Updates and Alerts
STATE LEGISLATIVE UPDATE: WEEK NINE
Last Friday put Week 9 of the legislative session in the books, and with the next legislative deadline in less than two weeks – when bills and issues still under consideration will again narrow — and first adjournment in just three weeks, the pace and intensity continues to ramp up!
Last week the Senate voted (24-16) to agree to changes made by the House to legislation addressing tax policy (see how senators voted on the motion to concur in those changes here). The bill now goes directly to Governor Kelly, who is expected to veto it. It would take 84 votes in the House and 27 votes in the Senate to override her veto – which appears would be challenging – or it’s possible proponents of taking action on tax policy could choose to introduce a new measure and try to negotiate modified provisions. Read more about the House and Senate versions of the bill here.
As the bill originally passed the Senate, the legislation revised state tax laws in response to December 2017 federal tax law changes. Because it has been estimated those federal tax law changes will result in a significant but inadvertent increase in some Kansas individual and corporate income tax liability, supporters argue state tax laws should be revised to avoid what would amount to a major unintended tax increase on individuals and corporations that would hurt the state’s competitiveness. Opponents argue revising state tax laws to avoid the unplanned windfall would amount to a tax cut giving up revenues that the state could really use right now for prisons, foster care, transportation, education, and more. Key provisions include how corporate foreign income should be classified and taxed, a question arising among many states (not only Kansas) as a direct result of brand new federal tax code substantially changing the treatment of foreign earnings and investment; whether the state should benefit from newly-taxable federal income related to now disallowed federal deductions for business interest, capital contributions, and FDIC premiums paid by financial institutions, part of broadening the federal tax base to reduce federal tax rates; and whether individual filers – where all non-corporate business entities pay their income taxes – should be able to elect to itemize deductions on their state tax returns if they opt to take a now much more generous federal standard deduction on their federal returns, a choice that they don’t currently have. The Senate previously approved its original version of the measure by a vote of (26-14) — see how senators voted here.
The House then added provisions reducing state sales tax on food by 1% (from 6.5% to 5.5%) starting Oct. 1, 2019, and creating a framework under which marketplace facilitators (like TripAdvisor or Etsy) and out-of-state online retailers with gross sales exceeding $100,000 must collect and remit state and local sales tax starting Oct. 1, 2019. The House voted (76-43) to approve its version of the measure — see how House members voted here.
Last week a House committee also looked at a separate bill enacting a food sales tax refund for certain low-income persons with disabilities, seniors, or with children living at home; it would be estimated to cost about $54 million. Read it here.
Last week a Senate committee held a hearing on a bill that would double the current $20,000 residential property tax exemption from the statewide school levy up to $40,000 of appraised valuation, which would have the practical impact of shifting additional property tax burden to commercial and other types of property. Read it here.
This week a House committee will hold a hearing on a bill that would require the repeal or suspension of an existing sales tax exemption prior to enactment of a new sales tax exemption. Read it here.
Last week House and Senate budget committees – by divided votes in each — stripped funding out of the Governor’s proposed state budget for the upcoming fiscal year to expand income-based eligibility for Medicaid health care coverage (the Senate redirected the funding to instead increase Medicaid reimbursement rates paid to health care providers that serve Medicaid patients). The issue of Medicaid expansion continues to simmer in the Capitol, with supporters saying the issue has enough votes to pass in both the House and the Senate but is being blocked from debate by a few Republican leaders. Medicaid provides health care coverage for low-income and disabled Kansans (the elderly are covered by Medicare and low-income children are covered by a separate program called State Children’s Health Insurance Program (SCHIP)). The proposed expansion of Medicaid would be mostly underwritten by federal funding (currently a 90/10 split) and extend health care coverage to an estimated 150,000 additional Kansans. Opponents to expansion say the state can’t afford it, now or later, especially if the federal government reduces its funding level, and it would be morally wrong to expand eligibility while the state still has waiting lists for services for disabled Kansans. Proponents of expansion say uncovered Kansans cost the system even more, that it’s contributing to the decline of rural health care, and that it is morally wrong not to expand eligibility to what are mostly working poor adults who fall in an earnings gap whereby they earn too much for Medicaid and too little for ACA subsidies.
Last week a House committee amended and advanced to the full House for consideration a bill that would authorize Association Health Plans, likely this week – AHPs are a health care alternative by which small businesses can aggregate to better spread risk and increase negotiating leverage to help reduce health care coverage costs (note: this is not the more controversial Kansas Farm Bureau bill being discussed in the media). Read about it here.
The clock is ticking on the deadline to present the Kansas Supreme Court with a revised K-12 education funding plan – the next set of opening briefs are to be submitted to the Court by April 15, and the Kansas Attorney General has indicated his office will need time to prepare (he says the more substantive the plan’s changes, the more time they’ll need.)
Last week the Senate passed (32-8) a bill that includes the Governor’s proposal to add an inflationary factor to K-12 education funding for the upcoming two school years, including about $92 million in the upcoming year – a component the Supreme Court has indicated is necessary to make the funding formula constitutional. See how senators voted here, and read about the measure here. The bill now moves to the House, where a committee will hold a hearing on it this week. The $92 million inflationary figure included in the bill was calculated and proposed by the Governor, KS Dept of Ed, State Board of Ed, and is supported by the Kansas Ass’n of School Boards, but the school districts suing the state over education funding levels retracted their original support for the bill saying their own calculations show inflationary funding amounts should be much higher.
A House committee is also considering its own K-12 education funding response. Last week there was an informational briefing on the bill and the beginning of hearings that stretched into this week, followed by scheduled committee action on the measure. The measure reshuffles K-12 education funding and also includes new policy enactments (the Senate bill does not make policy changes), among the most controversial being a bullying-related voucher program. Opponents have criticized not only the provisions of the bill, but what they say is an intentionally rushed process whereby a complicated bill was introduced and hearings immediately begun, all during Spring Break when many people are out of town. Read the bill here, and read an explainer here.
Last week a Senate committee held three days of hearings on a bill – previously approved by the House (122-0) – that would require the nonpartisan Legislative Post Audit agency to conduct a systematic and comprehensive review and evaluation of each economic development program every three years and the Department of Commerce to maintain a publicly-available online database of economic development incentive information; the committee is scheduled to discuss and possibly take action on it this week. Read it here.
The same Senate committee will hold a confirmation hearing this Wednesday on Governor Kelly’s proposed Cabinet appointment of David Toland as Secretary for the KS Department of Commerce. The Kansas Economic Development Alliance and Team Kansas — both of which are statewide networks of economic development professionals – are expected to support the appointment.
Last week a House committee held a hearing and advanced to the full House for consideration a bill – previously approved by the Senate (40-0) – that would expand the tax credit for contributions to the Center for Entrepreneurship. Read about it here.
A Senate committee held a confirmation hearing this week on Governor Kelly’s proposed Cabinet appointment of Julie Lorenz as Secretary for the KS Department of Transportation and then recommended to the full Senate that she be confirmed. Her appointment now goes to the full Senate for a vote. Acting Secretary Lorenz is also a Lenexan and spoke last week to our Lenexa Economic Development Council.
Bills representing recommendations from last year’s Legislative Transportation Vision Task Force – charged with reviewing the state’s transportation system and funding as groundwork for a possible new statewide transportation plan – are being considered by lawmakers. Last week Senate committees held hearings on a bill that would increase registration fees for electric and hybrid vehicles to help offset their reduced motor fuels tax paid toward maintaining the transportation system (read it here), a bill that would create a transportation planning program (read it here), and a bill increasing permit fees for oversize or overweight vehicles (read it here). This week a Senate committee will hold a hearing on a bill that would create a local property tax lid exception for transportation construction projects (read it here).
Last week a House committee also held hearings on several transportation-related bills:
HB2370 — Providing for an increase in motor fuel taxes (read it here).
HB2381 — Providing for a $.06 increase in motor fuel taxes (read it here).
HB2367 — Authorizing transfers from the state general fund to the local ad valorem tax reduction fund and county and city revenue sharing fund if the city or county has a new road construction or bridge improvement plan and the plan is approved by the secretary of transportation (read it here).
HB2368 — Creating a local property tax lid exception for transportation construction projects (read about it here).
HB2371 — Providing for an increase in permit fees for oversize or overweight vehicles (read it here).
HB2372 — Providing for an increase in registration fees for electric and hybrid vehicles (read it here).
This week House committees will also hold hearings on the bill that would create a transportation planning program (read about it here) and the bill that would create a framework under which additional tolling could be considered (read about it here).
Last week a House committee spent two days discussing a subcommittee report on authorizing sports wagering in the state; the committee chairman said the issue may be debated in committee this week. A Senate committee may also look at the issue (read about that bill here). A key issue in the discussion seems to be who would manage sports wagering in Kansas, with both the Kansas Lottery and state-owned casinos interested in the opportunity.
Last week Senate and House committees both held hearings on bills that would provide for the legal use of medical cannabis or cannabidiol oil (read about the Senate bill here and the House bill here).
Last week the Senate passed (38-1) a bill that would authorize a study of retail electric rates in the state, with the two parts of the study – which will use an outside consultant to look at why Kansas electric rates are higher than surrounding states – being due in January and July of 2020; a House committee will now look at the measure next week. Read about it here.
Questions or feedback on these of other issues? Contact email@example.com.
ICYMI – LEGISLATORS MEET WITH CHAMBER COMMITTEE
On Friday, January 18, all seven Lenexa-area state legislators were guests of the Chamber’s Legislative Affairs Committee – there was good dialogue, good fun, and good food! Thanks to Kansas Sen. Dinah Sykes and Kansas Reps. Tom Cox, Charlotte Esau, Cindy Holscher, John Resman, Susan Ruiz, and Brandon Woodard for taking time to meet with business constituents. If YOU want to join other Chamber members in learning more about the issues and help lead the way on advocating for our community, contact Ashley Sherard at firstname.lastname@example.org.
THANKS TO OUR LEGISLATIVE AFFAIRS CHAIR!
Thank you 2018-2019 Legislative Affairs Chair Lisa Tomlinson of Bank of Blue Valley-Lenexa Branch – we appreciate your leadership! (Pictured with 2016-2017 Chair Josh Woolard of HNTB Corporation.)
JO CO CHAMBERS’ LEGISLATIVE BREAKFAST SERIES COMING UP!
Johnson County area chambers of commerce jointly host a series of Saturday morning breakfasts (from 7:30 – 9:00 am) to enhance communication and meaningful interaction between the business community and our state legislative delegation. For more information and registration details, click here (to register, Lenexa Chamber members should call 913-491-3600). A list of legislators currently scheduled to appear at each breakfast, subject to change without notice, will be announced soon.
GOVERNOR KELLY RELEASES PROPOSED STATE BUDGET
Governor Kelly has released her proposal to touch up the current fiscal-year state budget (FY2019) and for the upcoming fiscal year (FY2020). For the overview presented to lawmakers by State Budget Director Larry Campbell, click here. For the full budget documents, click here.
Questions? Contact Ashley Sherard at email@example.com.
CHAMBER BOARD APPROVES 2019 LEGISLATIVE AGENDA
The Board of Directors has approved a legislative platform to guide our advocacy in the upcoming 2019 legislative session, recently convened in Topeka. The platform addresses a spectrum of issues important to the business community including tax policy; key business costs and regulations; K-12 and higher education; transportation; economic development; and others.
For a summary of the platform, click here.
Questions or feedback?
Call Ashley Sherard, Vice President of Legislative Affairs at 913-888-1414 or email firstname.lastname@example.org.
GOVERNOR KELLY MAKES STATE OF THE STATE ADDRESS
Governor Laura Kelly presented her first State of the State address to a joint session of the Kansas House and Senate on January 16, 2019, where she laid out her broad vision for the state. Her priorities included schools, foster care and the state’s social services system, and Medicaid expansion.
For a transcript of the Governor’s speech, click here.
For the Republican response, click here.