Dear Friend:

For the last two weeks, committees have been hearing bills sent over from the Senate and very few have trickled up to the House floor, which means long committee hearings but short House sessions. My committees have been especially busy, but I have been grateful for the break when constituents come to visit. 

The next three weeks are going to reveal a lot about how the House intends to address the three major issues facing the legislature.

Issue #1 Budget: A new 2018-19 budget should be coming forth from the House Appropriations Committee. I am anticipating this budget will reject the governor’s proposal on securitization of the tobacco settlement money. Questions remain on whether the new budget continues to sweep highway funds and delays KPERS payments. Because of the need to restore a stable ending balance or rainy day fund, I suspect this budget will be short on meeting the requests by many state funded agencies or programs. The key issue is how much new tax revenue needs to be raised to fund state government over the next two years. 

Issue #2 School Finance Formula:  The House committee responsible for drafting the new formula has been working hard since the first week.  From my viewpoint, they have had an inclusive and transparent process by engaging many stakeholders and experts. The recent ruling by the Supreme Court has given increased guidance on how to tackle the adequacy of school funding. Just like issue #1 budget, the key issue is how much new tax revenue needs to be raised to fund the school finance formula.

Issue #3 Tax Policy: Over the next three weeks the Tax committee will have hearings on a motor fuel tax, a flat tax (all citizens pay the same tax rate on their income), and return to discussing new ideas on changes to the tax rates for income.  For example, does a fourth tax bracket for higher income households make sense? Legislators are saying we have to know the costs of issue #1 budget and issue #2 school finance formula before we can define the parameters of the tax policy and know how much to increase taxes. This makes sense because you have a known dollar amount that needs to be raised. I also know before we even have the known dollar amount in the next three weeks, the legislature is probably looking at raising taxes to levels most of us will not find pleasant or easy to accomplish. 

The goods news is by early April there should be greater clarity on the initial ideas on the House budget, finance formula, and tax policy.  Please note I used the word clarity, and not certainty.  When the legislature reconvenes in early May, we begin the final push for certainty and an end to the session, hopefully before June. 

Last week, wildfires spread across much of central and western Kansas destroying homes, property, and livestock. Dry conditions combined with powerful, frequently-shifting winds turned these fires into the largest in Kansas history. By the numbers:

• 711,950 acres have burned
• 1148 square-miles, or
• 1.4% of the total land in Kansas.

There are not yet estimates on the loss of livestock and property. Clark County and the city of Ashland, Kansas were hit the hardest, with 85% of the county’s land area burned. Several organizations are coordinating assistance for those affected by the fire, and the state and federal governments are acting to mitigate the impact on Kansas families:

• The Kansas Livestock Association Foundation and the Kansas Farm Bureau are accepting and coordinating donations here.
• The Office of the Kansas Adjutant General oversees Emergency Management. Its website is a good source of information and news. 


• The Kansas Department of Agriculture has information regarding water use, food and assistance efforts, and livestock. 

• Governor Brownback signed Executive Order 17-01 to assist fire relief efforts.
• HB 2387 would provide a sales tax exemption for certain property destroyed by this wildfire. The bill passed the House Taxation Committee and the House and Senate this week and is headed for the governor’s signature.
• HB 2140 which enhances the ability of fire departments to assist each other across state lines, has passed the House and also was heard and passed the Senate Federal & State Affairs Committee this week.

• FEMA has approved Federal Fire Management Assistance Grants for the following counties: Clark, Comanche, Ellsworth, Ford, Lincoln, Ness, Rooks, and Russell.

ON THE FLOOR

This week, the Kansas Interfaith Action hosted Muslim Neighbors Day at the Capitol. I was pleased to join fellow Kansans in welcoming the Kansas Muslim community to the Capitol. Guest Chaplain Dr. Moussa Elbayoumy, of the Islamic Center of Lawrence provided the following prayer: 

Assalam Alaikum Wa Rahmatullah Wa Barakatuh
May the peace of God His Mercy and Blessings be with you and Upon You

In the name of God the most gracious, the most merciful, on this new day, as this assembly begins, we ask you, our God, the creator and heaven and earth and everything in between, to bless this assembly, its members, and the people they represent from every town, every city, and every county, from every faith & creed, every race, and every origin.

Our Almighty creator, at this time in our history, the challenges facing our State, our Nation, and indeed our world are great and many.

We ask you O God, to grant these men and women an abundance of your wisdom and guidance to steer our state into the path of compassion, justice and use of sound judgment to face all of these challenges.

O God, you have chosen them, in your wisdom, to be in this position of great responsibility and honor, so please O God, help them with Your guidance, and Your light. Grant them the strength and the will to do what is right to improve the lives and the well-being of ALL the people of this great state and beyond. It is only You we worship and only Your help we seek, to guide us and them, to the straight path. Amen

Work on the floor has been slow but sure. We passed a couple of interesting bills:

HB 2162 will be a great asset to small business owners who pay sales tax. The bill would increase the threshold filing amounts for retailers to submit sales taxes to the state from: 

• $80 to $400 for annual filing; 
• $3,200 to $4,000 for quarterly filings; and 
• $32,000 to $40,000 for monthly filings. 
• Amounts greater than $40,000 would be filed on a prepaid monthly basis.

HB 2168 passed the House, 97-22 and would create the Ad Astra Rural Jobs Act, to offer nonrefundable tax credits for taxpayers who invest in businesses in small towns. Beginning in 2020, 20% of the tax credit could be claimed annually over a five-year period. The maximum tax credit that could be claimed in any fiscal year would be $20 million. If you’re interested in reading more, the hearing testimony is available here. I voted YES. 

Commerce, Labor & Economic Development - Livestream link

The committee recently heard two important, proactive, and noncontroversial bills:

• Under current law, the Department of Administration awards state contracts to certified businesses that employ a certain percentage of individuals with disabilities, if the certified business’ total bid cost is not more than 10 percent higher than the lowest competitive bid. HB 2356 would clarify the definition of an individual with a disability to mean any individual who has been certified by the state as having a physical or mental impairment that is a barrier to employment or has a severe or persistent mental illness.
• SB 25 would allow the Department of Wildlife, Parks, and Tourism to set the rental fees for the State Parks’ cabins without first holding a public hearing. The bill would allow for flexibility to meet supply and demand by lowering the cost of infrequently used spaces and increasing the cost of more popular venues. You can read hearing testimony here. 

Taxation

The committee was very busy this week hearing bills left from before the Turnaround break, as well as passing the fire-related bill mentioned above:

• A  gas tax bill was introduced (HB 2382) to increase the tax by $0.11 per gallon, from $0.24 to $0.35. Eighty percent of the anticipated $190 million in revenue would go to KDOT and the remainder to the City/County Highway Fund. A hearing will be held this coming week. It is worth noting the Governor’s budget proposes sweeping $500 million each of the next two years. Many of the groups supporting this tax are keenly interested in restoring funding to highway maintenance and improvement projects.
• HB 2368 would allow business owners to deduct the amount of actual wages paid by the business to fill a newly created job, if they have an ownership interest in a business that currently pays no income taxes under the nonwage business exemption. The job must be “newly created” and not a job filled by recalled workers or existing vacant jobs. This would allow the intent of the 2012 LLC income tax break to continue with measurable outcomes of actual jobs created.
• The committee discussed (HB 2376) which would prohibit cities and counties from funding their budgets with property tax revenues that exceed the preceding year’s consumer price index. In addition, the bill would require cities and counties to publish notices of property tax increases in the official city or county newspaper. While I agree with the transparency components of the bill, the state should not be dictating to local units of government what they can spend. If citizens dislike how their local elected officials are spending taxpayer dollars, they have recourse through elections – just like you do with me.
• Exemption bills:

o   HB 2261 is a sales tax exemption to veterans’ service organizations to help them provide support for military veterans and their families. No sales tax would be charged on sales and purchases of tangible personal property and to services made by or on behalf of veterans’ service organizations.

o   HB 2146 is a property tax exemption for all real and personal property owned by a not-for-profit corporation that is leased by a postsecondary educational institution for educational or scientific purposes. Postsecondary educational institution means any public university, municipal university, community college or technical college. 

Veterans & Military

The committee discussed a report on the Native American Veterans’ Income Tax Study. This is related to a bill (HB 2147) which would authorize the Department of Revenue to study if Kansas had active-duty Native American veterans living on tribal lands that had state income taxes improperly withheld from their military income.

We are likely done meeting for the session as the Senate did not pass any veterans/military-related bills and the remaining House bills did not survive the Turnaround deadline. They remain in committee for consideration next year, but are dead for 2017.