Kansas Legislative Report, February 12 – 16

Week six of the 2018 Kansas Legislative Session remained relatively slow with the biggest event of the week being the naming of the new Lieutenant Governor on Tuesday evening. Beyond that the legislature continued its work with committees continuing to hold hearings on a variety of issues and a few bills being worked and sent on for further debate and evaluation by the larger chambers. This weekend the Republican State Party Convention is being held in Wichita and the Legislature will be pro forma on Friday in accordance.

New Lieutenant Governor

On Tuesday night at the Kansas Livestock Association dinner Tracey Mann was named the new Lieutenant Governor by Governor Jeff Colyer. Mann is a commercial real estate developer who previously ran for US Congress from the 1st district in 2010 before eventually losing to Tim Huelskamp in the primary.

From Governor Colyer’s press release announcing the choice;

“Tracey has made a name for himself as a strong, servant leader and a go-getter. He is truly in tune with the needs and challenges of Kansas’ rural and agricultural communities.

Tracey has been a leader on economic development and rural issues in Kansas for years, and I am excited to bring those skills to our team.

Tracey Mann is a fifth-generation Kansan from Quinter. Although his family now lives in Salina, he still regularly returns to Quinter to work on the family farm. Tracey truly knows what it means to listen, serve and lead.”

Amusement Park Legislation

SB 307 dealing with regulating amusement parks was heard in Senate Fed and State on Monday with the bill passing out of committee unanimously following a series of amendments. Those amendments were largely about explaining what was meant by amusement park rides with the bill excluding hayrack and barrel train rides and better defining water slides as longer than twenty feet. The bill also outlines in greater detail following amendment the qualifications for inspectors.

Seat Belt Legislation

On Tuesday the Senate Judiciary Committee passed on to the full Senate for consideration SB 296, which allows juries in auto accident trials to hear if the injured person was wearing his or her seatbelt. Current law prohibits that information from being revealed. It seems likely that this will continue to be a contentious issue as it moves forward.

Lobbying Bill

On Wednesday in Senate Ethics, Elections, and Local Government Senate President Susan Wagle and Senate Minority Leader Anthony Hensley spoke in favor of their bill, SB 394, which President Wagle referred to as a “sunshine bill”, The bill would require anyone wishing to lobby executive branch agencies or the judiciary to register as lobbyists. Currently only those lobbying the legislative branch are required to register. The bill was passed out of committee on Thursday and sent on to the full Senate.

Budget Committees

The budget process continued in both chambers this week. Budget subcommittees are still meeting to get detailed information from agencies about those agency budgets. The House Appropriations Committee discussed a number of budgets. In the budget for the Attorney General they reviewed his request for more funding to address fraud and abuse. The Board of Indigent Defense Services requested more funding, due to their increased activity as a number of capital punishment cases start the end phase of their process. Appropriations also discussed funds for career and technical education across the state, including south central Kansas. The workforce training at NIAR and NCAT led to a spirited discussion in committee, which led to the committee ultimately approving funds for both.

Senate Ways and Means heard budget reports, but also discussed the move at the Dept. of Revenue to transition to digitally printed license plates. This is suppose to get to lower costs and faster turn around.

Ways and Means began their discussion on the Judicial Branch. One of the most discussed items here is the salary levels for judges and non-judicial staff. Getting staff salaries up to market levels has been a topic for a number of years now. The House committee has delayed their discussion Judicial Branch. The Senate committee will continue their discussion into next week.

Both committees are reviewing the budgets for the state hospitals. This budget and the judicial budget will likely be significant points of difference between the two chambers in upcoming budget negotiations.

Insurance

Multiple insurance bills were discussed/worked. HB 2104 (auto insurance limits) and HB 2575 (Patient Right to Shop) failed to pass out of committee. SB 348 (Electronic documents for A&H Insurance companies), SB 410 (updating Kansas Captive Insurance laws) and SB 351 (PBM) all were passed out of committee to the Senate floor. Finally, HB 2674 (Telemedicine) and SB 304 (Step Therapy) both had hearings and may see committee action on Monday.

KanCare

The Senate Ways and Means Committee sent on to the full senate a bill that would essentially freeze KanCare as it currently exists without legislative approval for changes. The bill would end administration efforts to include work requirements for recipients as well as providing a vehicle for proponents to attempt to expand KanCare. There will be a KanCare Oversight meeting on Friday the 16th and an update on that meeting will be sent next week. This fight has likely only just begun.

Dental Therapists

The Senate passed 38-0 SB 312 which broadens what dental therapists are allowed to do and procedures they are allowed to perform provided they are supervised by a licensed dentist. Proponents argue this will greatly expand the number of Kansans receiving dental services. As a part of the bill dentists who agree to supervise up to three dental therapists must be a KanCare provider.

Next Week

With Turn-Around looming on Thursday the legislature is expected to spend most of the week on the floor with debate hot and heavy as they work to move bills out of their chamber of origin. The slow pace thus far means the chambers have work to do in a short amount of time. It should be an interesting week.

Kansas Legislative Report, February 5 – 9

The fifth week of the 2018 Kansas Legislative Session was dominated by an address to the combined House and Senate by the new Governor, Dr. Jeff Colyer, on Wednesday. Around that address the business of the state began ramping up with several interesting bills being heard and previews of upcoming struggles over a number of issues.

Executive Order on Sexual Harassment.

The week began with Governor Colyer signing his first Executive Order aimed directly at combatting sexual harassment in Kansas. The order mandates training in how to avoid sexual harassment in the workplace for all employees and staff of executive branch agencies and anyone doing business with those agencies including vendors, service providers, and interns. The Governor made clear through the order and the subsequent news conference that no forms of sexual harassment will be tolerated and it will be combated wherever it is found.

State of the State 2.0

On Wednesday Governor Jeff Colyer addressed a joint meeting of the House and Senate in what was quickly dubbed the State of the State 2.0. Members anxiously awaited the address as this would be the first opportunity for them to get a sense of the “new tone” the Governor had been promising. The signing of the Executive Order on Monday turned out to be a bit of a preview for what the Governor intended as he followed that up with a call for more transparency in State Government. The Governor stated his intention to sign a series of Executive Orders that would establish an internet site where Cabinet Agencies would present their activities, provide a list of public meetings, and establish a performance matrix so the citizens of Kansas can more easily see what their government is doing. He also stated his intent to order all executive branch employees to use only their official email accounts for doing business and not personal email. And finally he ordered that the first 100 pages of any Open Records Request would be free of charge to the one who requested it.

The Governor briefly touched on the issue of K12 School Finance at the end of his address with a call for the Legislature to send to him a plan that meets the requirements of the State Supreme Court while also requiring accountability for teachers and schools. He did not provide specifics about the solution but also did not walk back former Governor Brownback’s call for $600 million more in school aid spread out over the next five years. It remains to be seen what action the Legislature will take on the issue.

Net Neutrality

An attempt to add an amendment to an IT purchasing bill failed on a voter of 78-43 in the House this week. The amendment would have stated in no uncertain terms that Kansas rejects the new standards put in place by the FCC and would instead demand Net Neutrality for all vendors and internet contractors doing business with Kansas.

Seat Belts

Senate Judiciary saw the beginning of a struggle between insurance agencies and trial lawyers over SB 296. The bill would allow non-use of a seat belt to be revealed to juries in motor vehicle injury lawsuits, something currently prohibited in Kansas. The thought by both sides is revealing this information could impact how much if any compensation juries award and insurance companies favor this while trial lawyers obviously oppose.

Office of the State Auditor

Legislation was introduced this week in the Senate to establish the Office of State Auditor as an elected position as it was in Kansas until the office was eliminated in 1975. An interesting side note on this legislation is if the auditor doesn’t identify enough waste or misspending to finance his/her office, the agency is eliminated.

Workers Compensation

A hearing was held in Senate Commerce on SB 339 Thursday that prompted interesting discussion. The bill, introduced by Senator Tom Holland, would look at reforming Workers Compensation benefits and make changes to the death benefits which have not been updated since the 1970s. Senator Holland stated he did not intend to work the bill this session as he understands it is a difficult issue and one that requires a great deal of time and effort to look into but that he hopes when the issue is addressed in the future this bill and the accompanying testimony will be considered. Senators Lynn, Bollier, and Baumgardner each agreed that while the bill and the underlying issue may not be tackled this session they are opposed to delaying for long and urged/called for both sides and all stakeholders to come together and find a working dialogue and solution on the Workers Compensation issue and updating what appears to be a very archaic system.

Budget Committees Wrap Up

Kansas’ new Governor Colyer gave his State of the State speech to lawmakers on Wednesday, but didn’t give much detail in his budget priorities. Legislators expect more specifics later, but also are holding their fire for the school finance debate to really kick in towards the end of March. Some budget subcommittees are starting to make their recommendations to the full budget committees, so officially the budget process is underway. The Senate Ways and Means Committee was wrapping up their work on a proposed new task force on transportation issues. They also heard from the Sec. of the KDADS on the need for more beds for mental health patients at the State Hospitals. Specifically at Osawatomie State Hospital. They discussed the possibility of renovating existing buildings the possibility of building new facilities. Federal funding is also at stake, as well as the growing need for mental health services. The committee also discussed the issue of having a budget rainy day fund, sometimes called a budget stabilization fund. Many states have these kind of funds, Kansas has one on the statute books, but has not been able to put any money away recently due to budget and revenue issues. The amounts to be put away and if or when they could be used later are part of the discussion.

The House Appropriations Committee also began hearing budget subcommittee reports. The committee delayed action on the budget for the Judicial Branch. The budget requests for judges and non judge employees sparked a contentious debate in committee, which led to requests for more information. A separate bill could be used to move that budget later on. The Judicial budget could be an important difference later in the budget negotiations between the House and Senate. The committee will soon hear from its Higher Ed subcommittee, and one issue will be workforce readiness and training. Funding for that in the Wichita south central Kansas area will be part of that, including funding for NAIR. The manufacturing sector has testified in favor of funding, the full committee should take this up soon. House Appropriations also heard from the Sec. of Agriculture about the Ag economy, and they also discussed the issue of Tyson wanting to open a processing facility in Kansas.

Next Week

Looking ahead to next week the speed and work will continue to ramp up with a number of Committee Chairpersons warning their committees to expect long meetings and lots of them. Next week also sees the annual Republican Party Convention this year being held in Wichita and running throughout the weekend. It should be a great time for all who choose to attend.

Kansas Legislative Report, January 29 – February 2

Week four of the 2018 Kansas Legislative Session continued the pace of the first three with committee work being largely informational hearings and smaller bills as the session continues to rev up. Outside of committees there was more action as Kansas welcomed a new Governor, a prominent new candidate for Insurance Commissioner, and controversy over spending on K12 transportation.

Governor Colyer

In a swearing in ceremony on Wednesday, Dr. Jeff Colyer officially became Governor of Kansas. As had been anticipated for more than six months following former Governor Brownback’s nomination by President Trump as Ambassador for Religious Freedom the former Lieutenant Governor became Governor promising a new tone and vowing to listen and work with one and all to solve the challenges facing Kansas.

Insurance Commissioner

On Monday four term Senator Vicki Schmidt of Topeka officially announced she would be entering the race for Insurance Commissioner of Kansas. Senator Schmidt enters the race to succeed one-term Commissioner Ken Selzer who chose not to run again and is rather competing for the Republican nomination for Governor. Senator Schmidt, who chairs the Senate Public Health and Welfare committee, does not have to give up her seat as she is in the middle of her four-year term. The only other Republican candidate currently in the race is Clark Shultz who was defeated four years ago by Selzer and now works for Selzer in the Kansas Insurance Department.

K12 Transportation Controversy

Last Friday saw an emergency meeting held by the State Board of Education to consider whether Deputy Commissioner of Education Dale Dennis, the state’s top school finance formula administrator, should be placed on paid administrative leave. The issue at hand was Dennis’ decades long distribution of student transportation funds to school districts without legislative authority.

The issue came to light following an audit of the K12 Transportation Budget covering the last four years revealed Dennis had appropriated around $10 million more each year than was called for in the formula to determine funds. Senate President Susan Wagle, House Speaker Ron Ryckman, Senate Majority Leader Jim Denning, and Senate Education Committee Chairperson Molly Baumgardner, all Republicans, called for the action while the state conducts a full audit of the K12 finances and expenditures.

Dennis’ explanation was that he had been instructed in 1984 by the Senate Vice President Charlie Angell (who passed away in 2014) to use a “curve of best fit” formula to distribute funds and that he has done so ever since despite it not being allowed in state statute.

The State Board of Ed on a 9-1 vote instructed Education Commissioner Randy Watson to continue the employment of Dennis and that no action was to be taken against him. What happens next is not certain. There have been bills introduced to change statute to make the manner in which Dennis has been distributing transportation funds legal and there are continued calls for a full audit of K12 funding and distribution to see what else may be occurring. Interestingly there have also been calls for the school districts to return the money, as it was distributed incorrectly and thus it was an overpayment to which they were not entitled. No action has yet been taken on any of the proposals.

KCC

Pat Apple will vacate his seat on the three-member Kansas Corporation Committee at the end of his term on March 15th. Before leaving for his new position Governor Brownback set a February 9th deadline for applicants to make their desire known and to have their application completed. Governor Colyer will then nominate the new member to take over for Apple.

Budget Committee Wrap Up

More informational heading for the Legislatures budget committees this week and both sides held hearings on bills. The Senate Ways and Means Committee held hearings on a bill to require legislative action in the future before changes are made to medical assistance programs. This is part of a ongoing struggle between (some) legislators and the administration on state programs for medical assistance. The KanCare system and expansion of Medicaid in Kansas are part of the political struggle, and since these programs are a sizable part of the budget there is a lot of interest on how this shakes out.

The Ways and Means Committee also held hearings on establishing a cyber security agency in the executive branch. With more data being used and stored by the State, cyber security is a growing concern for legislators. Cyber attacks are becoming more frequent and state governments are looking to strengthen their ability to protect their data.

The House Appropriations Committee held hearings on a bill on collecting debts owed to the state which third party vendors, like casinos, might hold. The committee passed a similar bill last year. There is continued interest by committee members to address this for collecting child support and similar debts.

The House committee also had an informational hearing on the oil and gas industry in Kansas. The severance tax revenues collected are usually discussed in committee, but the industry as a whole is not as familiar to some committee members. The Chair of the committee thought the members would benefit from knowing more about this industry with its national and global reach.

Both Chairs announced that budget subcommittees will start meeting, and the House could hear its first budget subcommittee report next week.

Next Week

Next week should see an uptick in activity with the budget subcommittees beginning meetings and a number of important issues being addressed including cyber security, transparency, and a hearing discussing possible constitutional amendments that would change the number of House and Senate seats as well as staggering Senate elections. And on Wednesday Governor Colyer will address a joint meeting of the legislature to outline his goals for the session.

Kansas Legislative Report, January 22-26

The third week of the 2018 Kansas Legislature continued the languid pace of the first two with committees dominated by agency updates and technical bills. It is assumed that in the coming weeks the Legislature will begin the heavy lifting of the session but that has yet to begin. That is not to say nothing happened this week as a change at the top of government became imminent and a new buzzword flooded the statehouse.

Governor Brownback

On Wednesday the United States Senate confirmed Governor Brownback to the role of Ambassador for Religious Freedom and on Thursday he sent a letter to Secretary of State Kobach announcing his resignation as Governor effective January 31st. His resignation will complete Lieutenant Governor Colyer’s rise to the position of Governor. The swearing in ceremony will be held on Wednesday January 31st at 3 pm.

Transparency

An issue barely on the radar before the beginning of the session suddenly became the main talking point this week as a number of different actors offered changes to make Kansas government more transparent.

Senate President Susan Wagle announced her intention to introduce a bill requiring anyone meeting with administration agencies or members to register as lobbyists. Currently, only those who lobby the legislature are required to register in Kansas.

House Speaker Ron Ryckman and House Majority Leader Don Hineman announced a change in how Chairpersons in the House would handle the introduction of bills in committee by requiring the bill have an RS number and that the person or persons introducing the bill be easily identifiable and recorded. Without the need for passage of legislation and with this instead being a change in the rules themselves, Majority Leader Hineman believes it will be a quicker and better way of becoming more transparent.

Further, on Tuesday House and Senate Democrats held a press conference to announce their intention to introduce a number of bills to increase transparency including bills to prohibit outside employment of state office holders, a requirement that all votes in committees be recorded, and ending the practice commonly referred to as “gut-and-go” in which the contents of one bill are stripped and another bill is inserted instead, essentially changing everything about the bill except the number provided the new insert is deemed germane. They also proposed ending expenditures on meals and drinks by lobbyists unless they are provided to the entire legislature, i.e. no more dinners with individual members but the box lunches handed out in the statehouse are okay. They also proposed a measure which would prohibit any elected state officer or lawmaker from contract lobbying within a year of resignation or the end of their term in office. These were proposed along with a number of others dealing with the KBI reporting property recovered following arrests, making public the details of injuries or deaths of children while in state custody, limiting campaign contributions by any company that currently has a contract with the State of Kansas to $10,000.00, and harsher penalties for  not responding to Kansas Open Records Act requests in a timely fashion.

Budget Committees

Both budget committees continued with informational hearings in the third week of the session.

The House Appropriations Committee reviewed the report from a Legislative mental health initiative set up in last year’s budget bill. The report is an effort by the Legislature to gather information and also to set up another channel of communication with legislators, agencies, and mental health service providers.

While the State Hospitals have recently been the focus of much of the Governor and Legislature’s attention, other long standing mental health issues continue to require attention. Look for more mental health action by House Appropriations this session.

Senate Ways and Means held hearings on a bill establishing a new transportation centered group to study the needs for various highway, rail, and air transport issues that Kansas will face in the future. Various groups testified in favor the bill; cities, engineers, trucking interests, rail interests from across the state. There were no opponents.

Some Senators want to start the process of developing a new transportation plan, while also discussing funding issues at the state and federal levels. State highway funds have played an integral part of the budget debates in recent years. This effort is more pro highway plan and less using highway funds for other purposes.

Highway funding will likely be a component of this year’s budget debate, either way.

House Appropriations Chair Waymaster has said that that committee will likely start moving on budget subcommittees next week, but didn’t release a schedule, yet. Senate Ways and Means Chair McGinn hasn’t discussed budget subcommittees in great detail, yet.

Lansing Prison

On a 6-3 vote Wednesday the plan for CoreCivic to build a new facility was finally approved by the State Finance Council. There was some concern over the financing of the proposal that resulted in a series of delays before ultimately being resolved and approved. The new facility will be built on the grounds of the soon to be demolished Lansing State Penitentiary.

KanCare 2.0

Governor Brownback on Wednesday announced this week that the plan to update KanCare, dubbed KanCare 2.0 and first rolled out late last year, is now dead. The administration will instead work on improving the existing model of KanCare and the current providers of services will continue to do so.

Greg Orman

Also on Wednesday Olathe businessman Greg Orman officially announced his intention to run for Governor as an Independent Candidate. This announcement was hardly surprising given he had already raised nearly $500,000.00 for his campaign as reported in the end of the year campaign reports. However, it is now official; he is in and running. Orman last ran for the Senate in 2014 seeking to unseat Republican Senator Pat Roberts who ultimately defeated him. In that election the Democratic nominee, Chad Taylor, bowed out of the contest to clear the way for Orman and helping to make it largely a two person race. The Democratic Party of Kansas has already announced that this time no one would be stepping aside and Party Chairman John Gibson had some harsh words about Orman entering the race. It is widely assumed that a third party candidate will ultimately help the Republican candidate in this year’s Gubernatorial election.

Next Week

With a number of side issues resolved and the delays on the appointment of Governor Brownback to his new ambassador position next week could see the 2018 session begin to ramp up. The issue of school finance remains the cloud hanging over the entire session and at some point soon it is assumed it will begin to be addressed.

Kansas Legislative Report, January 15-19

The second week of the 2018 Kansas Legislative Session was very short with the Legislature being out on Monday in observance of the Martin Luther King Holiday and Friday being pro forma. That left only three days for actual work. The majority of that work was a continuation of informational briefings from the various state agencies as well as a few hearings on simple bills dealing primarily with technical matters and clarification of existing policies. Next week is a full week and will likely begin the ramping up from the languid pace of the first two weeks.

K-12 Funding

The principle issue of the 2018 session thus far remains the issue of meeting the Kansas Supreme Court order to address the adequacy portion of school funding. A number of hearings were held this week in each of the educational committees as well as Senate Ways and Means and House Appropriations. This was largely a rehashing of the reports the interim committees received prior to the start of the session and clarification on both the history of school finance litigation as well as the steps taken to comply with the constitutional requirement. The hearings were exclusively informational with no specific action being recommended. The only concrete policy currently on the table is in Governor Brownback’s budget calling for an increase of $100 million each year for the next five years. Meeting the Kansas Supreme Court’s order is the biggest issue that must
be settled this session.

State of the Judiciary

On Wednesday Chief Justice Lawton Nuss delivered the State of the Judiciary to a joint meeting of the House and Senate. Chief Justice Nuss stated the Kansas Judiciary will submit a budget to the Legislature calling for an increase in salaries for judicial employees. Chief Justice Nuss pointed out that Kansas ranks 49th in the nation in District Court Judge salaries and that entry level employees are barely paid more than the starting wage at Wal-Mart. These low salaries have resulted in a turnover rate of 15%, nearly 5 times the national average and that a third of judicial jobs provide salaries below the federal poverty line.

Federal Appointment of Governor Brownback

On Thursday Governor Brownback’s nomination to the post of Ambassador At-Large for International Religious Freedom was passed out of the Senate Foreign Relations Committee on a voice vote and sent to the full Senate for confirmation. Governor Brownback was nominated to the same position in 2017 but the Senate failed to vote on the nomination and it was not carried over to 2018 requiring the process to begin anew. There is no timetable for when the full Senate will vote but it is expected to be in the next few weeks and it is assumed he will be confirmed at that time.

Autonomous Vehicles

The House and Senate Transportation Committees held informational hearings on the future of autonomous vehicles this week. A variety of issues were discussed including reducing accidents; licensing and registering the vehicles; the potential benefit to the elderly and disabled; who is responsible in the event of an accident; the security of the guidance system; and what laws states need to be enacting to prepare for this new technology. Susan DeCourcy, regional administrator for the National Highway Traffic Safety Administration, said NHTSA is encouraging states to take steps such as reviewing all their motor vehicle laws and identifying those that may need to be changed to accommodate driverless vehicles. But she said the agency strongly discourages states from adopting laws or regulations that could be an impediment to deploying ADS vehicles.

Interesting Bills Introduced

While the majority of the work done this week was on informational briefings and hearings a number of interesting bills were introduced a few of which included:

  • Senator Skubal introduced a comprehensive bill to serve as a new highway plan going forward to replace the expiring ten-year-old T-Works bill.
  • The Office of Legislative Post Audit introduced a bill moving the responsibility for an annual audit on KPERS and the Kansas Lottery from their office to the offices of the agencies being audited. Legislative Post Audit Director Scott Frank, who is leaving soon for a similar position in the State of Washington, explained that his office does not actually do those audits but instead hires outside firms to perform the audit, which they then charge the agencies for. His belief is that moving them into the agencies will streamline the process without making any real changes to the way they are executed.
  • In House Appropriations Representative Landwehr introduced a bill tying a portion of the Kansas Lottery earnings to increased mental health services. This is a reintroduction of a bill passed by the Legislature last session before being ultimately vetoed by the Governor.
  • Senator Billinger in Senate Ways and Means requested a bill on amusement park rides and tourism. This follows up last year’s amendments requiring licensing and greater oversight. Also of note was a question raised in House Commerce by Representative Ralph. He asked the Kansas Department of Labor representative who was testifying about last years Amusement park legislation for their impression. Answer: Law was quick and turnaround short. We have worked with local units of government. Permit process is underway but there is room improvement. We have a new Amusement Park Coordinator. She oversees permitting, registration and investigation of serious accidents.
  • Bills were introduced on both the House and Senate side requiring the approval of the Legislature to enact changes to the state’s Medicaid program, KanCare. KanCare 2.0 was intended to make changes to the existing program and was unveiled by Lieutenant Governor Colyer last fall but now looks unlikely to move forward. It will be an issue to watch going forward.

The Legislature will reconvene next week and continue to work on a host of issues. It seems likely the focus in the early portion of the session will remain on K-12 funding until a consensus on how to meet the Kansas Supreme Court ruling is achieved. The Attorney General has requested that whatever the Legislature decides to do they complete their work by March 1st to give his office time to present their plan to the court. It should be a very interesting next few weeks as the 2018 session moves out of its slow start and into action.

Kansas Legislative Report – January 8-12

The 2018 Kansas Legislative Session commenced on Monday, January 8. Opening day was particularly brief with only a quick gaveling in to begin the session before adjourning. The 2018 session was expected to be relatively serene following last year’s tumultuous fight over the budget that included a massive tax increase to close the $350 million dollar shortfall. That all changed with the October ruling by the Kansas Supreme Court, the Gannon V ruling, that the state was failing to meet the Adequacy portion of the Rose Standards for measuring achievement and that more money would have to be spent. This resulted in a series of interim committee meetings over the last few months and cast a shadow over the upcoming session. The largest issue that must be decided this session is how the Legislature responds to the Gannon ruling and, if more money is to be spent, how much more and where will it come from.

Attention quickly turned to Governor Brownback’s final State of the State address, which he delivered on Tuesday evening. Governor Brownback was re-nominated for the position of Ambassador for Religious Freedom on Monday the 8th by President Trump and he is expected to be confirmed to the post in the coming weeks after which he will resign as Governor and hand over the reins to current Lieutenant Governor Jeff Colyer.

Governor Brownback’s speech was largely a reflection on his hopes for the future of the state and a listing of strides made in a number of areas including a continued reduction of the unemployment rate and the dramatic increase in wind energy over the last few years. The only truly dramatic portion of the speech was the Governor calling for $600 million in additional spending on K-12 over the next 5 years to meet the requirements of the recent Kansas Supreme Court ruling on school finance. This proposal received a harsh reception from Republican leaders in the Senate and a cautiously optimistic response from Democrats.

On Wednesday Budget Director Shawn Sullivan presented the “touch up” budget to the House Appropriations and Senate Ways and Means committees. The Budget projects a $266 million ending balance for the current fiscal year, $150.3 million the following year if no other changes are made beyond the $34.5 million in additional spending this fiscal year and the $290.3 million for next fiscal year the Governor’s budget calls for. The budget builds on the $1.2 billion in tax increases from last year and continued sweep of about $400 million a year in sales tax from the Kansas Department of Transportation.

The increase in K-12 spending called for in the State of the State speech includes the $93 million increase budgeted last year and calls for an additional $100 million per year over the next five years. A few of the more interesting budgetary increases aside from K-12 include an increase of $8 million to Corrections for increased salaries; $1.5 million dollars in salary increases for employees of the executive branch agencies who were left out of last years increases; increases of $18.1 million this year and $30.8 million next year for KPERS; spending $22.1 million to restore cuts made to Medicaid and $17.7 million to restore cuts to Nursing Home payments through KanCare.

The remainder of the week saw little activity with committees meeting to hear bill introductions and for brief informational hearings.

The Legislature is Pro Forma Friday, only gaveling in to introduce bills before heading home for the weekend and Martin Luther King holiday on Monday. Next week, expect to see mostly bill introductions and informational presentations by agencies, with a few bill hearings in select committees.

KS Legislative Report – May 22-26

The Kansas Legislature celebrated day 100 last Wednesday, which was the last planned day of the 2017 legislative session. While last week saw more movement on school finance; lawmakers continued to hit a wall on taxes, struggling to find a compromise with enough votes for either passage or a veto-override.

School Funding Bills Advancing

The full House finally had the opportunity to consider its K-12 finance measure on Wednesday. After five hours of debate and 14 proposed amendments, Substitute for House Bill 2410 was approved by a vote of 84-39. The bill appropriates $280 million in new funding for schools over the next two years, increasing the Base State Aid Per Pupil from $3,859 to $4,006 in Fiscal Year 2018 and $4,128 in FY 2019. After that, funding will be adjusted according to inflation, estimated around 1.5% a year or $55 million.

While most Legislators agree on the specific provisions in the new formula, opponents argue that the dollar amount will not meet constitutional muster in the courts. An amendment by House Minority Whip Ed Trimmer (D-Winfield) – retired teacher serving on the K-12 Budget Committee – to increase spending by $600 million over three years was defeated 47-75.

The Senate Select Committee on Education Finance also advanced their similar school funding bill on Wednesday. House Bill 2186 spends an additional $165 million on schools in FY 2018 and $70 million in FY 2019. After that, funding would increase by a rolling three-year inflation average. A previous proposal to increase funding by $150 million a year from a charge on utilities was removed this week. HB 2186 is expected to be debated by the full Senate tomorrow.

The Kansas Supreme Court’s latest ruling gave the Legislature until June 30 to pass a new school finance formula to replace the expiring two-year block grant.

Still No Tax Plan

 The House and Senate Tax Conference Committee met and agreed to a conference committee report (CCR) on Monday, which was defeated by the full House that evening by a vote of 68-53. The three-bracket income tax increase would have raised $591 million next fiscal year.

Back to the drawing board, negotiators signed a new CCR Tuesday morning. Senate Bill 30, a two-tier income tax plan, was scheduled to run on the House floor on Wednesday but pulled last minute as it appeared conservative support was waning. This tax plan is estimated to raise $488 million on FY 2018 and $460 million in FY 2019.

As it stands now, SB 30 would increase income taxes on all Kansans at the following rates: joint filers with income under $30,000 at 3% (currently 2.7%) and 5% on income over $30,000 (currently 4.6%). The increase would phase in with partial retroactivity for tax year 2017. It also includes a low-income exclusion of $5,000 for singles and $12,500 for married filers. The new income tax rates raise $412 million in FY 2018 and $384 million in FY 2019.

The bill also increases the alcohol enforcement tax from 8% to 10% effective July 1, 2017, which raises $15 million. It repeals the sales tax exemption on several personal services: towing, lawn care, detectives, security and guards, non-residential cleaning, personal care (tattoos, piercings, tanning) pet daycare, mini and self-storage, and custom computer software. That raises $61 million and goes into effect October 1, 2017 or upon renewal of an existing contract.

Other provisions include:

  • Repeal of the LLC loophole and glide path to zero on future income taxes.
  • 100% deduction on medical expenses.
  • Buy-down on food sales tax from 6.5% to 5.5%, effective July 1, 2020.
  • Five-year extension of the STAR Bond program, with a 1-year moratorium on new projects beginningSeptember 1, 2017.
  • Aviation tax credit, effective July 1, 2017. Estimated to cost $7.7 million.
  • Ad Astra rural jobs tax credit, effective July 1, 2020. Estimated to cost $10 million.

Conservatives Propose Budget Solution 

A group of conservative lawmakers unveiled their “Republican Balanced Budget Solution” during a press conference last Monday. The plan calls for no new taxes, no new spending, and leaves an ending balance of $54 million for FY 2018.

Conservative lawmakers believe the key to avoiding a tax increase on Kansans is to eliminate any new spending in next year’s budget, other than increases in Medicaid caseloads. Included is a partial securitization of the state’s Tobacco Master Settlement Agreement of $19 million to pay toward KPERS, while leaving the roughly $40 million spent on children’s programs intact.

It’s rumored that the group is meeting with House and Senate leadership early this week to consider a hybrid of the Republican plan with a smaller tax increase that could be considered.

Hospital Conceal Carry Prohibition Reconsidered 

The Senate Ways and Means Committee met last Tuesday to reconsider Senate Substitute for House Bill 2278 after the full Senate sent it back to committee last week for more work. The bill exempts state hospitals, community mental health centers and the University of Kansas Medical Center from allowing concealed handguns starting on July 1, 2017. College campuses are currently not included in the bill.

As of last Tuesday, a compromise between the interested parties had not yet been met, so the committee stripped from the bill an amendment made on the Senate floor – allowing conceal carry for licensees only (which would have killed the bill) – and sent it back to the floor for anticipated debate next week. Before kicking the bill out, the committee also added a provision that would not hold public employers liable for any wrongful act with a handgun by their employees outside of their facility.

HB 2278 will save the state at the minimum $12 million for installing adequate security measures at the four state mental hospitals, which would have otherwise been required by current law.

Legislature Approves Common Consumption Areas

The House concurred with the Senate’s amendments to Substitute for House Bill 2277 and sent the bill to the Governor by a vote of 97-22 on Tuesday. The bill allows adults to carry drinks into public common grounds and sidewalk areas, and authorizes a city or county to designate its boundaries and establish times for alcohol consumption.

Originally introduced by the city of Lenexa as part of their Vision 2030 plan for the construction of the Lenexa Public Market, other proponents argue the bill will spur economic development in their communities as well. Representative John Alcala (D-Topeka) spoke in support of the bill on the House floor citing the benefits to Topeka’s NOTO downtown district.

Looking Ahead

Legislators return to Topeka today to continue their work. We are keeping our eye on many issues especially extension of STAR Bond district legislation, insuring no further cuts to higher education, and any action related to concealed carry on college campuses.

Legislative Update: Week 15

The Kansas Legislature is not much closer to adjournment, unfortunately, with little advancement on major tax policy or budget issues last week. However, we did see movement on school finance as the House K-12 bill was voted out of committee on Monday and a new Senate education plan was introduced on Wednesday. Some are hoping that the Senate’s measure with targeted funding could be the kick start needed to finish the rest of the work for the year.

 

Negotiations Stalled on Full Repeal of 2012 Tax Cuts

The House and Senate Tax Conference Committee met late yesterday to discuss a full repeal of the income tax cuts passed in 2012. However, negotiations stalled after Senators refused to have simultaneous floor debates and votes and requested the House consider the measure first.

 

In addition to bringing small business non-wage income back on the tax rolls and eliminating Governor Brownback’s glide path to zero, the plan would also increase rates on all income taxpayers in Kansas. Joint filers would pay 3.5% on income under $30,000 (currently 2.7%), 6.25% on income under $100,000 (currently 4.6%), and creates a top bracket of 6.45% on income over $100,000. The measure would also partially increase rates retroactively for tax year 2017.

 

Returning to pre-2012 rates would raise state revenue by $649.5 million in FY18, $722 million in FY19, $781 million in FY20, and $791 million in FY21. More than enough to fill the budget shortfall, it’s still not clear if it’s enough to cover additional investment in K-12 education as well. Senate Hearing on Sales Tax Exemption Repeal, Reduction on Food

The Senate Assessment and Taxation Committee held two days of hearings on a bill that would repeal several sales tax exemptions on personal services. House Bill 2380 would save the state roughly $58 million in FY18 and FY19 and uses the revenue to buy down sales tax on food from 6.5% to 5.5% effective in FY2020.

 

As currently written, the repealed sales tax exemptions in the bill are on the following personal services: towing, detective services, security guards and patrol services, non residential cleaning, pet daycare, mini and self-storage and collection agencies. Non-profit, public gym memberships (to include YMCAs) are not included. Bill author Representative Kristey Williams (R-Augusta) testified during the hearing that additional sales tax exemptions are being considered, bringing the total savings to $162 million. Kansas currently has $6.2 billion worth of sales tax exemptions on the books. Committee Chairwoman Caryn Tyson (R-Parker) has not indicated when, or if, the committee will work the bill. It passed the House by a vote of 78-42 on Monday.

 

House Committee Reluctantly Forwards K-12 Bill

After months of hearings and work on a new school finance formula to replace the expiring block grant on June 30, the House K-12 Budget Committee passed Substitute for House Bill 2410 on Monday. The official motion was to report the bill without recommendation and was approved by a vote of 10-6.

Originally including $150 million/year over the next five years in additional state aid toward schools, the funding was reduced at the last hour to $180 million in FY18 and $100 million in FY19. The increase in the remaining years of the five-year plan would be based on the cost of living index.

 

House Speaker Ron Ryckman Jr. (R-Olathe) announced on Wednesday that Sub. for HB 2410 would be subject to the “pay-go” rule, requiring any appropriation be off-set by a matching decrease in spending in the same bill. The rule can be challenged on the floor, but it appears the Speaker’s designation could have stalled debate, as the bill remains below the line on General Orders.

 

Senate Introduces New School Funding Formula

The Senate’s Select Committee on Education Finance introduced their own school finance formula, Senate Bill 251, on Wednesday. Key to the bill is that it includes a utility surcharge funding mechanism that raises $150 million per year dedicated to schools. The proposed fee on all utility bills (water, gas and electric) would be $2.25 for residential and $10 for commercial, effective July 1, 2017. Chairman Jim Denning (R-Overland Park) argues that the surcharge on utilities is the broadest fee in Kansas, and including specific appropriation in the bill will show the Supreme Court that the Legislature is serious about funding schools and not relying on sometimes-volatile tax revenue from the State General Fund.

 

Other key differences between the Senate and House plans include:

  • Capital outlay levy is increased from eight to ten mills and expands approved expenditures to property and casualty insurance and computer maintenance.
  • Prohibits local tax abatement of 20 mill statewide levy toward future economic development projects.
  • Includes cost of living weighting but removes Local Excellence Budget option for some

districts.

  • Reduces at-risk weighting to previous formula level.
  • Removes funding that requires districts provide Applied Behavior Analysis treatment for students with autism.

 

The committee began hearings on SB 251 yesterday. The major opposition to the bill is from utility companies opposing the surcharge to their customers.

 

Guns at Hospitals Bill Back to Committee

After nearly two hours of debate on Tuesday, the Senate voted to send Senate Substitute for House Bill 2278 back to the Senate Ways and Means Committee for more work. The bill would exempt state or municipal-owned medical care facilities and adult care homes, community mental health centers, and all buildings associated with the University of Kansas Medical Center from impending law starting on July 1, 2017 that would allow conceal carry in all public buildings without adequate security.

Senator Ed Berger (R-Hutchinson) proposed an amendment to the bill that allows licensed conceal carry for state hospital employees only, which narrowly passed 21-19. Senator Barbara Bollier (RMission Hills) attempted to exempt state universities as well but was interrupted by a substitute motion to refer the bill back to committee for further consideration. The Kansas Department of Aging and Disability Services (KDADS) has said it will cost $12 million to hire and train armed security guards and install metal detectors at every entrance of the four state mental hospitals should this bill not pass. There is talk that the interested parties from KDADS, National Rifle Association and KU Hospital are in negotiations with Governor Brownback on a potential compromise.

 

 

Common Consumption Areas Approved by Senate

The Senate approved a bill on Tuesday by a vote of 35-5 that would allow adults to carry drinks into public common grounds and sidewalk areas. Substitute for House Bill 2277 authorizes a city or county to establish one or more “common consumption areas” by ordinance or resolution, designate the boundaries, and establish times during which alcoholic liquor can be consumed. The bill passed with two minor amendments, so a conference committee will be appointed to negotiate final differences between the House and Senate positions. The House passed the bill by a vote of 114-11 last month.

 

Josh Svaty Announces Democratic Run for Governor

Josh Svaty (D-Ellsworth) announced his 2018 candidacy for governor on Tuesday. Svaty, 37, was former Kansas Secretary of Agriculture under Governor Mark Parkinson and a House Representative from 2003-2009. Most recently, he served as a senior advisor for the Environmental Protection Agency and vice president of the Land Institute. He also owns and operates a family farm in Ellsworth County.

 

Looking Ahead

The Senate gaveled in Friday at 8:00 a.m. and quickly broke for the Select Committee on Education Finance to continue hearing testimony on their K-12 funding bill. There is a chance they will work the bill over the weekend. The House considered one item on General Orders Friday but adjourned for the weekend before noon.

Week 1 of Veto Session

Kansas lawmakers wrapped up the first part of the 2017 legislative session on April 7 and returned to TopekaMay 1 after a three-week spring break. Heading into Veto Session, Legislators still faced the same dominant issues since January – budget, taxes and school finance.

With one week down and no still no tax plan, budget, or K-12 formula, there is much speculation about how long this wrap-up session will last. Legislators have already approved extending the statutorily-approved 90-day session by 10 days in anticipation of the hard work in front of them this year.

First Item of Business? Taxes

The Consensus Revenue Estimating Group, made up of university economists and state budget officials, met on April 20 to revise the November 2016 State General Fund (SGF) forecast revenues. They announced at a joint meeting of the House Appropriations and Senate Ways and Means Committees last week that the state is expected to see increased tax revenues of $156.4 million over November’s projections. Receipts are expected to be up $62.5 million for the remainder of FY17, up $42.9 million in FY18, and up $51 million in FY19. These new estimates bring the expected budget shortfall to $889 million over the next two years.

After several efforts to pass a “flat” income tax bill during the regular session failed, legislators spent the week taking a second look at several three-bracket plans that would also repeal the small business tax exemption and eliminate the March to Zero trigger on reducing future income taxes.

Last Monday, the House and Senate Tax Conference Committee met and agreed to a plan similar to the bill vetoed by the Governor earlier this year that fell three votes short of an override in the Senate. The new plan phased in the higher rates making them effective July 1, 2017 in hopes that removing full retroactivity back toJanuary 1 could be the key to gaining a veto-proof majority this time around.

Despite the adjustment, opponents argued the bill didn’t raise enough money to fill the budget gap and fund schools. Debate was quickly called off Tuesday morning when Senate leaders realized they did not have enough votes to pass it over to the House. The bill was expected to raise $425 million in FY18 and $454 million in FY19.

On Tuesday, tax negotiators met again and agreed to an identical plan to Monday’s, only with higher rates for each bracket. Once more, floor debate was called off on Wednesday in the House due to lack of support. Major opposition this time was over passing a tax package before lawmakers know exactly how much money is needed for K-12 schools. Tuesday’s tax bill would have raised $514 million in FY18 and $548 in FY19.

The latest tax proposal on the table, House Bill 2228, was passed by the Senate Tax committee. It only has two brackets: joint filers under $12,600 would be at 0%, everyone else at 4.4% (essentially a flat tax). It closes the LLC loophole but removes all retroactivity making the new rates effective January 1, 2018. The bill also reduces the sales tax on food from 6.5% to 5.5%. The fiscal impact was unknown at the time of this writing, so it’s still unclear if this plan raises enough money or has enough support to bring it to the floor for debate.

Budget

Once a tax bill passes and appropriators have firm projected revenue numbers, the biennial budgets for FY18 and FY19 should move quickly. The Senate passed their mega spending bill before the April break, while the House’s budget is still awaiting debate and vote on the floor.

Meanwhile, both the House Appropriations and Senate Ways and Means Committees have assembled their “Omnibus” or catch-all budget bills that typically close out the legislative session.

House Bill 2002 passed the Senate Ways and Means Committee. A few key spending items include: restoration of previous cuts to higher education and Medicaid providers, full payments to the Kansas Public Employee Retirement System (KPERS) in both FY18 and FY19, and allowing the Kansas Department of Transportation bonding authority for an additional $400 million toward preservation and maintenance TWORKS projects.

The House Appropriations Committee met Friday morning to finish up their Omnibus work.

School Finance Formula

The House K-12 Budget Committee finished their work on a new school finance formula before first adjournment. House Bill 2410 is to replace the expiring two-year block grant funding system that’s been found unconstitutional by the Kansas Supreme Court. Closely resembling the old formula, the new plan targets more at-risk, low achieving students and increases funding by $150 million per year over the next five years.

The Legislative Coordinating Council hired attorney and former Senator Jeff King (R-Independence) before leaving for spring break to review the bill and create a record of evidence for the courts as lawmakers finalize the legislation. King presented his initial report to the K-12 Budget Committee, advising them to take a second look at targeting funds to the 25% of underperforming students ensuring they’ve addressed the key part of the Supreme Court’s ruling.

HB 2410 may see some tweaks early this week before being debated by the full House.

Guns at State Hospitals

During a joint meeting of the House Appropriations and Senate Ways and Means Committees last week, Governor Brownback’s budget staff presented the Governor’s Budget Amendments (GBAs) to his proposed budgets for FY18 and FY19. Included was an amendment requesting $12.5 million in FY18 and $11.7 million in FY19 for security enhancements at the four state mental hospitals. The exemption for state hospitals from requiring conceal carry of weapons expires on July 1, 2017 unless adequate security measures are in place.

The Kansas Department for Aging and Disability Services took significant heat from Legislators this week frustrated with the agency’s delay in planning for the impending change in law and requesting the needed funds so near the end of the fiscal year. In response, the Senate Ways and Means Committee yesterday passed out House Bill 2278, which would permanently prohibit guns at public hospitals and mental health centers. An amendment was offered but voted down to add college campuses to the bill. As of now, Regents universities are still required to allow conceal carry on campuses beginning this summer.

STAR Bonds

The House passed House Bill 2148 by a vote of 112-1. Set to expire on July 1 of this year, the bill extends the sunset of the Sales Tax As Revenue (STAR) Bond program to July 1, 2022. It also eliminates language allowing a county commission or school board to object to a STAR bond district if it’s determined to have an adverse effect on local property taxes, and no longer requires the Secretary of Commerce to approve a city/county option to use transient guest taxes for bond payments.

HB 2148 moves to the Senate Commerce Committee for consideration. However, since it’s passed one Chamber the bill can be taken up in a conference committee.

Rainy-Day Fund

The House Appropriations Committee passed House Bill 2419. The bill establishes the framework and guidelines around the newly-formed Budget Stabilization Fund.

HB 2419 authorizes the Budget Director to transfer the amount of actual estimated tax revenue receipts in excess of the average estimated tax revenue receipts for the preceding three fiscal years. It also outlines three criteria required for expenditures out of the rainy-day fund. HB 2419 goes into effect in FY2020 and is awaiting consideration by the full House.

State Employee Health Clinics

House Bill 2418 passed the House Appropriations Committee and appropriates $2.7 million in FY18 to the Department of Administration (DOA) to establish and operate an on-site state employee health clinic. The state is expected to see savings in health care premiums after five years.

The bill was amended in committee to: give the DOA authority to lease space near the Statehouse should no state-owned building be available, address the RFP and bidding process, and expand definitions to encompass all health care providers allowed to provide services at the clinic. The House is expected to consider HB 2418 sometime during the Veto Session.

Looking Ahead

With the “big three” issues remaining, we expect at the very least another week or two of the Veto Session. Today marks the 82nd day of the legislative session.

Final Week of Regular Session

The Kansas Legislature adjourned the regular session before noon Friday and will return on May 1 for the veto session. The final week of the regular session was spent mostly in conference committees, where negotiators ironed out House and Senate positions on many bills. We also saw floor action on a few major issues…here are some highlights.

Rescission Bill to the Governor 

Senate Substitute for Substitute for House Bill2052 is on its way to the Governor’s desk. The bill makes several adjustments to the FY17 budget based on actual revenues to ensure the state closes its books in the black on June 30. After March revenues came in $12.8 million less than estimated, the projected shortfall for this fiscal year is $290 million.

The meat of Senate Sub for HB 2052 is the authorization for Budget Director Shawn Sullivan to borrow from idle state funds to ensure a $50 million ending balance. An initial agreement between the House and Senate returned to conference committee Thursday over the fourth quarter $85.9 million payment to the Kansas Public Retirement Savings (KPERS) program. Senate negotiators quickly accepted the House’s position to appropriate the funds.

The Senate approved the final rescission bill 30-10 Thursday. The House voted 108-15.

Senate Kills Flat Tax Plan 

The Senate essentially squashed any “flat” income tax idea for this year when they overwhelmingly killed Senate Bill 214 by a vote of 37-3 Thursday. The bill proposed a single bracket, 4.6% income tax rate effective January 1, 2018. The ever-popular repeal of the 2012 small business tax cuts was not enough to make Senators vote for a tax increase on low income Kansans. The current rate for filers making under $30,000 is 2.6%.

Earlier in the week Governor Brownback announced that he would sign SB 214, or something similar, so the nearly unanimous rejection of the bill carried a strong message with it. It appears that most lawmakers in both Chambers are holding firm on a multi-tier tax bracket plan like the one the Governor vetoed earlier this year.

New Budget Stabilization Bill Heard

The House Appropriations Committee held a hearing on House Bill 2419 on Wednesday. This new bill establishes the framework and guidelines around the newly-formed Budget Stabilization Fund. PEW Charitable Trusts testified during the hearing that states should save above-average collections of estimated payments on personal income tax rather than relying on this volatile and unreliable revenue to fund the general budget.

The FY17 rescission bill includes a provision that instructs the Budget Director to transfer 10% of any remaining balance in the State General Fund from the previous fiscal year into a rainy-day fund beginning in FY2020.

Looking Ahead 

The FY17 rescission bill was the key to adjourning the main portion of the 2017 Legislative Session. The Senate has passed their FY18-FY19 mega budget, but the House’s measure has yet to be considered by the full body. The House Appropriations and Senate Ways and Means Committees have scheduled joint meetings onApril 27 and 28 to review the consensus revenue estimates to be released on April 20 and begin discussions on the “omnibus” budget bill.

Now that Legislators have generally taken a position on where they stand on taxes, we expect that to be the first issue taken up when they return on May 1.