Capitol Review – Week 12

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Lawmakers spent most of last week debating bills on the floor, while non-exempt committees met intermittently as needed. Thursday was the last day for bills not “blessed” by the Speaker or Senate President to be considered in either chamber. The Legislature enjoyed a three-day Easter weekend and returns to Topeka on Monday.

Conference Committees are scheduled to meet this week, while the House and Senate will churn through exempt bills on the floor. Leaders are hoping to see significant action on the House’s budget, the Senate’s tax cut package, and even school finance before first adjournment on Friday. The House is up for reelection this year, and members are anxious to start campaigning in full swing.

After Spring Break, legislators will return to Topeka for the Veto Session on April 26, where they’ll also need to pass the final, catch-all “omnibus” budget bill based on the consensus estimating group’s revenue announcements on April 20.

Senate Tax Cuts

The Senate is expected to debate a $135 million tax cut bill this week, Senate Substitute for House Bill 2228. Kansas is projected to receive $135 million in additional 2018 income tax receipts resulting from the 2017 federal income tax cuts. The Senate’s position at this time is to return those dollars to Kansas taxpayers, rather than use the windfall toward K-12 education like what some House members are considering.

This requires some technical changes to state tax code. Key is the decoupling of Kansas income tax liability from federal law regarding the standard deduction, which the federal code increased to $12,000 single/$24,000 joint returns. The change would allow Kansans to itemize their state return even if they take the (increased) federal standard deduction.

The Senate plan returns most of the $135 million to homeowners (through 100 percent deduction on property tax, home mortgage interest, medical expense and charitable contributions deductions), which Kansas taxpayers enjoyed prior to 2012. It also allows a 25 percent increase in the state’s standard deduction, from $3,000 to $3,750 for single filers and from $7,500 to $9,375 for married-jointly. Last, the Senate bill includes a reduction of sales tax on food, from the current 6.5 percent to 4 percent beginning on July 1, 2019, ($176 million cost), and then to 2 percent on July 1, 2020 ($294 million cost).

House K-12 Funding Plan

The House K-12 Budget Committee passed House Bill 2445 on Wednesday, this session’s first attempt at a new school finance formula to submit to the Kansas Supreme Court by their April 30 deadline. The $520 million plan would boost state aid to schools by $73 million in FY19 – in addition to the $200 million already approved in last year’s budget – and $105 million per year over the next four years. It also includes some provisions that further target the 25 percent of Kansas students who are underperforming in math and science, which is key in addressing the court’s demands.

Some House leaders are saying that the additional spending can be done without a tax increase, and rather by using recent growth in state revenues, passing online sales tax uniformity legislation, and potentially capturing some of the state tax gains from last December’s federal tax cuts. The bill will be debated by the full House on Monday.

Constitutional Amendment

The Kansas Coalition for Fair Funding introduced House Concurrent Resolution 5029 on Thursday, which would amend section six of article six of the Kansas Constitution and declare that the power to appropriate state funds for education be exclusively a legislative power and not subject to judicial review. The resolution specifically states: “The determination of the total amount of funding that constitutes suitable provision for finance of the educational interests of the state is exclusively a legislative power and shall be made as provided by law.”

A constitutional amendment would require a two-thirds majority in both the House and Senate, before going to a public vote, likely during the November elections. Coalition representatives argue that a constitutional amendment is the only way to stop the endless cycle of litigation over the adequate funding of K-12 schools, which has tied the hands of the Legislature from governing on a number of unmet needs in the state. The Coalition is currently made up of several business, transportation, and agricultural organizations, and is still growing.

Budget Bills

The Senate passed their FY18-19 budget bill on Wednesday by a vote of 34-6. Just a few notes about Senate Substitute for Senate Bill 269:

· Includes $3 million toward the State Water Plan Fund (SWPF): $2.5 million from the State General Fund and $500k from the Economic Development Initiatives Fund. Current statute requires $6 million be spent on the SWPF, which has been swept in recent years.

· Removes former Governor Brownback’s $100 million proposal toward K-12 education until a new school finance formula is passed.

The House was scheduled to debate it’s budget bill, House Bill 2468 on Thursday, but it was delayed until sometime this week.

Bill Signed into Law…

Electronic Pesticide Application Records

Governor Colyer signed into law House Bill 2619 on Thursday. Electronic notification of a commercial pesticide application will now be recognized as a valid form of notice, should the customer agree to the electronic format. Current law requires written notice only.

Bills in Conference…

CDL Renewal

The Senate passed House Bill 2511 by a vote of 40-0 on Tuesday, which extends the renewal period on commercial driver’s licenses from four to five years. The House on Wednesday nonconcurred to the changes made in the Senate, and it was sent to the Transportation Conference Committee. Negotiators met and passed Conference Committee Report on House Bill 2606, which will include HB 2511 along with two other transportation bills.

Rails-to-Trails

The House passed Senate Bill 331 by a vote of 99-24 on Monday. 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. 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 was sent to the Agriculture Conference Committee.

Bills Passed both Chambers…

(If the House of Origin agrees to the changes made, then they head to the Governor’s desk. Otherwise, a conference committee will be appointed to negotiate differences.)

Right-to-Know Fee Fund

The Senate passed House Bill 2577 by a vote of 40-0 on Thursday, which establishes the Kansas Right-to-Know Fee Fund within the Kansas Department of Health and Environment (KDHE) to administer the Tier II hazardous chemicals inventory. Currently, fees paid by the industry are deposited into the State General Fund, with only a portion being transferred to KDHE. Under this bill, all fees will go toward their intended purpose. The agency is also required to set the maximum fees that may be assessed, as set forth in a fee chart currently in regulation.

Noxious Weeds

The Senate passed House Bill 2583 by a vote of 36-4 on Thursday, 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. Current authority lies with the Legislature, which can be a burdensome and time-consuming process. It also requires county weed directors to check “DriftWatch” (online specialty crop database) prior to applying pesticides to control noxious weeds.

Industrial Hemp

The House passed Senate Bill 263 by a vote 123-1 on Wednesday, 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 in designated counties across the state.

Broadband Task Force

The Senate passed House Bill 2701 by a vote of 40-0 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 by January 15, 2019.

Exempt bills…

HPIP Extension

The Senate passed Senate Bill 430 by a vote of 40-0 on Thursday, which will allow employers to carry forward any unused High-Performance Incentive Program (HPIP) tax credits for an additional nine years at 50% of their value. It only applies toward credits claimed prior to January 1, 2018 and caps the amount of credits claimed in one year at 10%. HPIP provides a ten 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. The bill now awaits consideration by the House Tax Committee.

Scrap Metal Delay

The Senate passed Senate Bill 429 by a vote of 40-0 on Wednesday. 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 also requires a progress report to the Legislature by February 1, 2019. The bill has now been referred to the House Judiciary Committee.

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.