Kansas Legislature Update – Week 13

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The Kansas Legislature adjourned just after midnight Sunday morning, but not before some baffling twists, turns and political maneuvering. First adjournment was originally scheduled for Friday, but lawmakers continued their work into Saturday before finally passing the new school funding plan that was key to ending the session. A resolution also passed last night marking April 26 as the first day of the Veto Session, and May 4 as Sine Die – the official, ceremonial closing of the 2018 Legislative Session.

School Finance

The Legislature passed Substitute for Senate Bill 423 early Sunday morning, which spends an additional $525 million on K-12 education over the next five years. The Kansas Supreme Court has ruled the current school finance formula unconstitutional and gave lawmakers until April 30 to produce a new bill that adequately funds schools. While the court has never declared a specific dollar amount in their Gannon vs. Kansas decisions, study estimates ranged anywhere from $450 million to $2 billion. The Attorney General on Friday strongly urged Legislators to pass the bill before leaving on spring break to give the state’s attorneys time to review and build their arguments before the hearings begin.

Earlier in the week, both Chambers passed individual K-12 finance plans. While there were dozens of technical differences in the formulas, the largest contention surrounded funding levels. The House’s version spent $525 million, while the Senate’s only spent $275 million. House and Senate negotiators spent most of Friday in conference committee, but little progress was made toward an agreement. Then in a procedural move on Saturday morning, the House placed their plan in a Senate bill and sent it over to the higher Chamber allowing for debate, but no amendments. Frustrated Senate conservatives tried to wait out the clock when the 90 calendar-day session ended at midnight, essentially killing the school finance bill and every other piece of legislation this year. Tensions heightened even more when dozens of red-shirted KNEA teachers arrived at the Statehouse yesterday to watch the proceedings. The Senate eventually passed the House’s plan 21-19, and Governor Colyer has promised to sign the bill.

While some legislators don’t believe the measure appropriates enough money to meet constitutional muster by the Court, others continue to argue that the state can’t afford any more money toward schools while still meeting the needs of other core government functions. Those lawmakers are supporting the Kansas Coalition for Fair Funding’s constitutional amendment, House Concurrent Resolution 5029, which passed the House Judiciary Committee by a narrow vote of 12-10 on Wednesday night. As previously reported, the measure would allow for an amendment to article six of the Kansas Constitution regarding K-12 school funding. It would remove the jurisdiction of the Kansas Supreme Court over whether the legislature has made “suitable financial provision for public education,” while retaining jurisdiction over the issue of equitable distribution of funds, as a due process issue. A 2/3 majority of both legislative chambers is necessary before the question can be placed on the next state-wide election ballot. It’s uncertain whether the HCR will see any more action during the Veto Session.

Taxes

After five hours of debate on Saturday, the Senate passed a tax cut package, Senate Substitute for House Bill 2228, which gives $135 million back to Kansas taxpayers. The money is expected to come to the Kansas treasury as a result of last December’s federal income tax cuts. The bill includes the following provisions:

· 25 percent increase in the standard deduction.

· Decoupling to allow Kansans to itemize on their state returns, even if they claim standard deductions on the federal level.

· Allows 100 percent deductions for mortgage interest, medical expenses, charitable contributions, and property taxes.

· Reinstates an expensing deduction for small businesses prior to 2012, retroactive to tax year 2017.

· Captures 20 percent of repatriated foreign income at the current 7 percent state corporate income tax rate, retroactive to tax year 2017.

Late Friday night, the Senate Tax Committee heard and passed Senate Substitute for House Bill 2380, which would establish the Property Tax Review Study Commission. The 19-person commission would be charged with conducting a comprehensive review and analysis of the Kansas property tax structure and, by January 15, 2020, making an initial report to the Legislature with any and all recommendations necessary to ensure such structure is capable of meeting the long-term needs of the people in a fair and responsive manner. By February 1, 2021, the Commission would make a final report to the Legislature.

Budget

March tax-only revenues were up $43.4 million for the month, putting the state $313.7 million above estimates for the fiscal year. While the Senate has already passed their FY18-19 budget bill, Senate Substitute for Senate Bill 269, the House has not yet debated theirs, House Bill 2468. One thing to note is that the House’s budget includes as revenue the $135 million windfall expected as a result of last year’s federal income tax cuts. The Senate passed a bill that gives that money back to the taxpayers.

The House Appropriations and Senate Ways and Means Committees have scheduled joint meetings on April 25 to review the adjusted consensus revenue estimates to be released on April 20 and begin discussions on the “omnibus” budget bill. We expect this to be the central item of business conducted during the Veto Session.

Bill Action Last Week

REINS Act

The Senate Federal and State Affairs Committee heard and passed House Bill 2526 on Tuesday, which 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 $3 million over a two-year period on the business to implement and comply, then a public hearing is required. Staff has been working with legislators to ensure this bill is included in a committee report during the Veto Session.

Noxious Weeds

: The Senate adopted the conference committee report on House Bill 2583 on Saturday, which gives authority to the Secretary of Agriculture – with input from an advisory committee on which the Kansas Agribusiness Retailers Association will have a seat – to designate a plant as noxious. It requires county weed directors to check a designated online database for nearby specialty crops prior to applying pesticides to control noxious weeds. The CCR now awaits adoption by the House before heading to the Governor’s desk.

Industrial Hemp:

The Senate concurred with the House’s amendments to Senate Bill 263 on Saturday, which enacts the “Alternative Crop Research Act” and allows the Kansas Department of Agriculture (KDA) to grow, cultivate and promote the research and development of industrial hemp in accordance with federal law. The bill would allow individuals to participate in the research program under the authority of the KDA. The bill now awaits the Governor’s signature into law.

Flint Hills Trail

The House adopted the conference committee report on Senate Bill 331, which designates the Flint Hills Trail as a state park. The bill establishes an advisory committee to study and assess the development, staffing, maintenance and promotion of the state park, and include members who own land along the nature trail. 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. As the Flint Hills Trail covers six counties, it is exempt from separation distances for swine confined animal feeding operations. The CCR now awaits adoption by the Senate before heading to the Governor’s desk.

HPIP Extension

Senate Bill 430 was heard in the House Tax Committee on Wednesday. The bill allows companies to carry forward unused High-Performance Incentive Program tax credits at 50 percent value after the 16th year, expiring completely after 25 years. The bill also caps the annual amount that can be claimed at 10 percent of the reduced amount, as well as limits the extension to credits claimed prior to January 1, 2018. The bill has not yet been worked in committee, but it passed the Senate 40-0 and can be included in a conference committee report during the Veto Session.

Broadband Task Force

: Both the House and Senate adopted the conference committee report on House Bill 2701 on Saturday, which establishes the Statewide Broadband Expansion Planning Task Force to study the expansion of broadband infrastructure across Kansas. Final recommendations are due to the Legislature by January 15, 2020. The bill now awaits the Governor’s signature into law.

CDL Renewal

: Both the House and Senate adopted the conference committee report on House Bill 2606 last week, which includes a provision to extend from four years to five years the period of time before expiration of a commercial driver’s license. The bill now awaits the Governor’s signature into law.

Here is a link to all of the bills being tracked on your behalf. You can read a brief summary, history, upcoming actions, and the actual text of the bill. If you have any problems using the Bill Tracker, please contact Shahira Stafford at shahira@kansasag.org.