Kansas Week of Jan 13, 2017

Kansas Legislature Opening Day

Kansas House and Senate members were sworn into office quickly Monday afternoon, House members 10 at a time, senators 5 at a time, in their respective chambers, and the interest quickly turned to Tuesday's 5 p.m. State of the State message and Wednesday's briefing on the governor's plan to balance the budget for the remaining six months of this fiscal year.

Kansas Supreme Court Chief Justice Lawton Nuss swore in House members, Supreme Court Justice Marla Lukert swore in senators. The House gallery was tightly packed with friends and family of lawmakers; the smaller Senate chamber was so packed visitors were probably afraid to scratch.

The Senate was in session for 52 minutes, the House 72 minutes on opening day.

No real business, just introducing pre-filed bills and approving unanimously the party caucus votes that saw Rep. Ron Ryckman, R-Olathe, become Speaker of the House and similar unanimous votes that put Sen. Susan Wagle, R-Wichita, into her second term as president.

Five-term Rep. Marvin Kleeb, R-Overland Park, resigned his seat effective Tuesday to be succeeded by Abraham Rafie, R-Overland Park, bid farewell to the House, introduced his new bride, and received a standing ovation for his service.

In the Senate, Wagle and Minority Leader Anthony Hensley, D-Topeka, both spoke specifically about the $350 million budget shortfall for the current fiscal year, Hensley saying his caucus is willing to work toward tax fairness, Wagle saying that the Senate can find common ground for a solution and "if we work together, history will be kind to us."


House Tax starts

Less than an hour after taking their oaths of office, members of the House Tax Committee were sketching hazy outlines of major tax changes for the upcoming year and introduced a bill that would eliminate the four-year-old income tax exemption for Limited Liability Corporations, sole proprietorships and others.

It was the fastest first-day committee action in recent memory and Tax Chair Steven Johnson, R-Assaria, was looking for broad outlines of legislation the committee will pursue to boost state revenues.


Governor’s State of State

The reaction by legislative leaders to Gov. Sam Brownback's 32-minute State of the State Address Tuesday evening was predictable, and the speech itself provided some hints to what Brownback is looking for in a budget-fix bill and a new K-12 school finance plan.

Brownback stayed firmly supportive of the 2012 income tax bill which has helped create a budget shortfall and let more than 300,000 Kansans escape income taxes, saying that the effort is spurring economic development and bringing jobs to the state.

The governor also said he opposes expansion of the Affordable Care Act and Medicaid (KanCare here) because more Kansans are receiving health care than in the past, asserting that "It would be foolish to endorse the ObamaCare expansion of Medicaid. Kansas was right (in rejecting Medicaid expansion). Kansas should stay the course," Brownback said. 

Brownback said after his speech that he wants merit pay for schoolteachers, and that it should be part of a new K-12 school finance formula he wants passed this session, but that it probably isn't worth vetoing a finance bill that meets his other requirements of rewarding school districts which produce high-quality graduates.




Short-term borrowing

is current budget fix

Gov. Sam Brownback's proposal for fixing the $350 million budget shortfall this fiscal year is largely internal borrowing of state idle funds, to be paid back to agencies over seven years.

That's about $317 million of the shortfall, including tapping unclaimed property and other small funds for $45 million and taking about $27 million or more from the folding of the Kansas Bioscience Authority and cuts in KPERS payments worth about $86 million, while extending by 10 years to 2043 the actuarial balance target for the retirement account.

The cuts in current year spending are designed to yield a theoretical ending balance of $99 million which includes delaying a school finance payment into the next fiscal year rather than making an $86 million payment in the current fiscal year which 

For the biennial budget for Fiscal Years 2018 and 2019, which starts July 1, Brownback is proposing a handful of spending increases-including restoring the 4% cut to KanCare providers of health care to the poor.

Sullivan said the plan includes securitizing tobacco settlement payments-typically about $55 million to $60 million a year from cigarette manufacturers, which should net the state about $530 million-which depending on the financial markets could yield as much as $775 million. Essentially, the state sells the next 30 years of those expected tobacco payments for cash-in-hand and spends the proceeds. Sullivan said the tobacco money has traditionally been spent on programs to aid children but those programs now would be paid for from the State General Fund.

The governor proposes a tax plan expected to yield $180 million in the upcoming fiscal year and $198 million the following year. He carefully avoids tax rate increases on hisLLC tax plan.

Those increases are restoring the income tax on passive income, generally rents and royalties, worth about $40 million a year and freezing the bottom Kansas income tax bracket at 2.7%, which eliminates a planned reduction to a 2.6% rate worth $4.8 million in FY 2018 and $16 million in FY 2019.

For those LLCs, he proposes increasing the annual filing fee for owners from $40 to $200 for currently tax-exempt LLCs and similar businesses. That 500% increase in filing fees-not actual taxes-is expected to raise about $33.6 million each year for the next two fiscal years. 

Brownback-who last year proposed a $1.50 a pack cigarette tax increase and was handed just 50 cents by the Legislature-is going back for the other $1, which would put cigarette taxes at $2.29 a pack starting July 1 and which would raise about $41 million next fiscal year and $46 million in the following year.

He would also double from 10% to 20% the tax on other tobacco products-snuff, chewing tobacco, cigars and such-to raise $6.2 million next year and $7.8 million the following year.

He's also proposing doubling the tax on liquor, from 8% to 16%, which should net $52 million next year and $54 million the following year. That liquor tax boost would occur on July 1, giving folks time to stock up for 4th of July parties...


On the spending side, for the final two years of his administration, the governor is proposing legislation to force all 286 Kansas school districts to join a single health insurance program tied to the state employee health insurance plan, saving districts some $47 million in the upcoming fiscal year and about $90 million the year after. That boosting of the state insurance plan numbers might mean lower, or at least stabilized, rates.

He's also proposing moving all Medicaid (KanCare) management to the Kansas Department of Health and Environment as an overhead savings, extending the contract with the state's three managed care providers for another year and increasing fees of those providers from 3.31% to 5.77%, to create a fund to increase reimbursement rates to health care providers, targeting $20 million of that boost to rural hospitals.

The two-year budget proposes continuing to strip the sales tax transfers from the Kansas Department of Transportation, which would boost the SGF by $288 million in the next fiscal year and $293 million in Fiscal Year 2019.

For higher education, Brownback plans to spend $3 million in FY 2018 and $6 million the following year for scholarships for teachers who teach in rural areas and flat operating grants for the state's higher education system for the next two years. 

The budget plan debut was to the House Appropriations and Tax committees, followed by the Senate Ways and Means Committee midweek.



First debate Thursday

The House had its first debate of the session Thursday when it considered a bill aimed at updating the specific election laws that apply to filling a vacancy in a congressional seat, a fairly complex and different set of laws than for conventional elections.

The bill comes to focus as the U.S. Senate is considering the appointment by President-elect Donald Trump of 4th District U.S. Rep. Mike Pompeo, R-Kan., to be director of the Central Intelligence Agency. Pompeo hasn't stood for a confirmation hearing yet or resigned his House seat.

Key to the new bill is changing from 17,000 to 3,000 the number of signatures on a petition to put a non-party candidate on the ballot, delay the election for a replacement member of Congress from the current 60 days to 90 days and allow for quicker calling of conventions to select a candidate for the vacant seat.



House passes Pompeo replacement bill

The House, while a U.S. Senate committee in Washington, D.C., was interviewing U.S. Rep. Mike Pompeo, R-Kan., who has been nominated by President-Elect Donald Trump to lead the Central Intelligence Agency, passed 122-1 a bill to update Kansas election law allowing a successor to be elected should Pompeo get the job and resign his District 4 congressional seat.

The bill, first of the session passed by one house to the other, takes the selection process for a replacement member of Congress from 65 days to 95 days and will require just 3,000 signatures on a petition to put a non-major party candidate on the ballot for that election. 




Four Day Weeked begins


The House debated and passed measures Thursday as the opening week of the 2017 session got started and headed into what for most can be a four-day weekend.

Both the Senate at 8 a.m. and House at 9 a.m. will be pro forma Today, just introducing bills and getting out of town ahead of a forecast weekend ice storm and Monday which is Martin Luther King Day.

House and Senate leadership apparently by today hadn't huddled to see which chamber will take first action on the governor's rescission bill and his biennial budget bills.