February 17, 2017
Tax Bill Passes House
On Thursday, February 16, the House of Representatives passed a substitute bill for House Bill 2178 on final action, 76 to 48. The original bill, which was substituted on February 15th in the House of Representatives by the Committee of the Whole, proposed changes to the tax structure, specifically the income tax, by freezing the lower income bracket tax rate at 2.7 percent and raising the upper income tax bracket to 5.25 percent. The bill also eliminated the automatic income tax rate reduction procedure. The bill offered several alternative changes to the tax code in place of the original. First among those being to non-wage business income where the bill repealed the 2012 exemption on non-wage business income and allowed citizens to claim federal non-wage business exemptions beginning with fiscal year 2017. The second change is that Kansans would be allowed to claim itemized deductions on medical expenses under federal law. The last change was to the income tax rate. Instead the of the current two bracket tax code the substitute bill would create three tax brackets. The lowest bracket being 2.7 percent for those earning $15,000 or less, the middle bracket being 5.25 percent for those earning between $15,000 and $50,000, and the upper bracket being 5.45 percent for those earning $50,000 or more. The Department of Revenue calculated these changes would increase tax receipts by $2.4 billion over the next 5 fiscal years with no changes to the sales tax rate, which is currently at 6.50%. Due to the fact that this was not a true comprehensive tax plan and that the sales tax was not reduced from the rate we raised it to during the session of 2015, I could not support this particular tax plan.
The 2017 Kansas Budget: Rescission Decision
On Thursday, February 16th, the House of Representatives debated House Bill 2161, which would liquidate $317.1 million available from a long-term investment portfolio of idle funds the State Treasurer has transferred for long term investment and had deposited those funds in the Pooled Money Investment Portfolio (PMIP). The liquidated funds would then be loaned to the State General Fund and would be paid back over a 6-year period with an annual payment amount of $52.9 million, the first loan payment is due June 30, 2019. The bill also changes the long-term investment procedures for idle funds by not tying future transfers from PMIP to unclaimed property and by giving the State Treasurer the ability to liquidate future long term investments by certification to maintain cash flow after consulting with the Director of the Pooled Money Investment Board.
Also on Thursday, the House of Representatives debated House Bill 2052, which relates to the appropriations to state agencies for the remaining months of fiscal year 2017, which commenced on July 1, 2016. The bill, brought by the Appropriations Committee, contained three amendments. The first amendment requires that 50% of the ending balance for fiscal year 2017 be paid back to KPERS for the full amount of the 4th quarter employer contribution payment which was not allocated in the Governor’s Budget. The Second amendment, requires that 10% of the ending balance of the 2017 budget, only after the KPERS payment in the first amendment is paid in full with an amount of $85.9 million, be deposited to the Budget Stabilization Fund, or what is commonly referred to as the “Rainy Day Fund.” The third amendment grants the State Board of Pharmacy the discretion to spend federal grant dollars on the Prescription Drug Overdose Data driven Prevention Program from a revenue fund. Both House Bills advanced to final action for Friday and both passed out of the House of Representatives.
Appropriations
Last week, the House Appropriations Committee continued hearing reports from the Budget Committees on the fiscal year 2018 and 2019 budgets. The Committee finished hearing the Judicial Branch report, along with Department of Labor and Secretary of State reports. We also received an update on current and recent audits from Legislative Post Auditor. The Committee recommended House Bill 2109 favorably for passage, which allows for Kansas State University and Wichita State University to sell certain tracks of land. On Tuesday, the Committee heard the General Government Budget Committee recommendations for: Department of Revenue; Real Estate Appraisal Board; Real Estate Commission; and Board of Tax Appeals. Then Wednesday, the Committee heard recommendations from the Agriculture and Natural Resources Budget Committee on: Citizens Utility Ratepayer Board; Wildlife, Parks, and Tourism; Department of Agriculture; and Board of Veterinary Examiners. The Committee also heard House Bill 2133, which would move the Consensus Revenue Estimate date from April 20 to May 1. On Thursday, the Committee heard the recommendations for Kansas Department of Health and Environment; Kansas Water Office; and State Fair reports, along with Social Service Budget Committee reports on the State Hospitals. The Committee also heard House Bill 2068, which addresses child support payment which are in arrears and the enforcement thereof. This past Wednesday, the Committee heard House Bill 2180, which involves increasing the HMO privilege fee and Friday, the Committee we heard House Bill 2184, which extends the sunset date of the STAR Bonds Act.
Legislative Post Audit
The Legislative Division of Post Audit (LPA) was created in 1971. Their mission is to provide the Kansas Legislature with accurate and unbiased information on the performance of state and local government. Audits, generally, evaluate if agencies’ programs are effective in carrying out their duties, are efficient with their resources, and are in compliance with relevant laws, regulations, and other requirements. Audits are performed at direction of the Legislative Post Audit Committee. The Committee is made up of 5 representatives and 5 senators. The Committee determines which audits will be conducted. Audits are independently conducted and reports are issues without input from the Committee or other legislators.
Along with performance audits, the LPA conducts information technology audits (IT). This includes the broad classes of IT security and project monitoring. LPA also contracts with external CPA firms to conduct financial audits of several state agencies. These include annual audits of the state’s comprehensive annual financial report, as well as financial statements for the Kansas Lottery, the state pension fund (KPERS), the state highway fund (KDOT), and certain water funds (KDHE).
Every performance audit report issued since 1972 can be found on the Kansas Legislative Post Audit website. Most Recent audits will be present on the home page of the site. To visit this site or acquire any more information on Legislative Post Audit please visit: http://www.kslpa.org/
Last Wednesday, the Legislative Post Audit Committee received a presentation on the K-12 Benefits Consolidation audit. The audit highlights can be found at: http://www.kslpa.org/assets/files/reports/h-17-001.pdf. The audit can be found at: http://www.kslpa.org/assets/files/reports/r-17-001.pdf.
Medicaid Expansion
The Health Committee last week held a three-day hearing on Medicaid Expansion, HB 2064. On Monday, the Committee heard neutral testimony. On Tuesday, the Committee heard HB 2217, which enacts standards governing the use and administration of emergency opioid antagonists. This bill regulates the dispensary and administration of Narcan or Naloxone, a lifesaving drug that combats the effects of an opioid overdose. This drug could be used by first responders around the state to combat an opioid overdose. On Wednesday, the Committee heard from proponents for Medicaid Expansion. Proponent testimony focused on hearing from those who would benefit from expanding KanCare to more low income Kansans. Other testimony focused on economic gain and job creation opportunities. They also discussed the lack of certainty that healthcare will be repealed at the federal level. On Thursday, opponents indicated there is no economic gain from Medicaid expansion and it would cost the state more in the long run. They also noted that there has been significant talk of repeal or removal of the Affordable Care Act, which impacts the amount of money the states are given to help cover the cost of expansion.
K-12 Education Budget
The K-12 Education Budget Committee began hearing school finance ideas, plans, and legislation last week. On Monday, the committee heard from former Speaker Mike O’Neal on a framework for school finance. His premise is that the Legislature maintain its role as appropriators, but that the Kansas Department of Education (KSDE), along with the State Board of Education, be the allocators of resources. On Wednesday, the committee received a briefing on the Legislative Post Audit report on the Health Insurance for School Districts audit. The audit addresses the Alvarez and Marsal Efficiency Study recommendation regarding savings from consolidating school district health insurance benefits. On Thursday, the committee worked the operational budget for the Department of Education, along with the budgets of the School for the Blind and School for the Deaf. These recommendations were forwarded to the House Appropriations Committee this week.
The school finance plans that have been referred to the K-12 Education Budget Committee are: HB 2242, HB 2270, HB 2324, HB 2344, HB 2346, and HB 2347. Additional resources on various school finance proposals can be found at the KSDE website: http://www.ksde.org/Agency/Fiscal-and-Administrative-Services/School-Finance/Whats-New
Contact Information
As always, if you have any concerns, feel free to contact me (785) 296-7672, visit www.troywaymaster.com or email me at [email protected]. Also, if you happen to visit the statehouse, please let my office know.
It is a distinct honor to serve as your representative for the 109th Kansas House District and the state of Kansas. Please do not hesitate to contact me with your thoughts, concerns, and questions. I always appreciate hearing from the residents of the 109th House District and others from the state of Kansas, as well.
Troy L. Waymaster, (R-Bunker Hill) is the 109th Dist. State Representative and chairman of the House Appropriations Committee.