Veto Session Begins with Little Action
The Kansas Legislature returned to Topeka on Wednesday May 8 to finish work on the 2013 legislative session. It was a relatively slow three days with no heavy lifting to commence this week. Statutorily, the Kansas legislature only has to pass a budget before they can adjourn. However, the House and Senate are at odds on tax reform differences. Because of this log jam, the joint House/Senate budget conference committee has not met since April 5th and may extend the session for several days or possibly weeks.
Budget Negotiations Stalled
The House and Senate failed to come to an agreement on the 2014 and 2015 fiscal year budgets in April. The budget conference committee has not met since the regular session, but the full House and Senate Budget committees have met and approved most of the Governor’s proposed amendments to the budget. They will be incorporated into the final budget. Recent revenue estimates show that Kansas receipts are less than anticipated. Until a tax proposal is agreed to, we anticipate that there will be little progress made on a final budget agreement.
Tax Negotiators Not Talking
The House and Senate ceased negotiating their very different tax proposals and have not met since April 5th. The House-approved tax bill Sub SB 83, has provisions that, starting in 2015, whenever the annual tax proceeds grow more than 2% over the previous year, personal income tax rates would be cut a corresponding proportional amount, with the lower bracket cut more than the upper bracket. The bill ratchets down all income deductions as income rates lower proportionally starting with a 24% "haircut" in 2013. The sales tax rate would be reduced 6.3% to 5.7%. The Senate-approved tax bill HB 2059, freezes the current sales and use tax rate at 6.3%. The bill also ratchets down many income tax deductions by 24% and calls for a decrease in individual income tax rates. The big sticking point to an agreement depends on whether or not the sales tax increase is allowed to expire (which brings in an estimated $262 million in revenue). This issue is what has brought the legislature to a standstill.
Kansas Restraint of Trade Bill Signed by Governor
The Governor signed into law SB 124, amending the Kansas Restraint of Trade Act (KRTA) to specifically require the Court to weigh alleged violations of the act against a reasonableness standard, following the approach taken by the majority of states and under federal law. The law states that an arrangement, contract, agreement, trust, understanding, or combination shall not be deemed unlawful, void, prohibited, or wrongful under any provision of the act if it is a reasonable restraint of trade or commerce in view of all of the facts and circumstances and does not contravene public welfare. The law also directs the courts to construe the act in harmony with ruling judicial interpretations of federal antitrust law by the United States Supreme Court, however, the Kansas law is controlling over federal law in any conflicting issue. The law removes full consideration damages as an eligible remedy, bringing Kansas in line with the vast majority of other states’ antitrust remedy provision. The law also retroactively ratifies all existing contracts. The law came into effective upon publication in the Kansas register.
Ag Nuisance Bill Signed by Governor
The Governor signed into law SB 168 , a bill amending the agriculture nuisance laws. The bill amends the definition of the term “agricultural activity” to include the handling, storage, and transportation of agricultural commodities. It goes into effect July 1, 2013.
NBAF Bonding Increase Sought
The Senate Ways and Means Committee approved SB 245, a bill that would authorize the issuance of an additional $202 million in revenue bonds for a total of $307 million for the purpose of supporting capital improvement projects related to the National Bio and Agro Defense Facility (NBAF). The bill expands authority in existing law to expend bond proceeds for facility construction and improvements. The increased bonding is needed to help ensure to the federal government that the state is on board with seeing that the facility is properly constructed to defend against threats natural or manmade. The bill now goes to the Senate for consideration. The House Appropriations Committee approved similar language in a Governor’s budget amendment.