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.

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