THE PHILLIPS FILES: End of Regular Session

Governor Brownback signed the school block grant bill in a no press, not open to the public bill signing. Shortly thereafter, Schools for Fair Funding filed a motion in Shawnee District Court to block implementation of the new formula. The three-judge panel responsible for evaluating the states’ adequacy and equity in statewide school funding will hear arguments for blocking the law on May 7. The law eliminates the state's school funding formula and gives each district a fixed amount of money for the next two years.

• KCUR article
• Wichita Eagle article

Meanwhile the Senate Education Committee held hearings on a would-be replacement plan for the block grant funding formula which, so far, will sunset in 2017. The plan was developed by Senator Steve Abrams (R-Arkansas City), who was previously elected to the Kansas State School Board, and would be piloted in the six Kansas districts designated as Innovative Schools Districts. The plan would tie funding to student success into their 20s and among my other concerns, this would require significant data collection and monitoring far beyond what most parents or students would be comfortable. 

During my break, I am planning on visiting the three elementary schools and one middle school in the district.  I will also be meeting with Mercy Regional Hospital administrators, city and county officials, and USD 383 school board members. Last week, I spoke in front of the Konza Rotary Club. I welcome the opportunity to meet with community groups or clubs, so feel free to call me.

On the House Floor

We have passed the deadlines for bills to be considered in committees and in the opposite chambers, except for those bills which are exempt from legislative deadlines. Reminder: Bills are exempt if they have been referred to an exempt committee. Exempt committees are:

• House: Appropriations, Taxation, Federal & State Affairs, Calendar & Printing
• Senate: Ways & Means, Assessment & Taxation, Federal & State Affairs       

SB 95 is this session’s major abortion bill, titled the Kansas Unborn Child Protection from Dismemberment Abortion Act. Kansas is the first state to pass this legislation, drafted by the National Right to Life Committee. It passed the House on a 98-26 vote and the Senate 31-9, I voted yes. If you are interested in learning more, click here.

SB 45 is pretty simple. It allows Kansans over 21 to carry a concealed weapon without training or a license. It passed the House  on a 85-39 vote, and the Senate on a 31-8 vote. I voted NO for all of the common sense reasons you would expect, so I don’t have much more to say on the issue.

Many of you are concerned about efforts to block charitable contributions through payroll deduction. For a bit of history on the issue, last year, the legislature moved to prevent union members from using payroll deductions for political action committee contributions. This year, many sought to prevent union dues through payroll deduction and extended the ban to any deduction, including charitable causes like the United Way (Senate Substitute for House Bill 2096). After much debate in the Senate, this bill got so bogged down in debate and controversy that Senate leadership pulled it from the calendar for more committee work. Stay tuned. I have been in close contact with the Konza United Way, Executive Director, Lee Ann Smith Desper on how this would adversely impact our local social services agencies.

HB 2095 allows the state to take out an additional $1.5B in KPERS bonds. Part of this money will be used to fill the budget gap by replacing money the state would have put into KPERS, and moving that money into the State General Fund to cover the budget hole. This is akin to a balance transfer on maxxed out credit cards – we are borrowing money to pay off other debts and hoping the creditors don’t talk to each other. I fully foresee the possibility of another credit downgrade in our near future. The bill passed the House on a 67-57 vote, I voted NO.

• Wall Street Journal article

Current law prohibits juveniles convicted of crimes as an adult from being housed at juvenile detention facilities. However, the state does not have the capability to provide separate housing to keep these inmates separate from their adult counterparts in general detention. Thus, the state spends hundreds-of-thousands to send juveniles to out-of-state facilities. HB 2382 amends the law to allow these offenders – over 16 but under 18 at the time of sentencing, to be placed in juvenile facilities.

Committee Work

Taxation

The committee held hearings on sales tax exemptions. These seem to be an easy target for talking points but when it comes right down to it, the biggest sales tax exemption is on ingredient/component parts. So in the manufacturing of goods, the plastics, metal, wood, etc. used to produce a good are exempt from sales tax.  This exemption is estimated to be $3 billion, or approximately 54 % of all state exemptions.  In essence, we are talking about creating a valued-added tax on goods and services, we if moved in this direction.

Below is a list of the top 15 categories of sales tax exemptions in Kansas. This list comprises 97% of the total $5.716 billion exempted. 

• 1.Ingredient/component                                            $3,083 billion
• 2.State and local government                                     $454 million
• 3.Consumed in production                                         $404 million
• 4.Motor fuels                                                                $319 million
• 5.Original construction/ home remodel                    $249 million
• 6.Non-profit hospitals and schools                             $243 million
• 7.Animals for agriculture                                            $228 million
• 8.Residential and agriculture utilities                        $170 million
• 9.Manufacturing machinery/equip.                          $159 million
• 10.Prescription drugs                                                    $96 million
• 11.Farm machinery/equip.                                           $68 million
• 12.Enterprise zone                                                         $29 million
• 13.Religious organizations                                             $24 million
• 14.Public utility equip. for interstate movement        $21 million
• 15.Prescription prosthetic devices                               $19 million

The committees has been active in learning more about the various “revenue enhancement” options which could be on the table to help fill the gaps created by the 2012 income tax cuts.

• HB 2399 would increase the sales tax to 6.3% for three years. It would also reduce the amount of sales tax going to KDOT.
• HB 2400 would codify in statute what has become legislative practice – to deny local governments the property tax transfer under current law. Since 2003, the legislature has diverted the Local Ad Valorem Tax Reduction Fund (LAVTRF) to the State General Fund. This bill eliminates the need for that transfer by eliminating the fund.
• HB 2401 and 2396 are new ways to attack the Renewable Portfolio Standards. The former bill would tax renewable production by adding a 4.3% excise tax on the gross value of renewable energy and each gallon of ethanol. The latter bill would remove a tax exemption on property used to produce and generate renewable energy. The current property tax exemption would be limited to ten years after construction or installation was completed. 

I doubt these bills have enough support to go anywhere this year, but I won’t hold my breath, either – things tend to get highly unpredictable at the end of session—particularly in light of a $650 projected revenue shortfall. 

Children & Seniors

HB 2269 was back in the committee, this is the bill which would deduct taxes or child support owed from casino gaming winnings. Hollywood Casino in Kansas City understandably had concerns as this would encourage Kansans to gamble in Missouri instead. The committee asked the Department of Children & Families (DCF) and Hollywood Casino to work out a compromise. 

Local Government

SB 247 would allow cities with bond debt less than $500,000 to forego the expense of an outside auditing firm. The cities would be able to have their books reviewed by a CPA instead. For many units of government, an outside firm is expensive and unnecessary for tracking such small amounts. The House did not take up this bill last week, so I expect it to be added into a conference committee report. Bills which have passed one body are considered “conferenceable” and can be combined into other bills during the conference committee process.

Please do not hesitate to reply with questions or comments. It is an honor to serve you in Topeka. 

Sincerely,

Tom Phillips
State Representative, District 67
Kansas House of Representatives