Not sure if it was the unseasonably warm weather or not, but action in the statehouse was perhaps a little more quiet than usual for this time in the session. Committees continue to evaluate proposals as the legislature works toward first adjournment. Appropriators continue to work through agency budgets that have been vetted by their subcommittees as they work towards crafting a comprehensive budget proposal for consideration later this session.

 

Food Sales Tax

From day one there has been enthusiasm on both sides of the aisle for addressing the sales tax imposed on food. However, to what extent we do that has proven to be a bit of a stumbling block. Governor Kelly continues to call for a total elimination of the state portion of the tax citing continued strong tax receipts. Others, however, are urging a more conservative, phased-in approach due to concerns about long-term implications.

The House Taxation Committee kicked the tires on HB 2711 and HB 2720 this week as lawmakers continued to look at different approaches. HB 2711 would cut the tax to 3.5-percent and trigger further reductions based on balances in the Budget Stabilization Fund. The bill also proposes a smaller reduction in the sales tax rate for other items. HB 2720 focuses more on eliminating the food sales tax on SNAP-eligible foods.

Reducing the sales tax on food seems deceptively simple but other factors weigh on the decision. Kansas has signed onto the Streamlined Sales Tax Agreement and terms of the agreement come into play. Additionally, a portion of state sales tax is dedicated to the State Highway Trust Fund and protecting that fund after years of raiding the so-called Bank of KDOT also must be considered.

 

Taxes

Thursday during floor action in the Kansa Senate, lawmakers rejected Governor Laura Kelly’s proposal to use part of the state’s nearly $3 billion surplus to give Kansans a $250 rebate. Instead, they crafted a bill that would provide a variety of other tax benefits intended to address property taxes and affordable housing.

The legislation freezes property taxes for disabled veterans and Kansans 65 and older, provided their household income doesn’t exceed $50,000. The bill also places a $350,000 cap on the value of their home to qualify. The bill also creates a tax credit for developers of rural and low-income housing and increases the property tax exemption associated with the statewide levy for public schools.

Currently the first $20,000 of a homeowner’s property is exempted from the 20-mill statewide levy for schools. The actions of the Senate would increase that exemption to $65,000 with provisions to increase the exemption further based on the inflation rate.

Unrelated to housing, the bill creates an income tax credit sought by the aviation industry. The bill provides tax credits for employers who offer tuition reimbursement programs for employees in aviation-related programs. Graduates of those programs would also be eligible for income tax credits under the terms of the bill.

Numerous tax proposals have been making their way through the legislative process as lawmakers consider how to best utilize the state’s budget surplus. Ultimately lawmakers will have to weigh the competing tax cut proposals against available short-term and long-term revenue before making final decisions on a tax package.

February tax numbers released by the Kansas Department of Revenue indicate Kansas tax collections continue to be strong. Total collections for February were almost $19 million above estimates bringing in more than $502 million for the month.

 

Elections

The Senate Federal and State Affairs Committee worked a bill that would require advance voting ballots be received by 7 pm on the date of the election. Current law allows for advance voting ballots to be received and counted if received up to three days after election day.

During the discussion on the bill, amendments were added to address the usage of ballot boxes, voter registration deadlines and advanced voting.

The amended bill would limit counties of fewer than 60,000 residents to one drop box while allowing larger counties to have one drop box per 60,000 residents. Additional requirements regarding surveillance of the ballot boxes are also addressed.

The amendment also closes voter registration 24-days prior to election day – three days earlier than the current 21-day deadline. Lastly, the amendment adds three days of voting to the advance voting period as a counterbalance to the elimination of the three-day post-election deadline that is addressed by the underlying bill.

 

Redistricting

On Friday, the Kansas Supreme Court rejected Attorney General Derek Schmidt’s legal plea to speed up the process of ruling on two lawsuits filed against the Ad Astra 2 congressional maps. The Court, in their decision, didn’t rule on the merits of the AG’s arguments but instead said that the proper course of action was to have the district court “expeditiously resolve the legal questions and to [have litigants] present a timely appeal, should any party desire appellate review.” The two pending cases have not yet been scheduled for action in district court.

 

Economic Development

Site Selection Magazine named Kansas as the winner of their 2021 Governor’s Cup recognition for securing the most economic development investment per capita in the country. This is the first time that Kansas has won in the 30-year history of the award. This recognition follows an earlier announcement that Kansas won the Gold Shovel Award from Area Development.

Kansas landed several major economic development projects during 2021 and is a finalist for a so-called “mega project” with an announcement on that project expected very soon. Mega projects are generally considered to be single projects that surpass $1 billion in economic investment.

 

Supreme Court Selection Process

The current process for selecting Supreme Court justices has been in the crosshairs for many years and this week two proposals were introduced to resolve the long-running debate. Both proposals were introduced as proposed constitutional amendments, meaning either proposal would need to secure a 2/3rds majority in both legislative chambers before the question could be advanced to a ballot this fall.

One proposal, mirroring our federal system, would allow the governor to make an appointment subject to Senate confirmation. The second proposal would provide for the direct election of justices by voters in the state.

Currently a nominating panel of lawyers and non-lawyers presents to the governor three names for consideration. The governor then selects the new justice from the slate of three. The bills were discussed in the Senate Judiciary Committee on Friday morning.

 

Water

The House Water Committee has been working for multiple sessions to look at the state’s water supply and the myriad agencies that have a role in overseeing the resource. Their work led to the introduction of HB 2686, a bill that advanced a proposal to streamline oversight and provide a plan for the future of water resources in the state. That plan came largely undone when amendments were successfully added that neutered many of the provisions of the bill.

The issue of how we deal with water as a state is not a new one. For many years, the state has struggled to fully fund its water plan. In 2015 a task force was convened to look at the long-term vision for the future of water supply in Kansas and a subsequent report issued in 2017 made a case that $55 million in annual funding was needed to implement a comprehensive management plan. HB 2686, as proposed, would have raised additional revenue through an increase in user fees – an idea that received mixed reaction when the bill was debated.

 

Next Week

Next week committee work will continue with a full slate of hearings scheduled – especially on the tax front. The Senate Assessment and Taxation Committee will be busy with SB 542 - a bill that makes modifications to last year’s Truth in Taxation law. The Committee will also look at SCR 1619 dealing with recommendations from the 2021 Special Committee on Taxation and SCR 1620 which would require a legislative supermajority to adopt tax increases. Both proposals are constitutional amendments that would require approval of Kansas voters before becoming law.

Lawmakers on the Senate Commerce Committee will take a look at SB 361, a bill that deals with worker’s compensation issues while the Senate Federal and State Affairs Committee will look at SB 532 – a bill allowing candidates running for non-partisan offices to have their party affiliation included on the ballot with their name.

SB 493 will be the subject of a hearing on Wednesday in the House Commerce Committee. That bill prohibits cities and counties from regulating plastic and other containers used primarily for carryout food service. The bill passed the Senate earlier this session on at 27-13 vote.

Education issues will also get more attention next week. SB 362 will be discussed in the House K-12 Education Budget Committee on Monday. The bill, which was approved 35-3 in the Senate, would require local boards of education to document and consider the school needs assessment and state assessments when crafting their annual budgets. The Senate Education Committee will get in on the action with SB 455, a bill that allows K-12 students to transfer to any school district in the state. A similar concept was previously discussed in the House with HB 2553.