The Statehouse Report

Topeka Capitol

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.

March 24, 2017

March Madness has reached the 2017 Legislative Session. This is the last official week of the session that is dedicated to committee meetings. There are two full weeks left before the first adjournment deadline of April 7. Next week the Senate and House will be on the floor all day debating bills with the first week of April planned for conference committees. Some committees with major tasks can still meet intermittently if scheduled by the chairman.

School finance stole the week’s headlines as the House K-12 Budget Committee leadership unveiled its comprehensive plan for a new school finance formula. The plan, contained in HB 2410, has several notable changes from the formula that was repealed two years ago. For example, HB 2410 actually calls for a higher base state aid and fewer weightings. The bill prescribes a “base aid for student excellence”, known as the “BASE aid”, of $5,212 for school year 2017- 2018. This amount is made up of two factors – state foundation aid and a local foundation support that is an additional mill levy. There will also be an inflation adjustment for each year moving forward. There seems to be some question on the status of the vocational weighting in the bill. All day kindergarten is funded in the bill on a graduated scale – .8 in 2018, .9 in 2019, and full funding in 2020.

There are weightings for bilingual, transportation, low enrollment, new school facilities, declining enrollment, special education funding, and high density at risk weighting. There are also provisions for a new formula for a local option budget. The bill is estimated to produce a $72M net increase to spending. HB 2410 is in the middle of three day’s worth of hearings that will continue Monday. The committee is planning to take action on the bill Tuesday, Wednesday and Thursday. There will likely be numerous amendments offered when they work the bill.

This week each chamber chipped away at their state budget to-do list. The Senate Ways & Means Committee had hearings on their version of a two-year budget (SB 189). The budget will leave a shortfall in both of its fiscal years. The state intends to backfill this with a new tax package. After several amendments, the bill passed out of committee. The House Appropriations Committee similarly held hearings on its version contained in HB 2364 and began working the bill. Many on the committee want to wait until April to see the latest state revenue numbers to help determine the ending balance target. The committee will resume work next week.

The Rescission Bill work started in budget conference committee where leaders of the two budgets committee whittled down the differences between their respective versions to cover the $280 million shortfall for the remainder of 2017. They will be working to finish their compromise on Monday.

Tax policy is still up in the air. The Senate Tax Committee is considering a reduction in sales tax on food in 2019 and 2020 to an eventual 2%. Different income tax plans are being considered. Some aim to move state income tax for individuals from the two-bracket system to a three-bracket system, such as the concept vetoed last month. Others advocate for a flat tax system with one-bracket. There are also different proposed rates on the different bracket proposals, cementing the lingering question of which bracket will be victorious through the March Madness season – and the question will continue to throughout the beginning of baseball season.

Medicaid Expansion (HB 2044) was considered in the Senate Public Health & Welfare Committee over two days of hearings. The committee took action on the bill on Thursday and passed it out of committee after a divided vote. It will now be up to the Senate to see if it can be passed on to the Governor. This continues as Congress makes little movement toward repeal and replace of the federal affordable care act.

Major issues will continue to be addressed in the next week as the legislature works towards the end of the first adjournment on April 7. The legislature will return on May 1 to finish up their work, including passing a tax plan that supports a new school finance formula and provides for a balanced budget in FY2018 and FY2019. The consensus estimating group to review the revenues coming into the state will meet in mid-April, which will help the decision making process when the legislature returns in May.

 

Information provided by Gaches, Braden & Associates.

 

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