The Statehouse Report is published each week that the Kansas State Legislature is in session and provides high-level overviews of the status of current legislation that affect the business community.
April 7, 2017
The 2017 Legislature has reached the First Adjournment deadline. This is considered to be the end of the regular session, which sends legislators home for a three-week break until veto session. Veto session, scheduled to start May 1, is designated to wrap-up unresolved issues and respond to vetoes issued by the Governor, if any. It also allows the Legislature to adjust their numbers depending upon the April Consensus Revenue projections. There is no set schedule for veto session and it is common for meetings to run into the late hours of the night and carry into weekends.
Among the major headlines of the week was the House’s failed attempt to override the Governor’s veto of Medicaid Expansion. Proponents of Medicaid Expansion spent the weekend trying to gain support but the motion to override only generated 81 votes, three short of the required 2/3 majority. This will most likely end Medicaid Expansion discussion for the year.
On the budget front, the Senate and House gave its final approval of the Rescission Budget Bill conference committee report (HB 2052). An agreement was made last week but the House insisted the report make an $85M to payment to the KPERS system. The new agreement was overwhelming passed by the two chambers Thursday evening. The bill cuts enough expenditure to put the state’s ending balance back in the black for the current fiscal year that ends June 30. The major provision would allow for borrowing of money from the PMIB to produce a $50 million ending balance for 2017.
Last week the Senate passed its mega budget for the next two fiscal years (FY 2018 and FY 2019). The House has its version approved by the Appropriations Committee but it has not been debated on the House floor. This will most likely occur in early May.
The exploration of different tax policy methods to cover the budget continues. Last week, both tax committees approved similar bills that change income tax brackets from a two-tier system to a single bracket at 5% for all income levels. The full House or Senate did not formally consider these bills. This week, the Senate Tax Committee created a single bracket bill that is set at 4.6% with sales tax on food dropping to 5.5% in FY 2019. This bill (SB 214) also repeals the March to Zero Income Tax Plan implemented in 2012. Opponents of the bill stated it is not a viable option because it does not cover the projected state deficit. SB 214 was killed on the Senate floor 3-37. The tax policy discussion will continue through the veto session in May.
On Wednesday, the House K-12 Budget Committee met to review the revised draft of HB 2410, as amended last week. The committee added a handful of additional amendments and then discussed the base state aid funding of the bill. In the original version of the bill, the state funded base aid is $4,169. Representative Melissa Rooker successfully added an amendment to lower the first-year aid with an aggressive $200 per year stair step increase over the next five school years. This would set base state aid at $4,006 for school year 2017-2018, $4,206 for school year 2018-2019, $4,406 for school year 2019-2020, S4, 606 for school year 2020-2012, $4,806 for School year 2021-2022. This would increase K-12 spending by $150M each school year. The committee is allowing state attorneys to review the bill over the April break to ensure the bill will pass constitutional muster. If so, the committee plans to approve the bill on the first day of veto session (May 1). The action taken by the House on school finance exceeds most spectators’ expectations on the session’s timeline.
On the Congressional front in Kansas, there is a special election on Tuesday, April 11, 2017, for the 4th District Congressional seat. The 4th District includes 16 counties in south central Kansas including Wichita. U.S. Representative Mike Pompeo, who held the seat, resigned to take the position of CIA Director in the Trump Administration. Two candidates are vying for this seat – the Republican candidate, Ron Estes, is presently serving as the Kansas State Treasurer and the Democrat is James Thompson, attorney and U.S. Army veteran. The winner of the election will fill out the remaining term for the 4th District. The 4th District went 54% for Trump and 36% for Clinton in the 2016 General Election, so the wisdom would be that the winner would be Republican. If State Treasurer Estes wins, the State Treasurer’s position will be open. The Governor then will appoint a State Treasurer to fill out the term, which will be up in 2018.
This will be the last Friday report until the Kansas Legislature returns the week of May 1, 2017. The veto session will now be the time when all of the tax, school finance and budget issues will be determined.
Information provided by Gaches, Braden & Associates.