Kansas Week of Feb 17, 2017

3rd Annual MAMA Day on the Hill

The MAMA Day on the Hill was this past Wednesday, February 15th. Attendees got their picture taken with Governor Brownback and visited with several new members of House and Senate leadership. Speakers talked about some of the tax measures that were addressed this week to try to fill the budget gap for this fiscal year and the anticipated shortfall for next fiscal year. The day on the hill is productive because it gets our members more comfortable and knowledgeable on the Legislative process in Kansas. It also raises the profile of our association with the Kansas Legislature. There has been a lot of turnover in the legislature and it’s important to meet the new members and continue building relationships with current members. Thanks to all those that attended this year and helped make it a success.

 

House passes tax bill

The House, 76 to 48, passed its income tax increase bill ,that eliminates the LLC exemption and creates a third tax bracket, to the Senate. Senators killed a Democrat-crafted tax bill yesterday and is working on the House bill today.

Of the 76 yes votes, 40 were Republicans and 36 Democrats; of the 48 no votes, 44 were Republicans and 4 were Democrats. One Republican was absent. This vote is 8 votes less than is needed to override a gubernatorial veto of the measure.

The vote appears to establish a moderate Republican/Democrat consortium that will show the House's willingness to reject Gov. Sam Brownback's tax plan which would allow him to preserve the tax exemption for the LLCs that he campaigned on for re-election in 2014 and has championed with threats to veto its removal.

The bill raises about $590 million in upcoming Fiscal Year 2018 and $453 million the following year. That's less than the Senate bill that was rejected yesterday but more than the governor's budget plan which raises less than $200 million in each of the upcoming years, largely from cigarette and liquor taxes with a dab of filing fee increase and adding rents and royalty receipts to individual income tax liability.

The House now moves to consideration of a relatively Brownback-friendly rescission bill and a measure to borrow idle funds to make it through the current fiscal year's estimated $325 million deficit. 

 

Brownback blasts House tax plan

Gov. Sam Brownback criticized the House's income tax bill but stopped short of threatening to veto the bill should it be passed to him.

Brownback's statement:

"The House moved forward on the Democratic tax bill that would pummel the pocketbook of middle class families. It drastically hikes taxes retroactively on workers making as little as $15,000 annually. While on the campaign trail many of these representatives pledged to raise taxes on the wealthy, but now they are attempting to tax everyday Kansans. It doesn't have to be this way. I will continue the fight to keep your income taxes low.

"This plan also unfairly raises taxes retroactively on Kansas job creators, sending a negative signal to businesses looking to start or relocate in Kansas. There is a better way. My budget solves the challenges of today, has solutions for tomorrow, and avoids punishing tax increases on middle class workers, families, and job creators."

The House plan is retroactive to Jan. 1 of this year (first day of Tax Year 2017) The tax hike for married couples filing jointly with taxable income of $15,000 or less does away with a tax cut that current law provides for- eliminating a drop from 2.7% to 2.6% for those taxpayers-as does the governor's tax proposal which hasn't been OK'd in either chamber's tax committees.

 

Senate kills tax bill

The Senate, 30-10, yesterday afternoon killed not only a revenue-rich Democrat-sponsored income tax plan, but also a smaller Senate Republican-sponsored income tax revision plan, and is working today the House-passed income tax increase measure.

Sen. Tom Holland, D-Baldwin City, offered the Senate GOP plan as a gut-and-go to the Democrat plan and it was rejected with no audible votes.

Holland then returned to the Democrat-sponsored bill, which raises more money for the state than any considered this year. He lauded it as a cure for the state's revenue shortfall and saw it killed, with Sen. Randall Hardy, R-Salina, joining the chamber's 9 Democrats in the 30-10 vote.

The action sets the stage for today’s Senate plan to convene at 8 a.m. to debate the bipartisan tax plan approved 76-48 by the House.

It is widely presumed the Senate will pass the House's bill to Gov. Sam Brownback, who has opposed the bill but hasn't used the "V" (veto) word publically but privately has promised to veto any bill that removes the LLC loophole. His staff had no additional missives today from the governor, just "that he has said he won't sign it." That could mean if he leaves the bill untouched for 10 days after he receives it, it becomes law without his signature.

Brownback consistently opposes elimination of the LLC non-wage tax exemption, which he calls a business-booster for the state, and chides the remainder of the bill for raising the income tax rates of most middle-income Kansans.

Holland, in pushing for the LLC exemption elimination, said that of the roughly $205 million that exemption costs the state in revenues, 2% of top-income filers save $121 million or 65% of the value of the exemption, while LLC owners with non-wage incomes of less than $25,000 save only about $158 each under the plan, which Brownback would erase with his proposal to increase LLC filing fees from $40 to $200 a year.

The Senate Democrat proposal would have returned the state to three tax brackets, eliminated non-wage income exemption for LLCs and restored medical expense deductions. All tax measures considered so far end the "ratchet" provision which aims to reduce individual income tax rates based on increased revenues until there is no individual income tax and then corporate tax rates start being trimmed.

The Democrat bill killed yesterday was projected to raise $702 million in the upcoming fiscal year, $513 million in the next year. The House-passed plan to be debated by the Senate today is projected to raise $590 million in the upcoming fiscal year and $453 million the following year. The first-year revenues from the tax plans being considered are based on them being retroactive to Jan. 1 of this year. That retroactivity bonus fades the second fiscal year income taxes are in place.

 

Resman sworn in

John Resman, Olathe, was sworn in this morning at the opening of the House session to replace former Rep. Mike Kiegerl, R-Olathe, who resigned his District 121 House seat.

Kiegerl has health problems, and Resman, who was selected to replace Kiegerl Monday night, will take office immediately after his swearing-in.

Resman is retired from the Johnson County Sheriff's office, where he worked 28 years. Last fall he lost the GOP primary in the Johnson County Sheriff race.