpayers prefer to pay income and sales taxes
  • Ken McCauley of the Kansas Corn Growers Association, who said property taxes are not a fair way to fund education
  • The Kansas Chamber’s Eric Stafford, who cited of poll of the organization’s members that indicates they prefer property taxes to be reduced
  • Daniel Heady of the Kansas Wheat Growers and the Kansas Ag Alliance, who said the farm economy is struggling and property tax increases would hurt farmers more
  • Kansas Association of Realtors’ Patrick Vogelsburg. He said a property tax increase will impact the housing market
  • Randy Stuckey, Agribusiness Retailers Association
  • Lucas Heinen, Kansas Soybean Association
  • Mandy Roe of the Kansas Cooperative Council
  • Dan Murray of the National Federation of Independent Business
  • Mike Beam of the Kansas Livestock Association
  • Jeff Glendening of Americans for Prosperity
  • Dave Trabert of the Kansas Policy Institute
  • John Donnelly of the Kansas Farm Bureau

 

Tax Committee votes for regular review and disclosure of economic development programs

The House Taxation Committee has passed out a substitute bill that requires public disclosure of certain economic incentive data.  The measure is HB 2572.

The substitute bill was proposed by Representative Kristey Williams (R-Augusta).

The original bill required the Secretary of Administration to publish selected economic development program data on the KanView website.  It also established a new Joint Committee on Taxpayer Transparency, which would advise the Secretary of Commerce.

After discussions with the Commerce Department and others, Representative Williams offered the substitute bill.

The new bill does not create a joint committee and gives the Commerce Department the responsibility to publish the information (not the Department of Administration).  It now also applies to many more programs.

The House Tax Committee passed another transparency bill this week.  HB 2753 sets up a periodic review for certain tax credits, incentives, and sales tax exemptions for the Insurance Department, Commerce Department, and Department of Revenue.

Each review would be required to provide a description of each incentive and an estimate of the economic and fiscal impact of each.  The report is required to be on the website of each agency on or before March 1st of every year.

 

Convention of the states debated in Senate; fails

A measure calling for a convention of the states to amend the U.S. Constitution has failed in the Kansas Senate.  SCR 1611 required a 2/3 majority (27 votes), but the final vote was 22 to 16.

If three-fourths of state legislatures would ratify changes to the Constitution, they would take effect.  Supporters of the constitutional convention want to add a requirement that prevents deficit spending and debt by the federal government.  Opponents are concerned that a constitutional convention cannot be limited to a specific topic and that anything in the U.S. Constitution could be changed, added, or eliminated.

 

Proposal to collect more internet sales tax moves forward

House Bill 2756 creating the Kansas Main Street Parity Act has passed out of the House Taxation Committee.

It requires some out-of-state retailers and “marketplace facilitators” to begin collecting Kansas retail sales and use taxes on sales to Kansas.  The bill is primarily aimed at internet sales.  Some collect Kansas sales tax.  Others do not.

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.

Here’s a link to a description of the bill as it came out of the committee.

 

Lawmakers question STAR bonds expansiveness

The Senate Commerce Committee continued hearings this week on bills dealing with STAR bond changes and restrictions this week.  There has been no progress moving the bills forward yet, and more discussion is planned.

The restrictions are contained in Senate Bill 434, which was supported by the Kansas Speedway.  That was a surprise for many local governments and economic development organizations.  Opponents included economic development organizations.

Here’s a link to the fiscal note on the bill, which includes a description.

There was a lot of questioning by Senators concerning projects in Johnson County.

 

Hearings on income tax increases and cuts scheduled for next week

Some income tax bills will be heard in the House Taxation Committee next week:

  • HB 2761 allows an individual to itemize deductions in Kansas despite not itemizing on their federal return. As of this writing, there is no estimate on the impact on the budget.
  • HB 2661 changes the corporate income tax rate and surtax.  The changes would bring in an estimated $117 million more in FY 2019 and FY 2020.  Here’s a link to the fiscal note that describes the changes.
  • The bill was introduced by Representative Tim Hodge (D-Newton)
  • House Bill 2569 would double the standard deduction on individual income tax in Kansas.  It would cost the state $208.8 million. Here’s a link to the fiscal note.
  • House Bill 2618 would increase Kansas income taxes for those with income over $500,000 and for those with income over a million dollars.  It would raise an estimated $307.5 million next year and the year after. Here’s a link to the fiscal note.

 

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.

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
  • BILL TRACKING

 

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.

KEPC NEWS: Halfway mark, Medicaid expansion blocked by leadership, eco devo transparency, expensing, HPIP, broadband

In this issue …

  • Legislature begins five day break marking halfway point
  • Medicaid expansion approved by committee but blocked by leadership
  • Hearing held on economic development transparency
  • Expensing bill passes Senate 31-8
  • HPIP changes referred back to committee
  • Broadband issue is aired on House floor 2701
  • BILL TRACKING

 

Legislature begins five day break marking halfway point

The 2018 Kansas Legislature is now on a five day break following a busy week on the House and Senate floors debating bills.  Legislation that has not passed one of the chambers by now is gone for the session, unless it comes from an “exempt” committee, such as Appropriations, Ways & Means, Federal and State Affairs, and Taxation.

There has been little activity on school finance with the exception of lawmakers reviewing the Kansas Supreme Court decision declaring the current law unconstitutional.

Although most lawmakers have gone home, some will be staying into Friday to hear from Professor Dr. Lori L. Taylor of Texas A&M, who’s be hired to conduct a cost study of K-12 education in Kansas.

Her report is due to the legislature by March 15.

Lawmakers will return next Wednesday, February 28 for a short week.  As of this writing the committee schedule has not been published.  Thursday of this week was officially the 33 day of the 2018 Kansas Legislature.

 

Medicaid expansion approved by committee but blocked by leadership

A Medicaid expansion bill introduced in 2017 was worked by the Senate Public Health and Welfare Committee on Monday and sent to the full Senate for debate.

However, Senate leadership did not allow the bill to come up before Thursday’s deadline for bills to be voted out of their house of origin.  Senate Bill 38 would expand Medicaid under the federal Affordable Care Act (Obamacare), beginning in 2019.  It would add as many as 150,000 people who would have the ability to access the health care insurance.

The legislation would establish the KanCare Bridge to a Health Kansas Program.  To qualify, Kansans could not have an income exceeding 133 percent of the federal poverty level.

The bill requires:

  • Referral to workforce training programs
  • Creation of a Program Drug Rebate Fund
  • Creation of a Program Privilege Fee Fund
  • Creation of a health insurance coverage premium assistance program
  • Addressing federal denial and approval of financial participation
  • Submission of a waiver request to the federal government
  • Various program reports to the Legislature
  • Creation of a Program Working Group

There were about 140 proponents who submitted testimony in support, including business, community, economic development interests, health foundations, policy and advocacy organizations, hospitals, community support agencies, health care providers, community health centers, and private citizens.

They said the bill would provide better health care for more Kansans, bring businesses and jobs to communities, providing funding for hospitals that are struggling, and return millions of federal tax dollars back to Kansas.

Opponents included Americans for Prosperity, the Foundation for Government Accountability, the Kansas Policy Institute, and the Kansas Department of Health and Environment.

They said the bill could not accurately predict Medicaid enrollment, that expansion would be costly, and expressed uncertainty that the Affordable Care Act will continue to exist and provide funding to the states.

 

Hearing held on economic development transparency

A hearing was held Monday in the House Taxation Committee on HB 2672, which requires public disclosure of certain economic development incentive data.  A joint legislative committee would be created to meet at least twice a year to study economic development incentives

Although it was not voted out of committee, the bill remains alive since it is in a committee which is exempt from legislative deadlines.

Representative Kristey Williams (R-Augusta) testified in support of the bill, saying it’s about transparency.  An internet portal would be created where people could access incentive data.  She said the bill would help lawmakers make better informed decisions on incentives and how to get the greatest return on investments.

 

Expensing bill passes Senate 31-8  

The bill that expands the expensing economic development incentive passed the Kansas Senate by a vote of 31 to 8 on Thursday.  Senate Bill 303 would allow certain individual income taxpayers to claim the expensing deduction now only available to C Corporations.

The tax incentive would be to reward businesses for the costs of placing certain tangible property (mainly machinery and equipment) and computer software into service in Kansas.

 

HPIP changes referred back to committee

A bill making changes how businesses use High Performance Incentive Program tax credits has been returned to the Senate Commerce Committee.  It had been on the Senate Calendar under General Orders for debate after passing out of the Commerce Committee earlier this week.

For many years, lawmakers and others have complained the program’s structure made it impossible to predict when the tax credits would be used, which could have a substantial impact on money available in the state general fund for state operations like education.

It’s unclear whether the bill (SB 334) will remain alive this session.

Meanwhile, Senate Bill 430 was introduced on Wednesday.  It extends the HPIP tax credit carry forward from 16 to 25 years.

 

Broadband issue is aired on House floor

A bill on the issue of providing broadband to rural areas of Kansas passed the Kansas House 117 to 0 on Thursday.

HB 2701 creates the Statewide Broadband Expansion Task Force.

Its mission is to collaboratively evaluate the broadband needs of Kansas citizens, business, industries, institutions, and organizations.

It is also tasked with indentifying opportunities and potential funding sources to:

  • Expand broadband infrastructure and increase statewide access to broadband services
  • Remove barriers that might hinder deployment of broadband infrastructure or access to services
  • Enable the creation and deployment of new advanced communications technologies
  • Prioritize the expansion of broadband to unserved areas of the state first and then to underserved areas

The bill requires the Task Force to submit a report to the 2019 Legislature on its work and recommendations.

 

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.

KEPC UPDATE: Halfway point, $137.7m from fed tax changes, Medicaid, incentives, HPIP, expensing, new money for schools, ed study author, bill tracking

In this issue …

  • Halfway point of session is next week
  • Changes in federal law equal $137.7 million for Kansas
  • Medicaid expansion proponents try again
  • Hearing scheduled on bill that requires transparency on incentives
  • HPIP changes voted out of committee
  • Expansion of expensing incentive moves forward
  • How school districts would use new money
  • Education study author will brief legislators next week
  • BILL TRACKER

 

Halfway point of session is next week

The “turnaround” known for being the halfway point of the Kansas Legislative session comes at the end of next week.  That’s the deadline for most Senate bills to have passed the Senate and most House bills to have passed the House.

As a result, there are very few committee meetings next week, not many new bills are being introduced, and legislators will spend a lot of time on the House and Senate floors debating bills that have passed out of committee.

Legislators should be done Thursday night and would return on Wednesday, February 28.

 

Changes in federal law equal $137.7 million for Kansas

As I reported in a KEPC Bulletin earlier this week, a joint meeting of the House Taxation Committee and the Senate Assessment and Taxation Committee heard Wednesday afternoon that the state may roughly pick up $137.7 million more than expected in FY 2019 due to the federal tax bill passed in December.

The estimate came from Kathleen Smith of the Kansas Revenue Department’s Office of Policy and Research.

The report estimates that $84.4 million comes from individual income tax provisions as the result of

  • increased limitations for certain charitable deductions
  • limitation on the deduction for state and local taxes
  • limitation on deduction for qualified residence interest

$53.4 million is the estimated effect from business provisions in the new federal tax law, the biggest amount coming from provisions involving foreign owned corporations including:

  • Deductions for foreign-source portion of dividends received by domestic corporations from specified 10-percent owned foreign-owned corporations
  • Special rules relating to sales or transfers involving specified 10-percent owned foreign corporations
  • Treatment of deferred foreign income upon transition to participation exemption system of taxation

The estimated total Kansas increase for FY 2020 is $179.9 million and for FY 2021 is $187.7 million.

Smith said the Revenue Department is still studying the impacts of the federal tax legislation and the report to the committees is by no means complete.  Revenue Department Economist Michael Austin echoed those remarks, calling the figures a “rough guess” that does not take into account how taxpayer behavior may change in a way that changes the numbers.

The question is now whether legislators will let this stand or attempt to change state tax law in an attempt to return the “windfall” to taxpayers.

Several months ago, the Kansas Economic Progress Council speculated that the federal tax changes could have an impact on state revenues, based on the experience of Kansas in the late 1980s when federal tax law changed, resulting in hundreds of millions of additional dollars being collected by the state.

 

Medicaid expansion proponents try again

Medicaid expansion in Kansas passed the Kansas Legislature last year, but was vetoed by then-Governor Sam Brownback.  Despite opposition from now-Governor Jeff Colyer, proponents are trying again in 2018.

A standing-room-only bill had a hearing Wednesday at the Statehouse.  It expands Medicaid eligibility to households with incomes below 138 percent of the federal poverty level.  That would be $35,218 for a family of three.

This bill is different from last year.  It requires able-bodied adults in Medicaid to work a minimum of 20 hours each week or be enrolled in a workforce training program.

Here’s a link to a story on the hearing from the Lawrence Journal-World.

 

Hearing is scheduled on bill that requires transparency on incentives

A Kansas House Committee has a hearing scheduled Monday on House Bill 2572 that creates a joint legislative committee on transparency on economic development incentives, including:

  • STAR Bonds
  • Income tax credits, including for rural opportunity zones (ROZ)
  • PEAK
  • The job creation fund
  • Property tax exemptions

The ten-member committee would advise on what information should and should not be available.  Five members would come from the House and five from the Senate.

 

HPIP changes voted out of committee

The Kansas Senate Commerce Committee has voted out a bill that makes changes to the High Performance Incentive Program (HPIP).  It changes how long tax credits under the program are available, including tax credits already earned by businesses.

Current law provides HPIP certified companies a ten percent income tax credit for eligible capital investments that exceed $50,000 in most places, but $51 million in metropolitan areas.

Those can be carried forward for 16 years.

Senate Bill 334 extends the timeframe beginning in tax year 2018.  75 percent of the HPIP tax credits that are unused at the end of the 16th year could be carried forward until used by the company.  After the 16th year, the company could only claim up to 25 percent of the unused HPIP credits in any one tax year.

The bill might be debated next week in the Kansas Senate.

 

Expansion of expensing incentive moves forward

In 2011, one of Governor Sam Brownback’s big economic development pushes was the expensing deduction for the costs of placing certain tangible property and computer software into service in Kansas.

To help pay for the 2012 income tax cuts, that incentive was eliminated for all businesses except C Corporations and those that pay the financial institution privilege tax, which did not get an income tax cut.

Senate Bill 303 restores the incentive for all businesses.  The bill passed out of the Senate Commerce Committee this week.

 

How school districts would use new money

There was more information given to a legislative committee this week on how Kansas school districts would use new money if they had it.  A survey asked, “what would you do if you had $200 million a year for three years in a row?”  That’s not for each school district, but a statewide number.

Dale Dennis with the Department of Education outlined what districts said:

  • There would be about a $285 increase each year in base aid
  • Teacher salaries would average 3.85 percent increase each year
  • Statewide, a total of 150 psychologists, social workers, and counselors would be hired (Districts added 126 statewide last year)
  • Work at closing the at-risk achievement gap
  • Lower class sizes (mostly in larger districts)
  • Provide health insurance premium assistance for employees
  • Increase pay for non-licenses employees so they are not lost to the private sector

 

Education study author will brief legislators next week

Even though the Kansas Legislature will not be meeting next Friday due to the five-day “turnaround,” some lawmakers will be meeting on education issues.  They will be hearing from Professor Dr. Lori L. Taylor of Texas A&M, who has been hired to conduct a cost study of K-12 education in Kansas.

Taylor is to provide the legislature with information on how much it will cost to satisfy the Kansas Supreme Court, which has ruled the current school funding formula unconstitutional.  Taylor’s report won’t be available until March 15.

Taylor will speak to a meeting of the Senate Select Committee on Education Finance.

 

Bill tracking

Here’s our latest bill tracking on measures we think are of interest to our readers.  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.

KEPC UPDATE: Session picks up speed, eco devo, transportation task force, rural jobs, rainy day funds threatened, bill tracking

In this issue …

  • Legislative activity picking up speed
  • Economic development hashed out in committees
  • Transportation task force passes Senate
  • Ad astra rural jobs act has hearing
  • Rainy day funds thrashed out once again
  • BILL TRACKING

 

Legislative activity picking up speed

The pace is starting to pick up in Topeka at the Statehouse.  Doctor Jeff Colyer began his term as the new Governor of Kansas, but gave little indication he had any new ideas on how to fund schools to meet the Kansas Supreme Court’s order to fix constitutional problems with the formula.

The budget committees of the legislature are beginning to go though budgets agency by agency and building the framework for a budget.  However, their work may be altered later in an effort to find money for schools.

Friday was the deadline for bill introductions in most committees.  That resulted in a flood of last-minute bills being introduced.

We are now within two weeks of the “turnaround,” considered the halfway point of the legislative session.  Lawmakers will be gone from February 23 through February 27th before returning.  The significance of the turnaround is that most legislation must be passed out of the originating house or it is considered dead for the year.

About three weeks after that, the long-awaited school finance study should be available, telling legislators how much they must raise to satisfy the Kansas Supreme Court.  It’s then that the real work begins.

The other activity of interest that is probably being overlooked by most lawmakers and observers is a joint hearing next Wednesday by the tax committees on the impact of federal tax reform.  The federal changes could affect revenue collected by Kansas in either a positive or negative way.  Kathleen Smith of the Revenue Department and Jay Langley of the Kansas Society of Certified Public Accountants will testify.

 

Economic development hashed out in committees

A couple of legislative committees spent considerable time this week discussing the state’s economic development programs and whether they were working.

In House Appropriations on Wednesday,  Interim Commerce Secretary Bob North said his agency completed 108 projects in 2017, creating 11,291 jobs and retaining 4,444.

Representative Henry Helgerson (D-Wichita) questioned some of the STAR Bonds projects.

“Some of these projects look great but some look marginal,” Helgerson said, “especially when you look at pure economic development.  Seems like with Heartland Park and others; the state jumps in, there is lots of talk about the beef but there is no beef.”

Testifying on behalf of the Kansas Economic Development Alliance, Andrew Nave of the Greater Wichita Partnership said budget cuts over the last decade have been making an impact on local efforts to work with the Commerce Department on economic development projects.  He said attractions are down, leads are down the same percentage as the budget, and project completions are down as well.

Nave said there needs to be a strategic economic development plan, the state needs to reinstate the sales tax project exemption legislation, and workforce development is an issue.

Appropriations Chairman Troy Waymaster (R-Bunker Hill) expressed concern about the disappearance of Main Street organizations that focused on making downtown areas more inviting, giving out loans to businesses for improvements.

Nave agreed, saying when state funding for the Main Street program was eliminated, many local groups went away.

Representative Helgerson commented that he’s seen good analysis and development go away when the Kansas Department of Commerce budget gets cut.  Nave said a Texas A & M Study referenced that very situation.  He said, “We have to have a strong state agency to drive the message and relationships.

Meanwhile, the Senate Commerce Committee also reviewed economic development programs and seemed favorable toward extending the HPIP program (High Performance Incentive) past is current 16 year limit.  They discussed having beneficiaries giving up 25 percent of their tax credits after the 16th year (if not claimed) and only being able to claim 25 percent of the remaining credit in any given year.

For several years, lawmakers have been concerned about tax credits from HPIP being carried over and having an impact on the state general fund all at once.

This discussion occurred as the committee talked about Senate Bill 334, which extends the time that taxpayers may carry forward the tax credits, but with the 25 percent “haircuts” included.

Patrick Fucik of Sprint supported the legislation, as did John Idoux of CenturyLink (the second largest landline telecom in the U.S.), and Eric Stafford of the Kansas Chamber of Commerce.

 

Transportation task force passes Senate

By a vote of 33 to 5, a bill setting up a task force to begin the process of putting together the next transportation program for Kansas passed the state senate Thursday.

The task force would be required to submit its report to the Kansas Legislature by January 31 of 2019.

Here’s a link to the Legislative Research summary of what is in the bill.

Not included in this summary, but added on the Senate floor was the addition of the chief executive officer of the Kansas Turnpike Authority, or their designee.

 

Ad Astra rural jobs act has hearing

A holdover economic development bill from last year had a hearing in the Senate Commerce Committee this week.  House Bill 2168 had passed the Kansas House of Representatives last year on a vote of 97 to 22.

The bill authorizes nonrefundable tax credits for taxpayers who contribute capital to an “approved investment company” to fund a “rural business concern” in a “rural area.”

Those terms are defined in the bill.

Beginning in tax year 2020, 20 percent of the tax credit could be claimed annually over a five-year period.  The amount of tax credits claimed in any one fiscal year could not exceed $20 million, exclusive of the tax credit amounts carried forward.

The Senate Commerce Committee has taken no action on the bill.

 

Rainy Day Funds thrashed out once again

The subject of a Budget Stabilization Fund for state revenue emergencies (also known as Rainy Day Funds) was discussed again this year in the Senate Ways and Means Committee.  Many states have such a fund to get them by in times when revenues are down.

The committee heard a presentation from the Pew Charitable Trust on the subject.  

Stephen Bailey, Associate Manager for State Fiscal Health from the Pew organization, gave the presentation.  He said Pew’s work in other states found, “ It is often very difficult to require saving when revenues are down, but it is important for a Rainy Day Fund structure to be in place when revenues return to health.”

Bailey recommended tying any Rainy Day Fund to a stable funding source that contributes to the fund when revenue is growing at above average levels.

Kansas does have a so-called Rainy Day Fund but it has no criteria or rules.

In response to a question from Senator Laura Kelly (D-Topeka), Bailey said 12 states have the fund requirement in their constitution while three have it in both statute and the constitution.

 

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.

KEPC UPDATE: Gov. Colyer, revenue up in Jan, tax chair asks for help, STAR Bonds, transpo task force, rural broadband, labor market, oil & gas, county profiles available

In this issue …

  • Colyer sworn in as governor
  • Revenues up in January
  • Tax Chairman asks for help on how to proceed
  • Proposed changes to STAR Bonds
  • Changes made to transportation task force bill
  • Committee hears rural broadband presentation
  • Kansas labor market report
  • State of the Kansas oil and gas industry
  • Kansas county profiles now available
  • BILL TRACKING

 

Colyer sworn in as governor

Lieutenant Governor Jeff Colyer is now the Governor of Kansas.  Colyer was sworn in Wednesday afternoon on the first floor of the Statehouse.  He replaces Sam Brownback, who has been appointed an ambassador at large for international religious freedom by President Donald Trump.

There wasn’t much news coming out of the swearing in, but earlier in the week, Colyer, a physician, told reporters he favored expanding Medicaid in Kansas.

 

Revenues up in January

The State of Kansas collected $165 million more than expected in taxes in January.  Secretary of Revenue Sam Williams said the increase is the result of federal tax changes in 2017.

Williams said the federal tax changes encouraged taxpayers to pay state and local taxes before the end of 2017.  That’s because the new federal law does not allow those taxes to be deducted in 2018.

Kansas revenues are now $249 million above estimates for the fiscal year, or 6.7 percent.

 

Tax Chairman asks for help on how to proceed

At Tuesday’s meeting of the House Taxation Committee, Chairman Steve Johnson (R-Assaria) asked committee members for their thoughts on how to proceed this year in light of the Kansas Supreme Court decision on school finance.

“I would prefer to wait on revenue, but the court has another idea,” said Johnson, referring to the deadline imposed by the court on a solution.

“We need to have a plan in front of us and how we satisfy the courts,” Johnson said.  “The legislature does not want to shut schools, but how do we address this issue?”

Johnson said the committee may begin looking at the revenue problem next week.  “I would prefer to do nothing,” said Johnson, “but I’m afraid that may not be an option.”

 

Proposed changes to STAR Bonds

Members of the Senate Commerce Committee and others are looking at possible changes to the state’s STAR Bonds program (Sales Tax And Revenue).  Committee Chair Julia Lynn (R-Olathe) says she’s still working on a reform bill, but wants to get it right.  Lynn called the issue “complex and politically charged.”

Lynn’s comments came this week as Commerce Department official Bob North delivered the annual report on STAR Bonds to the committee.  North said there are eleven active projects and another five have been approved but bonds have not yet been issued.

Lynn gave some hints about what will be in the bill and the future of STAR Bonds:

  • Online shopping will affect the ability to do projects in the future.
  • The bill limits projects to within five miles of a competitor. For example, a Menards cannot compete with a Lowe’s.
  • No landscaping will be permitted using STAR Bonds.
  • The bill requires input from local tourism organizations.
  • The state investment must be the same as the local investment in a project.
  • Transparency will be a significant part of the legislation with requirements for significant information on each project.

 

Changes made to transportation task force bill

The Senate Ways and Means began working on the bill (SB 285) that creates a transportation task force to study a future transportation program.

The committee added these amendments to the bill:

  • Representatives are added from the Portland Cement Association, the Petroleum Marketers and Convenience Star Association, the Kansas Asphalt and Pavement Association and the International Association of Sheet Metal, Air, Rail and Transportation Workers.
  • Economic Lifelines would be required to appoint a rural and an urban member to the task force.
  • Other members added were an airport representative and someone to represent UAVs (Unmanned Aerial Vehicles).

Work on the bill is not completed and will continue at future meetings.

 

Committee hears rural broadband presentation

The House Agriculture Committee held an informational hearing this week on expansion of rural broadband service.

Josh Roe with the Kansas Department of Agriculture spoke about the importance of broadband in rural areas to economic development, allowing adoption of the latest cutting edge technology in areas that are currently underserved.

Roe said new ag technology often requires significant download and upload capability, adding that broadband access is required to attract a quality workforce and provide for a quality family experience for those employees and their families.

Agriculture groups and individuals spoke about the need for broadband, while technology companies discussed the high cost of providing service in rural areas.

Legislation has been introduced to establish a task force to some up with recommendations on the dilemma.

 

Kansas labor market report

The latest Kansas Labor Market Report for December of 2017 has been released.  The Kansas Department of Labor says total nonfarm employment grew 0.4 percent from December of 2016 to December of 2017.  That’s about 6,300 jobs.

Here’s a link to the part of the report that breaks out job growth by industry sector.

 

 State of the Kansas oil and gas industry

The House Appropriations Committee heard an update on the oil and gas industry in Kansas, a segment of the economy that is being blamed by many for the state’s economic growth problems.

The committee discussed an emerging problem facing the industry.

The Russian government provided a loan to Venezuela using that country’s Citgo assets as collateral.  Many believe that Venezuela will default on the loan and the Russian government could shut down ten percent of U.S. refining assets through its interest in Citgo.

Asked about the impact on Kansas, Edward Cross, President of the Kansas Independent Oil and Gas Association, said if Venezuela defaults on the loan, it could have a Katrina-like impact on the gasoline market, leading to a glut on the market.

 

Kansas County profiles now available

The latest Kansas County Profile Report is now available from the University of Kansas.

The report contains the most recent population, socio-economic and employment data.  Profiles are available for all 105 counties.  County reports can be generated for any county in Kansas by clicking on the county from the website.

Each report contains twelve categories of information: population, vital statistics and health, housing, education, social environment, business, employment, income, banking, government, crime, and agriculture.

 

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.