KEPC UPDATE: Week Two

Week two of the 2019 session is a wrap. Here are the highlights.

House Rules
On Wednesday, by a vote of 104-15, the House approved a package of rules changes, primarily dealing with transparency and increasing from 63 to 70 the number of votes needed to bring a bill “above the line” with one day’s notice. The new transparency rules mirror changes made last year as a matter of policy.

Representative Victors brought an amendment to allow breastfeeding of infants on the house floor. The amendment was approved and included in the package.

Wagle Creates “Special” Tax Committee
Senate President Susan Wagle formed a special committee to study SB 22, the legislation returning the revenue windfall attributed to the change in the federal tax code. Wagle appointed herself Chairman, and the committee is made up of eight members of the Senate Committee on Assessment and Taxation, with one notable exception: Chair Sen. Caryn Tyson. Wagle has scheduled hearings on Tuesday, Wednesday and Thursday of next week, with an anticipated Thursday committee vote on the bill.

KPERS Re-amortization
The Governor’s plan to re-amortize KPERS to free up $145 million has drawn strong opposition from the KPERS Board as well as Senate and House leadership. In presentation to Ways and Means and Appropriations, Alan Conroy, Executive Director of KPERS, noted that extending the current amortization schedule keeps KPERS vulnerable to volatile market conditions for many years.

It’s worth noting that while it’s important to debate KPERS funding, the state of KPERS is generally secure. KPERS has $19 billion in assets, with approximately $1 billion in yearly contributions.

Governor’s Cabinet
Governor Kelly continues to fill out her top administration posts. Posts named to date include:
• Secretary of Administration: Duane Goosen
• Secretary of Agriculture: Mike Beam
• Secretary of Transportation: Julie Lorenz
• Sec of Commerce: David Toland
• Secretary of Corrections: Roger Werholtz
• Secretary of Children & Family and Aging: Laura Howard
• Adjutant General: Lee Tafanelli*
• Budget Director: Larry Campbell*
• Superintendent of Highway Patrol: Mark Bruce*
• State Fire Marshall: Doug Jorgenson*
*Tafanelli, Campbell, Bruce, and Jorgenson are held over from the previous administration

Medicaid Expansion Group
Governor Kelly has created a committee to provide input on expansion of KanCare. There is a short timeline for the committee to meet and provide input, as the governor has stated she wants to have a plan by the end of January. Members are:
• Tom Bell: Kansas Hospital Association
• Rep. Susan Concannon: state representative
• Denise Cyzman: Community Care Network of Kansas
• Cathy Harding: Wyandotte Health Foundation
• April Homan: Alliance for a Healthy Kansas
• Kyle Kessler: Association of Community Mental Health Centers
• Dr. Lee Norman: Kansas Department of Health and Environment
• John Russell: Kansas Medical Society
• Michael Stephens: Sunflower Health Plan
• Suzanne Wikle: Center for Law and Social Policy
• Rep. Kathy Wolfe Moore: state representative

Tax Foundation
This week, the DC-based Tax Foundation, was in Topeka to discuss tax policy and present a well-deserved award. The Tax Foundation is one of the nation’s leading independent tax policy nonprofits. Each year, they recognize state policymakers who take steps to reform taxes to make them more neutral, transparent, stable, and pro-growth. The 2018 Outstanding Achievement in State Tax Reform honored Representative Steve Johnson and Representative Tom Sawyer, Chair and Ranking Minority Member of the House Taxation Committee. In announcing the award, the Foundation praise them for “…deftly handling difficult negotiations on solutions for closing the state’s recurring budget shortfalls and secured the repeal of the state’s decidedly non-neutral pass-through exemption…Its repeal represented the best way for the state to address its revenue shortfall.”

In Committee: Senate Committee on Ways and Means
On Tuesday, the committee held a hearing on SB 9. This bill authorizes the transfer of $115 million from the state general fund to KPERS State/School Group employer contributions for FY 2019. In FY 2016, Governor Brownback ordered $97 million in allotment cuts when he signed the state budget. The $115 million represents the $97 million, plus interest.

House Committee on Appropriations
The Appropriations Committee this week held several informational meetings
• KPERS
• K-State overview of the federal Agricultural Improvement Act of 2018 (known as the farm bill), specifically how it relates to research and extension programming
• Transportation Task Force Update: the committee heard an overview of the task force’s work done the past year, protections in state law for transportation funding, meeting locations and topics, makeup of the task force membership, and information on delayed T-WORKS projects, both modernization and expansion projects. The estimated cost for the 21 delayed projects is $535 million in FY 2020. That number increases to $600 million if spread out over the next five years. The task force anticipates that it will submit its report to the legislature early next week. I will send out a notice with links to the report as soon as it is available.

House Committee on Taxation
On Tuesday, the Department of Revenue gave an informational briefing on internet sales.

Hearings were held on HB 2033 and HB 2040, providing sales tax authority for Dickinson, Finney, Jackson, Russell, and Thomas counties. HB 2040 (Finney County) was incorporated into HB 2033 and passed committee on voice vote.

On Thursday, the committee held an informational meeting on itemized deductions. The Kansas Association of Realtors and the Kansas Society of CPAs testified.

Under current Kansas law, Kansas income tax filers may only itemize deductions on state income tax filings if the itemize on their federal return. The recent changes in federal tax law doubles the federal standard deduction. Because of this, many Kansans will not benefit from itemized deductions as they have done in the past (charitable donations, mortgage interest, property taxes, medical).

House Committee on Commerce, Labor and Economic Development
On Tuesday, the Commerce Committee held an informational briefing on Workers Comp litigation and medical standards. On Wednesday, the Greater Kansas City Chamber of Commerce (GKC Chamber) presented to the committee an overview of their Workforce Development Initiative. The GKC Chamber has made education and workforce development a top objective. They report that the Kansas City area currently has an immediate need to fill 63,000 jobs with qualified skilled workers. Coupled with a 2.7% unemployment rate, the need to train skilled workers and get more people in the workforce is clear.

Markley Musings
Several people commented this week that the tone in the building seems different this year. Some of that is to be expected. This is the first time in eight years that legislative leadership and the Governor are not of the same party. But it seems a bit more than that. People have started retreating to their “corners”, something that tends to occur towards the end of session, not the beginning. We will have to wait and see if and how this affects the body’s ability to craft sound policy and work for the good of our state. As always, please feel free to contact me with any questions, comments, concerns. I can be reached at 913-709-5985 or patty@markleystrategies.com.