May 30, 2015
Troy L. Waymaster, State Representative, Kansas House District 109
TOPEKA
Tax Policy for the State of Kansas: House Substitute for Senate Bill 29
Tax policy has been the leading agenda for both chambers of the Kansas Legislature this week. On Wednesday, May 27, the Senate debated and amended their tax policy legislation, which on final action failed 1-30. On Thursday, May 28, the House was beginning debate on House Substitute for Senate Bill 29, however failed to garner the two-thirds majority in the House in order to commence debate. On Friday, May 29, House Substitute for Senate Bill 29 was placed on General Orders, along with two other tax proposals to be debated on the floor of the House.
House Substitute for Senate Bill 29 has many different tax components. The most contentious item is the business income exemption temporary repeal. This bill would repeal for tax years 2015 through 2017 a provision that was enacted by the 2012 Legislature that exempts certain non-wage business income from the individual income tax rate. The bill stipulates that all such income would become taxable at the lowest income tax rate, currently 2.7%. The exemption would be reinstated at the beginning of the 2018 tax year. Also, the loss add-back requirement implemented by the 2012 Legislature relative to certain losses would be repealed for tax years 2015, 2016, and 2017, however would be restored for the 2018 tax year.
Also with House Substitute for Senate Bill 29, there would be a freezing of the current income tax rates at the 2015 tax rate of 2.7% and 4.6%. The rate reductions would be suspended until the 2018 tax year and then would be reduced according to existing statute.
The sales tax rate would also be adjusted in this tax proposal. Currently, the sales tax rate is 6.15% and this proposal would adjust the sales tax rate to 6.45%, with the rate reducing back to 6.15% on July 1, 2018. There would be a reduction on the sales tax rate on food and that rate would be 5.9% and would not be subject to the sunset provision of the regular sales tax rate. There are also provisions of eliminating the sunset provision for the rural opportunity zones, additional sales tax provisions for Bourbon, Douglas, and Thomas counties, and clarifying property tax levying for fire districts over 15 mills.
Governor Brownback Introduces New Tax Plan
On Saturday, May 30, which was the 100th day of the 2015 Legislative Session, Governor Sam Brownback held a news conference detailing the components of his latest tax proposal. The governor focused on income taxes and consumption taxes. His tax plan would eliminate income taxes for 388,000 low-income Kansans, which would be a reduction in tax revenues of approximately $18.9 million in fiscal year 2016. His proposal would freeze the current income tax rates through the tax year of 2017 and starting in 2018 those income tax rates would see a reduction. He also introduced in his tax plan of treating guaranteed payments for Limited Liability Corporations as wage income. Consumption tax increases from the governor’s plan would be a sales tax increase to 6.65% and increasing the taxes on cigarettes by $0.50. He also suggested simplifying the tax code by eliminating various deductions. The governor’s plan would generate enough revenue to have a positive ending balance in 2016 of approximately $81 million. Each chamber is now reviewing the governor’s plan.
Liquor Law Changes
This Friday, we also debated the conference committee report on House Bill 2223, which addresses an array of changes to the liquor laws in the state of Kansas. The bill would allow drinking establishments to sell and serve alcoholic liquor infused with spices, herbs, fruits, vegetables, candy, or other substances.
The bill would ban the sale and service of powdered alcohol, would allow public venues, clubs and drinking establishments to offer automated wine devices, and allows alcoholic beverage distributor licensees to provide samples of spirits, wines, and beer, allows any person engaged in business as a Kansas vineyard with more than 100 vines to apply for an annual vineyard permit.
The bill would also allow cities to pass ordinances allowing liquor retailers, microbrewies, microdistilleries, and farm wineries to locate within 200 feet of any public or parochial school, college, or church in a commercial district. House bill 2223 would allow the Director of ABC to issue a sufficient number of temporary permits for the sale of wine and beer at the Kansas State Fairgrounds. Another provision is that farm wineries would be able to apply for a sales permit at farmer’s markets that allow for the sale of wine.
The two largest changes to the existing liquor laws are the allowance of the consumption of alcohol on unlicensed premises and at the Kansas State Capitol. The first would allow alcohol to be consumed at businesses that do not sell alcohol; this is also referred to as the BYOB provision. This has been an issue throughout the state where art businesses are having painting parties and allow individuals to bring their own alcoholic beverage, namely wine. Current law states that the business needs a liquor license, even in cases where patrons bring their own alcohol. The other is allowing alcohol at the Kansas State Capitol, only for official state functions that are nonpartisan in nature, and would require the prior approval by the Legislative Coordinating Council.
The conference committee report for House Bill 2223 passed the House, 89-31.
Tax Discussions Continue and Contact Information
There have been many tax proposals discussed either in bill format or in meetings through the past couple weeks. However, it appears that none of those tax plans will be able to receive the needed 63 votes in the House and 21 votes in the Senate to pass and then go to the governor’s desk for his signature.
There has been a group of legislators in the House, including myself, that have been meeting to deliberate about tax legislation that will address the revenue shortfall that we are experiencing and, at the same time, restructure the tax policy for Kansas by adding long-term revenue stabilization. We have been meeting multiple times a day to discuss proposals and strategies. Our intent is to pass tax policy that will be greatly beneficial to the people of Kansas and create a stable revenue environment.
If you have any concerns, feel free to contact my office at (785) 296-7672, visit www.troywaymaster.com or email me at [email protected]
It is an honor to serve the 109th Kansas House District and the state of Kansas. Do not hesitate to contact me with your thoughts, concerns and questions. I appreciate hearing from the residents of the 109th House District and others from the state of Kansas.
Troy L. Waymaster,
State Representative
109th Kansas House
300 SW 10th
Topeka, KS 66612