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Friday marked the last day for non-exempt committees (budget, tax, federal and state affairs) to meet and finish their work for the 2018 Legislative Session. Both the House and Senate are on the floor all this week debating legislation before Thursday’s drop-dead deadline, when all non-exempt bills must pass their second chamber. Conference committee negotiators will iron out House and Senate positions on various bills next week, with first adjournment on April 6.
Lawmakers had the week to learn more about the complex school finance study prepared by Texas A&M professor Dr. Lori Taylor, which calls for between $451 million to $2.1 billion in new K-12 spending to reach targeted levels of student achievement. The top outcomes include a 95 percent graduation rate (currently at 86 percent), 90 percent of students achieving at grade level (currently at 75 percent), and 60 percent college readiness (currently around 30 percent). The $2.1 billion would be more than 70 percent of the State General Fund, leaving the remainder for Medicaid, transportation, and all other state government programs and services. Even the lowest spending level would require a 15 percent across the board spending cut in all state agencies.
Both the House K-12 Budget Committee and Senate Select Committee on School Finance began working on separate school formula bills this week to address equity, local option budget and capital outlay provisions, and various weightings. No specific funding levels have been included yet.
Meanwhile, various business groups came together this week to form a coalition supporting a constitutional amendment to finally end the 50 years of school finance litigation in Kansas. Spokespersons for the Kansas Coalition for Fair Funding have stated that this level of appropriation to schools is unsustainable without significant tax increases on Kansas citizens and drastic cuts to other essential government services. While House and Senate leadership are supportive of a constitutional amendment to “suitable” education funding, getting a two-thirds majority will be difficult given the current composition of the Legislature.
The Senate Tax Committee passed a bill on Friday that would return back to Kansas taxpayers the nearly $135 million the state will receive as a result of the federal tax cuts passed in December. Senate Substitute for House Bill 2228 (new bill language not ready) awaits debate by the full Senate this week and does the following:
· Allow taxpayers to itemize their state return even if they take the standard deduction on the federal level.
· Allows taxpayers 100 percent of allowable income tax deductions, including mortgage interest.
· Increases the individual income tax standard deduction for all tax filers by 25 percent.
· Allows expensing of investment in machinery and equipment and amended returns for tax year 2017 (SB 303)
· Changes Kansas tax forms to maintain conformity with federal treatment of repatriated corporate income.
The Senate Tax Committee also passed on Thursday Senate Bill 444, which reduces the sales tax on food from 6.5 percent to 4 percent in FY 2019 and down to 2 percent in FY 2020.
More bill action last week…
The House Agriculture Committee passed Senate Bill 263 on Tuesday, which establishes the Alternative Crop Research Act and allows the Kansas Department of Agriculture, alone or in conjunction with a state higher education institution, to research, grow and cultivate industrial hemp. Before passage, the committee amended the bill to allow any county – as determined by the Department – to participate in the research and development pilot projects. SB 263 now awaits consideration by the full House.
The House passed House Bill 2526, 96-26, on Friday. The bill requires state agencies to perform a number of steps before proposing a rule or regulation to the Legislature. Modeled largely after Wisconsin’s REINS Act, agencies must research surrounding state’s approach, consult with the regulated entity, and obtain approval of their economic impact statement from the state budget director. Also, if the proposed regulation is estimated to cost more than $5 million over a two-year period on the business to implement and comply, then a public hearing is required. While the bill has only passed one Chamber and is not from an exempt committee, stakeholders are working with Senate leadership to get it included in a Commerce conference committee report.
The House tentatively passed Senate Bill 331 on Friday. The bill designates two new state parks, including the Flint Hills Trail that will be exempt from separation distances for swine confined animal feeding operations. Before passage, it was amended to clarify that the Kansas Department of Wildlife, Parks and Tourism must carry out the requirements outlined in state law as the responsible party after a transfer of a deed for land pursuant to federal law on railroad rights-of-way. The bill passed the Senate 24-14 before Turnaround. It awaits a final action vote in the House on Monday before heading to the Governor’s desk.
Scrap Metal Delay
The Senate Tax Committee passed Senate Bill 429 on Tuesday. The bill allows for a one-year extension to implement and fund through the Attorney General’s office the Scrap Metal Theft Reduction Act passed in 2015. It was originally placed on the Consent Calendar and withdrawn on Friday. It now awaits consideration by the full Senate.
The Senate Commerce Committee passed Senate Bill 430 on Tuesday, which will allow employers to carry forward any unused High-Performance Incentive Program (HPIP) tax credits for an additional nine years. They currently expire after 16 years. Before passage, the committee amended the bill to reduce the carry forward value from 75 percent to 50 percent and caps the amount of credits claimed in one year at 10 percent. It was also modified to only allow the carry forward extension on credits claimed prior to January 1, 2018. HPIP provides a 10 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. SB 430 now awaits consideration by the full Senate.
Enterprise Zone Program
The House Appropriations Committee heard on Wednesday House Bill 2767, which would reinstate the Enterprise Zone Program that provides income tax credits to businesses creating new jobs in Kansas through major capital investment projects. Prior to being replaced by the Rural Opportunity Zone program seven years ago, the program provided a sales tax exemption for construction materials and certain equipment. Proponents included several economic development organizations and had no opponents.
Broadband Task Force
The Senate Utilities Committee passed House Bill 2701 on Thursday, which would create the Broadband Expansion Plan Task Force to study and identify opportunities and potential funding sources to expand broadband infrastructure and services in Kansas. A report would be due to the Legislature in January 2019. Before passage, the committee amended the bill to give the task force an additional year before a final report is due back to the Legislature. It was also modified to add additional members from various industry sectors and directs the task force to look at price caps for broadband service providers. The bill now awaits consideration by the full Senate.
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