KEPC UPDATE: Prison system, shrinking economy, disappointing labor report

In this issue …

  • Lawmakers will look at prison system budget after disturbances
  • Kansas economy shrank 1st quarter
  • A disappointing June labor report


Lawmakers will look at prison system budget after disturbances

Several years of state budget cuts are having their consequences on state prisons, where recent disturbances are putting a spotlight on serious safety problems.

Low pay for employees, unfilled positions, and difficulty recruiting employees may be contributing to recent disturbances at both the El Dorado and Lansing correctional facilities.

The agenda for Thursday’s Legislative Budget Committee meeting in Topeka includes an update on corrections by Kansas Secretary of Corrections Joe Norwood.

Committee Chair Senator Carolyn McGinn (R-Sedgwick) told the Kansas City Star she’s concerned about double-bunking of inmates, long hours for guards, and lockdown problems.

“I’ve never seen anything like this,” McGinn told the Star.

Some of the reported problems:

  • Union representatives say some employees are required to work 16-hour shifts
  • On June 29 at El Dorado, some prisoners refused to return to their cell block. Visitation was cancelled for two cell houses
  • Union reps also report receiving information about disturbances up to two months prior to the June 29th incident
  • There have been reports of inmate stabbings. On July 28th at El Dorado, two prisoners were taken for medical treatment after squabbles with other inmates.  Reports quote Corrections Department spokesman Todd Fertig saying one inmate suffered several puncture wounds.
  • As of Monday, July 24, Lansing had 116 staff vacancies out of about 682 workers
  • Staff positions at El Dorado are believed to be about 20 percent vacant

Here’s a link to a Kansas City Star story on the problems.


Kansas economy shrank 1st quarter

A report by the U.S. Bureau of Economic Analysis says the Kansas economy shrank -0.7 percent during the first quarter of 2017.  This was at the same time the national economy was growing at a rate of 1.2 percent.

As has been the pattern since the 2012 Kansas income tax cuts (which were supposed to grow the economy) all of our surrounding states did better with the exception of Nebraska, where the economy shrank -4.0 percent.

  • Missouri grew 0.9 percent.
  • Colorado grew 0.4 percent.
  • Oklahoma grew 1.9 percent

Kansas was only one of seven states where Gross Domestic Product shrank from the previous quarter.

The Bureau says the worst decline was in agriculture.  Retail, utilities, finance and insurance, information services, professional services, business management, educational services, and arts and entertainment all shrank.

Oil and gas production, manufacturing, construction, wholesale trade, transportation and warehousing, real estate, administrative services, health care, accommodation and food services, and government services all grew.

Here’s a link to the BEA news release.


A disappointing June labor report

The Kansas Labor Department’s June labor market report contains more bad news.

Since June of 2016, the Kansas economy lost 4,000 seasonally adjusted total nonfarm jobs and 4,000 private sector jobs.

Here’s a link to the report, which contains detailed employment growth information by industry.

The July Labor Report will come out on August 18.


KEPC UPDATE: Cut spending? Prison problems? June revenue, T-WORKS, school finance, college costs and benefits

In this issue …

  • Cut spending? What about prison problems?
  • June revenue growth came largely from corporate taxes
  • T-WORKS Progress
  • Preparing for school finance arguments
  • What a degree costs and can get you


Cut spending?  What about prison problems?

The media spin from the Brownback Administration about the income tax bill has been to criticize the legislation and the veto override and to talk in general terms about the need for spending cuts.

In an op-ed in the Wichita Eagle July 2, Revenue Secretary Sam Williams talked about the need for “cuts and efficiencies.”

In the same editorial section, Americans For Prosperity’s Kansas State Director Jeff Glendenning criticized the tax increases and condemned “soaring government spending.”

There was something else both of these op-ed pieces had in common.  Neither mentioned specific suggestions for what to cut.  That seems to be a common theme among those who criticize the legislation: don’t be specific; be general.

There’s no mention of the state budget cuts that have already occurred over the past decade or their impact.

No mention that the T-WORKS transportation program has been reduced to basic preservation after billions in transfers.  This year’s budget authorizes $400 million in bonding over the next two years specifically to be used for preservation work on the state’s roads.  We’ve been reduced to borrowing just to fill the potholes.

No mention of the state employees who have gone without a raise for nearly a decade because of the cuts that have already taken place, but are finally getting an increase this year.

No mention of the years of tuition hikes for post-secondary education as state aid to Regents Institutions has decreased in real dollars, making it harder for young people and their families to afford a higher education.

No mention of the shortage of highway patrol officers in over 30 counties, resulting in many counties without coverage.

No mention of the systemic problems in our state mental hospitals, and that inadequate spending on security has resulting in federal Medicare funds being halted to Osawatomie State Hospital after the investigation into a 2015 sexual assault.  The cost to the state is a million dollars a month.

I found it particularly ironic that the two op-eds with their anti-spending rhetoric occurred in a week where the long period of state budget stagnation likely resulted in the disturbances at the El Dorado Correctional Facility that began June 29.  The situation was resolved later that day.

Reports indicate that some prisoners refused to return to their cells and reportedly took over sections of the prison.

According to the Associated Press: “The union has said for weeks that the prison is understaffed and its inmate population has increased by about 200 inmates over the past three months, to about 1,900.  The state has boosted its capacity by double-bunking some cells as it transferred inmates in, including from other prisons.

‘The pressure of having fewer staff, more inmates and double-bunking was a recipe for some type of occurrence like this,’ said state Rep. J.R. Claeys, the Republican chairman of a budget subcommittee on public safety.”

It had been announced earlier in the week that employees at the El Dorado facility would start working 12-hour shifts to cope with the staffing shortage.  That was to begin July 1.

So, where is the state supposed to cut and become more efficient and what’s your solution for our roads, our higher education, our state hospitals, our law enforcement, and our prisons?

Please be specific.


June revenue growth came largely from corporate taxes

June revenues for the state of Kansas came in $72 million over the estimates, according to the Kansas Department of Revenue.

The biggest increase came from corporate income taxes, which are notoriously hard to estimate.  It’s important to note that the 2012 Kansas income tax cuts did not impact corporate income taxes for business.  Those are paid by C corporations, as opposed to the 2012 tax break (repealed by the 2017 Legislature) for business pass-through entities.

Those C corporations made up the biggest piece of the increase, exceeding estimates by about $39 million.

Individual income tax collections (where business pass-through entities would be located) were up $22.8 million over estimates.  Sales tax receipts beat the estimates by $11.5 million for the month.


T-WORKS Progress

Where are we on transportation projects in Kansas after the 2017 legislative session?

Economic Lifelines, the statewide transportation coalition, put out a summary of what to expect.  Here’s our summary of what they said:

KDOT has begun the process of letting additional critical preservation projects based on the $400 million in additional bonding authority authorized by the 2017 Kansas Legislature (see the first story in this newsletter, above).

In January, KDOT planned to let only $43 million in preservation projects during FY 18, but will now spend about $320 million in both FY 18 and FY 19.

For FY 18, $115 million will be spent on “1R” projects.  Examples of these types of projects are overlays, seals, patching and surfacing work.  1R projects help to ensure the full useful life of roadways and protect the investments already made to the system.

$143 million will be spent on heavy preservation projects.  Examples of these projects are bridge replacements or sections where full reconstruction may be necessary.  Two of the main projects that will be programmed during FY 18 are:

  • I-70 in Wyandotte County at the Lewis & Clark Viaduct over the Kansas River in Kansas City Kansas
  • I-70 in Gove County from one miles west of K-23 to 4 miles east of K-211, which will be let in April of 2018. Other heavy preservation projects can be expected in Edwards, Allen, Sheridan, Hamilton, and Butler Counties during Fiscal Year 2018.

The rest of the funds will be programmed to yet-to-be determined 1R projects.

Because these projects are based on borrowing, the funds cannot be swept in to the state general fund by future legislatures.


Preparing for school finance arguments

Now that the Kansas Legislature has passed school finance legislation that replaces the block grants of the past two years, the Kansas Supreme Court has scheduled oral arguments in the school finance lawsuit for July 18.

There seems to be a consensus among legislators (including pro-education lawmakers who don’t think the state did enough) that the Court decision, whatever it is, will NOT require a special legislative session this summer or fall.  Instead, any changes would be allowed to take place by the 2018 Legislature.

In Court briefs filed on the lawsuit recently, the districts suing the state say what the legislature approved is about $1.5 billion short of what’s needed.  Their attorneys are asking the Court to order more money be provided by September 1.

Attorney General Derek Schmidt, representing the state, says the increase is sufficient under the state constitution to pay for a suitable education for every child.


What a degree costs and can get you

What does a higher education degree from a Kansas public institution cost?  How much can you expect to earn if you get one of these degrees?

The Kansas Board of Regents has updated that information here.

A 2016 Kansas law requires the Regents to make the information available as an online tool.  It reviews cost and earnings data from real graduates for each undergraduate degree program offered at a public university or college in Kansas.

Known as Kansas DegreeStats, the newly updated information has been expanded to include each degree offered at 26 public colleges in Kansas, along with employment data for graduates who work in both Kansas and Missouri.  That’s information on more than 1,100 undergraduate degrees.

Information includes reports on typical resident tuition, fees, room and board, and books and supplies.  There’s information on the typical length of time it takes students to complete each degree program, along with scholarships, grants, loans, etc.

The site allows side-by-side comparison of up to three degrees.

KEPC UPDATE: Supreme court hearing, tuition increases, lottery, budget, Osawatomie, nothing on property tax lid

In this issue …

  • Kansas Supreme Court to set school finance hearing schedule
  • Board of Regents approves tuition rate increases
  • Governor vetoes Lottery extension/vending machines
  • How the budget turned out
  • Feds don’t certify Osawatomie State Hospital
  • No action on property tax lid
  • Bill Tracking


Kansas Supreme Court to set school finance hearing schedule

Now that Governor Sam Brownback has signed SB 19, the new school finance formula bill, the Kansas Supreme Court has begun the process of reviewing the bill relative to its constitutionality.

A scheduling conference call will take place at 8:30 Monday morning to discuss deadlines and identify at least the major issues arising out of the signing of the bill.  Afterward Monday, the Court says it will issue a scheduling order.  It’s expected the Supreme Court will schedule a hearing on the constitutionality of the bill very quickly.

Kansas lawmakers will return June 26 for the formal Sine Die session when the books are officially closed on the session.  If Governor Brownback vetoes any bills, Sine Die will be the time when veto override votes take place.

A possible return could occur before then if the Kansas Supreme Court rules that the school finance actions taken by lawmakers are unconstitutional.  That could mean returning to session before the end of June to figure out how to make school funding constitutional and allow revenue to move to local school districts.


Board of Regents approves tuition rate increases

Once again, the Kansas Board of Regents has approved tuition increases for the six state universities for another academic year.  The majority of the increases range from 1.5% to 1.9% for undergraduate resident and non-resident students.

The exceptions are the University of Kansas Compact Rate (5.5% increase) and students attending the University of Kansas Medical Center (5.0%).  Students attending the Kansas State University College of Veterinary Medicine will have no rate increase.

Here’s a link to the 102-page Kansas Board of Regents document that provides detailed information on tuition at all of the state’s Regents Institutions.

Also, the Kansas News Service has put together an excellent report on the rising cost of higher education in Kansas that’s well worth reading to understand how dwindling state support over the years has resulted in higher tuitions.

Pay particular attention to the chart entitled, “The shifting cost of Kansas education.”  It really tells the story.

Here’s the link to the story.


Governor vetoes Lottery extension/vending machines

Governor Sam Brownback has vetoed a bill that extends the Kansas Lottery because it authorizes vending machine sales of Lottery products.

Brownback vetoed House Bill 2313, saying he objected to the measure because expansion of lottery ticket sales “will negatively impact our communities and our neighbors.  The Kansas Lottery has a disproportionately negative effect on low income Kansans.  Rather than investing limited resources in games of chance, our goal is to help low income Kansans find a path to self-reliance and independence through education, work, and savings.”

There appeared to be no advance warning that Brownback was going to veto the bill.

Kansas Lottery officials had lobbied legislators for many months to authorize vending machines.  They argued an additional $8 to $10 million in state revenue would be generated.  The bill dedicated that additional funding to community mental health services.

Current law sunsets the Kansas Lottery on July 1, 2022, so the Kansas Legislature has five years to renew it.  The Lottery provides funding for the Kansas Department of Commerce and most of the state’s economic development programs.


How the budget turned out

The two year budget passed by the legislature leaves the state with an estimated ending balance of $157 million (2.5%) in Fiscal Year 2018 and $209 million (3.3%) in Fiscal Year 2019.

Built into the budget is a pay raise for state employees after almost nine years of no raises for most.  Those with less than five years on the job will get a 2.5% raise, while those with over five years will receive a 5% increase.  There are some exceptions.  Statewide elected officials and legislators don’t get a raise.  In the courts, there’s 2.5% allowed for judges and non-judicial staff.

Also in the budget is a provision that allows the Kansas Department of Transportation to issue up to $400 million in bonds over the next two years.  The revenue raised must be used for road maintenance and repair.

The state water plan will receive $1.2 million after a long wait for additional funds.


Feds don’t recertify Osawatomie State Hospital

In a very disappointing decision for the Administration and many others, the Osawatomie State Hospital has not been recertified by the federal government.  That means it will continue to lose $1 million per month in federal funds.

The certification of the unit was revoked at the end of 2015 over safety issues, along with a lack of staff and problems having to do with patient care.  Many blamed state budget cuts.  The federal government said the facility was too unsafe to accept Medicare patients.

The latest inspection indicated there were improvements at the facility, but not enough for recertification.

Osawatomie State Hospital is a psychiatric hospital with 206 beds.  At one time, it was considered by many to be a strong leader in treatment of serious mental illnesses.  Federal officials started looking into safety at the hospital after a 2015 sexual assault.


No action on property tax lid

The legislature, caught up in the fervor of trying to pass an income tax override, school finance, and a budget, did not take action to loosen the local property tax lid.  The major hope was to exempt employee benefits from the lid.

Local government officials are now putting together their 2018 budgets.  Many are trying to figure out how to meet increased demand for public services under the tax lid’s restrictions.  Exceeding the lid is possible with an election, but most agree that the current law on how that would happen is unworkable.


Bill tracking

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

You should be able to click on the bill number and be taken to the Kansas Legislature’s web site page for that particular bill.  You will be able to see all actions taken, read the bill, and read any supplemental notes (layman’s descriptions) and fiscal notes (how much does the bill cost the state) that have been prepared.

KEPC UPDATE: School finance, debate held until staff can write agreement, house adjourned until 8a Monday

In this issue…
  • House and Senate negotiators have reached agreement on a school finance bill that is linked to a revenue-raising income tax/sales tax on services bill.
  • House leadership had hoped to debate the measure Sunday night, but legislative staff needed time to put the agreement into writing.  
  • The House of Representatives has adjourned until 8 a.m. Monday morning.
Here’s what’s in the tax portion as I understand it:
  • The tax plan is basically the conference committee report on HB 2067, which failed in the Kansas Senate on May 11 by a vote of 18 to 22.
  • There would be three-tiers of individual income tax rates: Under $30,000 (3%); $30,000 to $100,000 (5.6%); and over $100,000 (5.6%).
  • Sales tax would be added to certain services. These would include towing, detective, cleaning, pet care, and mini storage/self storage.
  • The bill would designate income tax to be transferred from the state general fund to school funding.
  • All tax revenue from the sales tax on the newly taxed services would go to school funding.
  • KPERS employer contributions would not come from the state general fund but from a special revenue fund.
  • A  tax “trailer bill” would be required to be passed, with both bills linked.  If one bill does not pass, the other does not go into effect.
  • The bill raises an estimated $514 million in FY 18; $548 million in FY 19; $554.2 million in FY 20; $559.8 million in FY21; and$564.4 million in FY 22.
  • The business pass through exemption is eliminated in tax year 2017 and beyond.
  • The “glide path to zero,” the trigger mechanism that reduces future income taxes, is eliminated.
After the House adjourned Sunday evening, the tax conference committee of negotiators met to discuss the tax trailer bill for the agreement.  The Senate asked for more time to study the House proposal, so the committee will meet again tomorrow.
Here’s the House offer that was discussed Sunday night on the tax trailer bill:
  • Itemized deductions would be phased back in beginning in tax year 2018 for medical expenses, mortgage interest paid, and state/local property taxes paid.  The phase in would be 50%, 75%, and 100%.
  • Dependent child care tax credit would be restored to pre-2012 levels over a three year period, beginning in tax year 2018.
  • STAR Bonds would get a three year extension with a one-year moratorium beginning July 1, 2017.
  • The Ad Astra Jobs Act (which has already passed) tax credit would begin in 2020.
  • An Aviation Tax Credit would be enacted.
The big question now is: are there enough votes?  Many Democrats have expressed disappointment with the agreement. 
In fact, Democrats on the education conference committee refused to sign the agreement, but it is going forward anyway.

KEPC UPDATE: Nothing new on income tax, school finance conference, gun bill to Gov

In this issue…
  • Nothing new on income tax
  • School finance goes to a conference committee
  • Gun bill sent to Governor
Here’s what’s going on at the veto session in Topeka as of Friday morning. The House and Senate are scheduled to go in at 10 a.m.
There is no debate scheduled in the House.  The Senate has two minor bills scheduled for debate on General Orders.
It’s possible lawmakers will be working this weekend, but nothing is certain yet.
Nothing new on income tax
There was no activity on income tax legislation Thursday, at least not in the open.
The conference committee of House and Senate negotiators met, but discussed other legislation, not the income tax issue.  They may be waiting to see what the legislature does with the school finance bill.
School finance goes to a conference committee
The Kansas Senate passed its version of school finance Wednesday by a vote of 23 to 16.  The bill went to the Kansas House of Representatives which asked for a conference committee to iron out differences between the House and Senate versions of the bill.
That conference committee met Thursday afternoon and plans to continue meeting today (Friday).
Gun bill sent to Governor
The major gun bill of the legislative session has passed and is headed to Governor Brownback’s desk.  It is uncertain whether he will sign the measure, House Bill 2278.
The bill would exempt certain institutions from a general requirement in current law that public buildings have adequate security measures in place before the concealed carry of handguns can be prohibited.
Those public buildings would be exempted:
  • State or municipal-owned medical care facilities and adult care homes
  • Community mental health centers
  • Indigent health care clinics
  • Any buildings located in the district associated with the KU Medical Center.
It passed the Senate 24 to 16 after a four hour debate.  The House agreed to the Senate version by a vote of 91 to 33. The bill was opposed by the Kansas State Rifle Association. 

KEPC UPDATE: Senate passes school finance, lottery compromise, gun debate, nothing new on tax bill

In this issue…
  • Senate passes school finance
  • Lottery compromise: extension for 15 years
  • Senate debates guns
  • Nothing new on tax bill
Senate passes school finance
The Kansas Senate passed its version of school finance Wednesday by a vote of 23 to 16.  The bill went to the Kansas House of Representatives which asked for a conference committee to iron out differences between the House and Senate versions of the bill.
The House has appointed its negotiators. The Senate negotiators have not been named as of this writing.
Lottery compromise: extension for 15 years
Without action by the Kansas Legislature, the Kansas Lottery’s legal authority to continue will lapse.  Legislation is in the works so that doesn’t happen.
A Federal and State Affairs conference committee has been working on the issue and has reached a compromise on differences between House and Senate Bills.  An earlier compromise was rejected by the House on Wednesday.
The new compromise is in House Bill 2313.  Here’s part of what’s in it:
  • The Lottery would not sunset again until the year 2037 (15 years from now)
  • The bill authorizes Lottery vending machines
  • Pull tab instant winner tickets could be dispensed in regular lottery dispensing machines
  • The Lottery will negotiate a shared fee to cover the cost of the machines with certain fraternal groups
  • The legislature’s staff is working with Lottery officials to draft the property language to make the compromise work
Senate debates guns
As of this writing, the Kansas Senate is debating House Bill 2278, which is the major gun bill of the session.
The bill would exempt certain institutions from a general requirement in current law that public buildings have adequate security measures in place before the concealed carry of handguns can be prohibited.
Those public buildings would be:
  • State or municipal-owned medical care facilities and adult care homes
  • Community mental health centers
  • Indigent health care clinics
  • Any buildings located in the district associated with the KU Medical Center.
Several amendments have been offered.
Nothing new on tax bill
As of this writing, we know nothing about what direction the House or Senate might be heading on raising revenue for the budget and school finance.  There’s not much new since earlier in the week when the House rejected a conference committee report that raised income taxes.  The Senate had passed the bill earlier.
A conference committee on taxes is scheduled to meet at 5 p.m., but may or may not talk about the income tax issue.
A hearing was held in the House Appropriations Committee on a plan (House Bill 2429) by a group of conservative legislators to balance the budget by changing the distribution of tax revenues from cigarette and tobacco products that would normally go to the Children’s Initiative Fund.
Bonds would be issued to fund the budget.  They would be paid off by diverting money from those tax revenues.
That’s seen as having very little chance of passage.

KEPC UPDATE: Kansas Legislature takes 4 day weekend

Afternoon Update: Kansas Legislature takes a four-day weekend
After passing a House version of school finance on a final vote this morning, the Kansas Legislature has adjourned for an unpaid four-day Memorial Day weekend.
The Kansas House passed House Bill 2410, the school finance rewrite, by a final vote of 84 to 39Here’s how the House members voted.
Many legislators supported the bill despite saying it is not adequately funded and that the Kansas Supreme Court may say so, resulting in a special session this summer.
The House did not take up a tax bill voted out of a conference committee by House/Senate negotiators.
The Senate version of school finance was voted out of a Senate committee this week.  It is House Bill 2187.  The language of the bill and a description of what’s in it was not available at the time of this writing.

KEPC UPDATE: House & senate advance school finance, income tax bill delayed

In this issue …
  • House advances school finance bill 81 to 40
  • Senate Committee passes its version of school finance
  • Income tax bill delayed; maybe Thursday debate
House advances school finance bill 81 to 40
The Kansas House of Representatives advanced a long-awaited school finance bill Wednesday after several hours of debate. 
By a vote of 81 to 40, House Bill 2410 was sent to a final vote, expected shortly after 10 a.m. Thursday morning.
The bill increases K-12 spending by $180 million next year and $100 million the year after.  The bill also puts more money into at-risk students in an attempt to satisfy the Kansas Supreme Court, which said that area needed more attention.
Several amendments were offered.  The most important was by Representative Ed Trimmer (D-Winfield) to add $200 million in extra money each year for three years.  Trimmer said he worried the bill did not contain enough funding to satisfy the Court.  The Trimmer Amendment failed 47 to 75.  Opponents said they feared they could not pass a big enough tax increase to pay for it.
Another amendment proposed by Representative William Sutton (R-Gardner) was one likely to be strongly opposed by economic developers across the state.  It would have allowed any taxing entity to have veto power over property tax abatements.  Democrats and Republicans opposed it, saying it would have a negative impact on economic development.  It failed on a voice vote.
Senate Committee passes its version of school finance
Meanwhile, most of the activity in the Kansas Senate also centered on school finance, but at the committee level.  The Senate Select Committee on Education Finance passed out its version of school finance.  It’s called the School Equity & Enhancement Act.
That measure was previously in Senate Bill 251, but it has been placed in House Bill 2187 for parliamentary procedure purposes.
The bill will NOT be debated Thursday.  It is not listed on the agenda for General Orders that has been published.
Income tax bill delayed; maybe Thursday debate
The income tax bill that was to be debated in the Kansas House of Representatives Wednesday was delayed and changed slightly.  It might be debated on Thursday.
The Tax Conference Committee met Wednesday morning and made some changes to what had been agreed to on Tuesday:
  • The one-year moratorium on STAR Bonds begins September 1.  There is no reference to bond issuance
  • A one percent drop in the sales tax on food has been added, to begin in 2020
  • When the sales tax starts being collected on the new services, there is no change on how the money is allocated to the highway fund.  The current formula continues
  • Instead of July 1, the sales tax on certain services begins October 1 to give businesses time to ramp up.  If services are provided through a pre-existing contract, the sales tax does not take effect until the contract expires (for example landscaping/lawn services)
  • The previous version of the bill included a sales tax on veterinary services for companion animals (pet dogs, cats, etc., as opposed to animals in agriculture).  There were no hearings on this concept, so it is no longer in the bill
  • The sales tax is added to custom computer software
  • The alcohol enforcement tax would start July 1, 2017
  • Tax credits for the Ad Astra economic development program added to the bill Tuesday have been cut in half
Most observers expect this conference committee report (Senate Bill 30) to be debated in the House sometime Thursday.  It is not given a high expectation of passage.  The bill still raises about $488 million in FY 2018 and $460 million in FY 2019.

KEPC UPDATE: School finance debate schedule, tax bill debate Wednesday

In this issue …
House schedules school finance debate
Another income tax bill debate Wednesday morning
House schedules school finance debate
Democrats and some Moderate Republicans have argued all legislative session that a new school finance formula should be debated BEFORE the legislature works on a tax increase bill.  That is one big reason a proposed income tax bill failed in the Kansas House of Representatives Tuesday night.
It now appears a school finance debate will happen in the Kansas House Wednesday.
House Majority Leader Don Hineman (R-Dighton) announced Tuesday that the House version of school finance, HB 2410, will be on general orders for debate Wednesday.  That debate will probably take place Wednesday afternoon after one.
The bill provides an additional $226.8 million in state general fund spending for schools in FY 2018 and an additional $370 million in FY 2019.  It’s unclear if that will be enough to satisfy the Kansas Supreme Court.
The House debate is expected to take several hours.  The bill will be subject to amendments that can change it before a final vote takes place.
Meanwhile, the Senate Select Committee on Education Finance continues to work on its bill and will continue on Wednesday.
Another income tax bill debate Wednesday morning
House and Senate tax negotiators have approved yet another income tax/revenue bill to try to balance the state budget.  The measure is expected to be debated Wednesday morning in the House of Representatives. The House goes in at nine in the morning.
The latest plan has been inserted into a conference committee report on Senate Bill 30.  That’s the same bill that was defeated Monday night, but it now has different contents.
It’s a combination of income tax, removal of sales tax exemptions, increases in liquor taxes and some items that do not raise money, but spend money.
Here’s what I understand is in the bill:
  • There would be two income tax brackets with rates of 3 percent and 5 percent
  • The “glide path to zero” trigger mechanism is eliminated
  • Business pass through income would be taxed
  • Medical deductions would be at 100 percent beginning in 2018
  • Several sales tax exemptions on services would be removed to raise money including:
    • Towing
    • Detective services
    • Security and patrol services
    • Security systems
    • Non-residential cleaning service
    • Pet care
    • Self storage
    • Personal care (tattoo, tanning, and piercing, etc.)
    • Expanded lawn services (landscaping, etc.)
    • Companion animal veterinary services
  • The Liquor enforcement tax would be increased by two cents
In addition, the extension of STAR Bonds would be included with the one-year moratorium proposed in HB 2184, except that projects with bonds authorized and issued by October 1 would be able to proceed.
The Ad Astra economic development program proposed in HB 2168 would be enacted with only half the proposed tax credits issued ($10 million per year for five years)
The aviation tax credit bill (HB 2036) would be included in the package.  That would cost the state an estimated $7.7 million the first year.
The bill would raise an estimated $488 million in FY 2018 and $460 million in FY 2019.  Many lawmakers will likely argue that is not enough.  Prospects for this bill are slim without support from Democrats unless 63 Republican votes can be found.

KEPC UPDATE: Income tax bill fails, education discussion continues

In this issue …
  • Income tax bill fails in House Monday night
  • Senate education discussion continues
Income tax bill fails in House Monday night
A conference committee report on an income tax increase failed to pass the Kansas House of Representatives Monday night by a vote of 53 to 68.  The measure, Senate Bill 30, was returned to the tax conference committee for more work and the Legislature will return at 10 a.m. Tuesday morning.
Democrats were split on the bill.
This bill was very similar to what the tax conference committee agreed to on May 2 for Senate Bill 30. 
Here’s what was in this version of the bill.
  • The business pass-through income exemption is repealed retroactive to January 1
  • The March to Zero trigger mechanism is repealed
  • Medical deductions are at 100 percent, beginning in 2018
  • The low income threshold is reduced from $12,500 to $5,000 for married filers and from $5,000 to $2,500 for single filers
  • The rates increase to 3.1 percent, 5.25 percent, and 5.7 percent.  These are retroactive for business pass through income to January 1, 2017.  A half-rate would be applied to individuals
  • The three brackets are below $30,000 married/ $15,000 single; Between $30,000 and $60,000 married/$15,000 and $30,000 single; and above $60,000 married/$30,000 single
  • The bill raised an estimated $591 million in FY 2018 and $626 million in FY 2019
The bill also includes a one year “pause” for using STAR Bonds, followed by a five year renewal of the program.  No new districts could be started until July 1, 2018.  STAR Bonds projects already in the works would be allowed to continue.
The conference committee had considered adding a three cent per gallon motor fuels tax increase but left it out because it was an appropriation and that would cause a technical problem with the bill.
The Senate negotiators also rejected a House proposal to include House Bill 2168, the Ad Astra Rural Jobs Program.
In the end, there were two basic camps for those who voted no.  They either oppose a tax increase or didn’t think the bill raised enough money.
In his closing remarks, House Taxation Committee Chair Steven Johnson (R-Assaria) said, “What is next?  I’m not entirely sure.”
Meanwhile on Monday morning, the Kansas House introduced HB 2428, a bill that repeals several sales tax exemptions.  We presume this might be similar to the bill that passed the House last week that put the sales tax on some services.
A quick reading of the bill indicates that, beginning in 2020, computer software and bingo cards will be subject to sales tax.  Based on new language on page 43, it appears several sections of current law will go away after June 30, 2020.  We presume that means a lot of exemptions go away.
We will have to wait to see how the bill is interpreted.
Senate education discussion continues
The Senate Select Committee on School Finance spent most its meeting Monday asking questions about SB 251 of legislative staff lawyers who write laws; and staff from the Department of Education.  The plan is to meet again Tuesday to begin working on amendments.
The scheduled meetings are from 9 a.m. to 10 a.m.; from first recess until noon; and from 1:30 p.m. until 3 p.m.