Kansas Week of Jan 20, 2017

House, Senate quiet

There were bill introductions, but it was quiet in both chambers as work focused on committee action, where in both chambers budget and tax committees were working to deal with the $350 million budget deficit this fiscal year and plan for the upcoming biennial budget.

In both chambers, committees are still hearing explanations of Gov. Sam Brownback'srescission bill to finish the current fiscal year in the black and the biennial budget for the last two years of Brownback's governorship.


LLC tax hearing

Controversy over the fiscal note on reimposing state income tax on earnings of LLCs, farms, the self-employed and some specific corporations colored the Legislature's first hearings on an LLC tax exemption "fix" bill in the House Tax Committee.

The bill would make non-wage income taxable again after it was exempted from state income taxes in 2012. This issue has been a powerful political/state revenue issue, and this appears to be the first session since its passage that there is a reasonable chance the exemption will be removed.

But the fiscal note problem-how much money reimposing taxes on that money will raise for the state-becomes serious as a way for lawmakers to use it as a revenue shortfall stopper in the coming two fiscal years.

Gov. Sam Brownback opposes reimposing state income tax on so-called "non-wage" income.

The fiscal note controversy began weeks ago, when preliminary estimates of reimposing the tax were generally in the $260 million to $280 million a year range. The fiscal note presented to the House Tax Committee this week from the Division of Budget, an arm of the Brownback administration headed by Director of the Budget Shawn Sullivan, estimated lower proceeds from reimposing the tax.

The official fiscal note signed by Sullivan projected Fiscal Year 2018 revenues of $178 million and FY 2019 revenues of $139 million if the tax is reimposed.


The fiscal note problem instantly raised questions among observers, whether the administration low-balled the fiscal note to make the proposal less of a solution for the state's revenue shortage. That would have the effect of requiring lawmakers to vote for other tax increases that are politically less attractive, which works in the governor's favor.

Key to the bill's passage is whether it fixes the projected shortfalls in revenues in the coming two years, and the fiscal note is the focus. 

Hearing will continue next week in House Tax on the bill.


Pompeo bill signed

Gov. Sam Brownback signed the congressional replacement bill, clearing the way for an expedited procedure to elect a successor to U.S. Rep. Mike Pompeo, R-Kan., if he is confirmed as Central Intelligence Agency director in the administration of President-elect Donald Trump.

The measure moved quickly from the House to the Senate and the governor's office. 

Key is that with the governor's signature, it's the law that will apply to a vacancy in the congressional seat, not only speeding the replacement election process but getting the 4th Congressional District a congressman quickly.

Brownback said he was glad the bill-first of the 2017 session-was handled so quickly. 

The measure speeds the time Brownback will have to call a special election if Pompeo resigns his seat to run the CIA, speeds nomination of candidates for the office and reduces to 3,000 the number of petition signatures needed by independent candidates to get on the ballot.