February 17, 2013

With two weeks before Turnaround and reaching the halfway point of session, legislators are making steady progress. While the budget committees are focused on the expenditures of the state budget, both tax committees are determining the revenue stream to balance the Governor’s recommended budget.

Taxes and the Budget

In order for the Governor’s budget to be balanced, reach his goal of reducing income taxes further and meet the statutorily required 7.5% ending balance, there needs to be either a cut in spending or an increase in revenue. The tax cut bill signed into law last year created a budget hole of $442 million for FY 2014. In addition, the school funding law suit decision stated that the State needs to been more $440 million to boost the Base State Aid Per Pupil to the adequate school finance levels. The school finance decision is unaccounted for in the budget as it currently works its way through the court system. To pay for the Governor’s tax cut bill from last year ($442 million) and the proposed income tax cuts for this year and future years, he has proposed keeping the sales tax at 6.3% and eliminating the property tax deduction and the mortgage interest deduction.

In addition, the trailer bill for last year’s income tax cut bill has made its way through the House and was sent to the Senate. It was scheduled for debate and likely first-round approval by the Senate on Wednesday. However, in an attempt to keep it as a vehicle for the Governor’s tax proposal it was sent back to the Senate Tax Committee for safekeeping.

The Senate Tax Committee also passed out of committee the Governor’s tax plan on Tuesday. The committee did amend out the property tax deduction elimination. The mortgage interest deduction currently remains in the bill. That would be a loss of $68 million in revenue to the state in FY 2014. The House Tax Committee hasn’t yet worked its copy of the Governor’s tax bill.

SB 84 was passed out of the Senate Tax Committee on Wednesday and it remains on general orders. This bill addresses the nexus issue for collecting sales tax from internet and direct marketing retailers making it easier for the State to collect sales tax. The House Tax Committee held a hearing on their nexus bill HB 2103 this week, but there was a lot of confusion on the impact of the bill and it is uncertain if and when the committee might work their bill.

Finally, HB 2355, which contains the FAIR Tax proposal, was introduced in House Tax Committee by Rep. Siegfreid this week. This bill has been introduced in the past and expands the tax base by eliminating tax exemptions and adding sales tax to such things as professional services. Rumors indicated the supporters of the bill have been asked to find 63 signatures supporting the bill or it will not get a hearing. We will continue to monitor the bill.

Nonprofit Disclosure

The House Judiciary Committee held a hearing Tuesday on HB 2188, which is a bill that is has been presented as promoting transparency and open records. Numerous opponents testified on the bill and pointed out the significant administrative costs the will would place on nonprofits. In addition, several chambers and economic development organizations testified the bill would also force reporting of information which would expose their business recruiting strategies, which would ultimately impact the economic growth for the state of Kansas.

HB 2087, which was the bill to grandfather certain recipients of the PEAK program and was scheduled to be heard in House Commerce on Monday, will now not be heard. The Chairman has indicated the issue has gotten too complicated and there is not sufficient time to work bill.

In addition, there is discussion that Rep. Kleeb, Chairman of House Commerce, will not seek a bill to lower the HPIP qualification threshold back to $50,000 for all counties. A few years ago, the HPIP threshold was raised to $1 million for the larger metropolitan counties. Rep. Kleeb has indicated he doesn’t have time to work the issues in his committee and will instead seek a floor amendment.

While the House committee continues to review liquor bills, the Senate passed, 37-2, the liquor sampling bill, which allows liquor stores and some other venues to offer a maximum of five half-ounce samples of spirits, five one-ounce samples of wine and five two-ounce samples of beer to the drinking-age public. It now goes to the House.

In health care news, the Governor’s administration released this week a summary of its estimated cost for Kansas to expand the Medicaid program. Officials said the state could expect to spend an additional $513 million over ten years if it does nothing different of $1.1 billion over the same period if policymakers choose to open Medicaid to people earning up to 138% of federal poverty guidelines. The Governor’s administration said the cost estimates were prepared by the consulting firm Aon Hewitt.

The projected cost would be significantly less than some previous estimates but considerably more than others. Governor Brownback has not yet said whether he would support expanding Medicaid. Although some members of his administration have led many to believe it is unlikely.

The Senate Public Health and Welfare Committee passed out a bill on Thursday that would allow health insurance companies to develop and market so-called “mandate lite” policies in Kansas. SB 163 calls for allowing companies to sell major-medical policies that could exclude coverage of mental health, pharmacy, chiropractic or allergy treatments. The bill also stipulates that commissions paid to insurance agents “shall be excluded from all determinations of the medical loss ratio,” a reference to provisions in the Affordable Care Act that limit insurance companies’ administrative costs to no more than 20% of their individual-policy premiums; 25% of their small-group policy premiums.

The House Federal and State Affairs Committee held a briefing this week on the business perspective on immigration reform. Several people testified about the impact and burden mandating E-verify would have on businesses, costs to the state’s economy should a strict immigration policy be put in place, legal implications of immigration policy and the importance of the in-state tuition for immigrant’s policy passed in 2005. The Kansas Business Coalition for Immigration Reform continues to share information with legislators about the impact immigration reform would have in Kansas.

A hearing was held Wednesday on HB 2022. This bill revises the Wage Payment Act by granting the employer discretion, contingent upon a signed written agreement between the employer and the employee, clarifies and strengthens employers’ causes for withholding wages. The Senate Commerce Committee is scheduled to work the bill on Tuesday. If you support the passage of this bill you are encouraged to contact Senate Commerce Committee members.

On Thursday, the House Tax Committee had a hearing on HB 2136, which would divert the 4/10 sales tax from transportation and send it to the State General Fund. Rep. Virgil Peck testified in support, saying if the Legislature is going to take money away from the Kansas Department of Transportation, it should be done in a straightforward manner. Rep. Peck was the only supporter of the bill. Kansas Secretary of Transportation Mike King opposed the bill, saying it would reduce KDOT revenues by $1.5 billion and have a negative impact on future projects. There were many opponents to the bill, arguing infrastructure assists economic development and is a major reason businesses move to Kansas.

Finally, Kansas Securities Commissioner Aaron Jack resigned this week, effective immediately. He is also a Republican candidate for Kansas Insurance Commissioner. He states he intends to devote full-time to his campaign and work in the private sector.

HB 2285, the real vs. personal property tax bill, will be heard next Thursday in House Tax. In addition, the committee will also receive the results of the long awaited post audit study, which will be presented on Wednesday. The business community and counties continue to battle over the issue and have not been able to reach a compromise. As soon as the post-audit report it made public we will be happy to provide interested parties of copy of it.

HB 2105 and HB 2124, which address concerns with Kansas Unemployment Insurance, are scheduled to be discussed next week in House Commerce Committee. These reforms are aimed at addressing the $90 million tax increase expected to hit employers in 2015 to make up for shortfalls in the account. In addition, the business community to seeking an amendment to increase the wage base from the current $8,000 to $16,000. After studying the impact of this increase, it appears this is the best mechanism to restore the fund and bring equity to the tax rates assessed on positively balanced employers. By increasing the wage base, positively balanced employers will see their tax rates decline.

SB 73, which contains several workers compensation reforms, will be worked Monday in Senate Commerce. Also, on Thursday next week the same Committee will hold a hearing on SB 187. This measure proposes to change the selection process of workers compensation judges and unemployment insurance adjudicators. The selection process will be broadened from a two member panel comprised of the Kansas Chamber to a seven member panel with broader business community representation including NFIB and Kansas SHRM.   It also proposes to increase salaries for the workers compensation judges to be more in line with the district court. Advocates feel this will attract stronger candidates and promote longevity in the positions.

The Legislature reached an important deadline on February 15 as the last day for committees to introduce new bills. There are exempt committees not subject to the rule, including budget writing committees, tax committees and federal and state affairs committee. Another major deadline is March 1, which is known as “turnaround.” This deadline is when House bills have to be out of the chamber of origin.

Below please find the list of bills introduced during the 2013 Legislative Session. These bills have been identified as issues which may impact the interest to Olathe Chamber members.   Within the bill tracker you will find the bill number and its subject matter as well the current status of the bill and whether there is pending committee action on the bill. Please note the bills highlighted in gray have either been sent to the Governor’s desk for his approval or have been approved by the Governor. You may access the full text of the bill by holding down your computer control key and clicking on the bill number in the report. If you should have any questions or concerns regarding the bills below, please do not hesitate to contact our lobbyist, Natalie Bright, at natalie@brightcarpenter.com or 316.640.1422.

Bill Number	Bill Sponsor	Bill Subject	Current Status	Last Action
SB 5	Oletha Faust-Goudeau, D-29th	Business entities; restricting the use of an acquired entity’s name by an acquiring entity	In Senate Commerce	01/17/2013 – Senate Scheduled Hearing and Possible Action in Commerce: Thursday, 1/24/2013, 8:30 AM, Rm 548-S
SB 8	Jeff King, R-15th	Creating the Kansas Commission on Judicial Qualifications	In House Judiciary	02/13/2013 – House Scheduled Hearing in Judiciary: Tuesday, 2/19/2013, 3:30 PM, Rm 112-N
SB 10	Jacob LaTurner, R-13th	Open meetings; minutes required; open records; charges limited	In Senate Federal and State Affairs	01/15/2013 – Senate Referred to Federal and State Affairs
SB 15	Anthony Hensley, D-19th	Local ad valorem tax reduction fund; transfers to; distributions to political subdivisions	In Senate Assessment and Taxation	01/15/2013 – Senate Referred to Assessment and Taxation
SB 23	Legislative Educational Planning Committee	Continuation of statewide tax levy for public schools	On General Orders in Senate	02/14/2013 – Senate Committee Report recommending bill be passed by Education
SB 31	Senate Commerce Committee	Certain deductions from wages authorized	In Senate Commerce	01/17/2013 – Senate Referred to Commerce
SB 33	Senate Ethics, Elections and Local Government Committee	Elections; voter identification requirement	In Senate Ethics, Elections and Local Government	01/17/2013 – Senate Referred to Ethics, Elections and Local Government
SB 48	Senate Federal and State Affairs Committee	Kansas Employer E-verify Accountability Act	In Senate Commerce	01/22/2013 – Senate Referred to Commerce
SB 53	Senate Federal and State Affairs Committee	Employee privacy	In Senate Commerce	01/22/2013 – Senate Referred to Commerce
SB 55	Senate Assessment and Taxation Committee	Specifying responsibility for payment of the mortgage registration fee	In Senate Assessment and Taxation	01/23/2013 – Senate Referred to Assessment and Taxation
SB 73	Senate Commerce Committee	Workers compensation: administrative duties of secretary of health and environment; citizenship status; administrative judge disqualification; limitation of actions; workplace health and safety program	In Senate Commerce	02/13/2013 – Senate Scheduled Final Action in Commerce: Monday, 2/18/2013, 8:30 AM, Rm 548-S
SB 78	Senate Assessment and Taxation Committee	Retention of 6.3% sales tax rate, reduction in individual income tax rates and elimination of certain deductions	On General Orders in Senate	02/12/2013 – Senate Committee Report recommending bill be passed as amended by Assessment and Taxation
SB 79	Senate Assessment and Taxation Committee	Income tax deductions and modifications and severance tax exemptions; basis of partner’s interest and shareholder’s stock; statutory clarification	On General Orders in Senate	02/06/2013 – Senate Committee Report recommending bill be passed as amended by Assessment and Taxation
SB 84	Senate Assessment and Taxation Committee	Sales taxation; presumptions relating to nexus	On General Orders in Senate	02/13/2013 – Senate Committee Report recommending bill be passed as amended by Assessment and Taxation
SB 103	Senate Education Committee	School district; redefining at-risk pupil	In Senate Education	02/06/2013 – Senate Scheduled Hearing and Possible Action in Education: Tuesday, 2/12/2013, 1:30 PM, Rm 144-S
SB 106	Senate Assessment and Taxation Committee	Income tax credit for expenses paid for household and dependent care services necessary for gainful employment	In Senate Assessment and Taxation	02/01/2013 – Senate Referred to Assessment and Taxation
SB 119	Greg Smith, R-21st	Legislature; job protection for persons elected or appointed to the state legislature	In Senate Ethics, Elections and Local Government	02/05/2013 – Senate Referred to Ethics, Elections and Local Government
SB 123	Senate Judiciary Committee	Amending the Kansas Restraint of Trade Act	In Senate Judiciary	02/13/2013 – Senate Scheduled Hearing in Judiciary: Thursday, 2/21/2013, 10:30 AM, Rm 346-S
SB 128	Senate Education Committee	Career technical education incentive program amendments	In Senate Education	02/13/2013 – Senate Scheduled Hearing in Education: Monday, 2/18/2013, 1:30 PM, Rm 144-S
SB 131	Senate Ways and Means Committee	School finance; use of capital outlay funds	In Senate Education	02/13/2013 – Senate Scheduled Hearing in Education: Monday, 2/18/2013, 1:30 PM, Rm 144-S
SB 132	Senate Ways and Means Committee	School finance; amount of tax levy authorized to finance ancillary school facilities	In Senate Education	02/06/2013 – Senate Referred to Education
SB 133	Senate Ways and Means Committee	Providing authority for a school district to adopt a local activities budget	In Senate Education	02/06/2013 – Senate Referred to Education
SB 140	Senate Judiciary Committee	Immigration; enforcement of federal immigration laws; determination of citizenship; cooperative agreements; validity of certain contracts; eligibility for certain public benefits; effect of immigration status on criminal appearance bonds	In Senate Federal and State Affairs	02/07/2013 – Senate Referred to Federal and State Affairs
SB 149	Senate Commerce Committee	Drug screening for recipients of cash assistance and unemployment benefits	In Senate Commerce	02/14/2013 – Senate Scheduled Final Action in Commerce: Friday, 2/22/2013, 8:30 AM, Rm 548-S
SB 162	Senate Public Health and Welfare Committee	Allowing employees to retain and receive employer contributions for health insurance and provide a tax deduction for premiums paid on individually underwritten privately purchased health insurance policies	In Senate Assessment and Taxation	02/11/2013 – Senate Referred to Assessment and Taxation
SB 163	Senate Public Health and Welfare Committee	Health Insurance; Mandate lite health benefit plans	On General Orders in Senate	02/14/2013 – Senate Committee Report recommending bill be passed by Public Health and Welfare
SB 187	Senate Commerce Committee	Establishing the workers compensation and employment security boards nominating committee; administrative law judge appointment; workers compensation appeals board	In Senate Commerce	02/14/2013 – Senate Referred to Commerce; Scheduled Hearing in Commerce: Thursday, 2/21/2013, 8:30 AM, Rm 548-S
SB 195	Senate Ways and Means Committee	Kansas Employment First Initiative Act amendments	In Senate Commerce	02/14/2013 – Senate Referred to Commerce
SB 198	Anthony Hensley, D-19th	Kansas Buy American Act	In Senate Commerce	02/14/2013 – Senate Referred to Commerce
SB 203	Senate Federal and State Affairs Committee	Club and drinking establishments; hotels; coupon for drinks; liquor drink tax	In Senate Federal and State Affairs	02/15/2013 – Senate Referred to Federal and State Affairs
SCR 1601	Jeff King, R-15th	Constitutional amendment revising article 3, relating to the judiciary; allowing the governor to appoint supreme court justices and court of appeals judges, subject to senate confirmation; abolishing the supreme court nominating commission	In House Judiciary	02/01/2013 – House Referred to Judiciary
SCR 1605	Senate Judiciary Committee	Constitutional amendment revising Article 3, relating to the judiciary; placing the court of appeals into the constitution; changing the membership of the supreme court nominating commission	In Senate Judiciary	01/17/2013 – Senate Referred to Judiciary
SCR 1608	Senate Education Committee	Constitutional amendment concerning school finance; suitable provision for finance determined by the legislature	In Senate Judiciary	02/06/2013 – Senate Scheduled Hearings in Judiciary: Pro and Neut – Wednesday, 2/13/2013, 10:30 AM, Rm 346-S; Opp – Thursday, 2/14/2013, 10:30 AM, Rm 546-S
SCR 1609	Senate Commerce Committee	Constitutional amendment adding the economic freedom amendment prohibiting the transfer to the federal government of ownership interests in entities formed under Kansas law	In Senate Commerce	02/04/2013 – Senate Referred to Commerce
HB 2003	Steve Huebert, R-90th	School districts; finance; amendments to funding formula.	In House Education Budget	02/06/2013 – House Scheduled Hearing in Education Budget: Thursday, 2/14/2013, 3:30 PM, Rm 281-N
HB 2005	Steve Huebert, R-90th	State aid for capital improvements and capital outlay for school districts	In House Education	01/14/2013 – House Introduced; Referred to Education
HB 2010	Gail Finney, D-84th	Business entities; restricting the use of an acquired entity’s name by an acquiring entity	In House Commerce, Labor and Economic Development	01/14/2013 – House Introduced; Referred to Commerce, Labor and Economic Development
HB 2019	House Judiciary Committee	Court of appeals judges; appointment by the governor, confirmation by the senate	In House Judiciary	01/17/2013 – House Referred to Judiciary; Scheduled Hearing in Judiciary: Tuesday, 1/22/2013, 3:30 PM, Rm 112-N
HB 2019	House Judiciary Committee	Court of appeals judges; appointment by the governor, confirmation by the senate	In House Judiciary	01/17/2013 – House Referred to Judiciary; Scheduled Hearing in Judiciary: Tuesday, 1/22/2013, 3:30 PM, Rm 112-N
HB 2020	House Judiciary Committee	Court of appeals judges; direct partisan election	In House Judiciary	01/17/2013 – House Referred to Judiciary; Scheduled Hearing in Judiciary: Tuesday, 1/22/2013, 3:30 PM, Rm 112-N
HB 2020	House Judiciary Committee	Court of appeals judges; direct partisan election	In House Judiciary	01/17/2013 – House Referred to Judiciary; Scheduled Hearing in Judiciary: Tuesday, 1/22/2013, 3:30 PM, Rm 112-N
HB 2022	House Commerce, Labor and Economic Development Committee	Certain deductions from wages authorized	In Senate Commerce	02/13/2013 – Senate Scheduled Final Action in Commerce: Tuesday, 2/19/2013, 8:30 AM, Rm 548-S
HB 2038	House Federal and State Affairs Committee	Voter identification requirement	In House Elections	01/23/2013 – House Referred to Elections
HB 2042	House Taxation Committee	Appraisal of property for taxation purposes; appeals; changes	In House Taxation	01/23/2013 – House Referred to Taxation; Scheduled Hearing in Taxation: Monday, 1/28/2013, 3:30 PM, Rm 582-N
HB 2047	House Taxation Committee	Requiring municipalities to vote to increase property tax revenues over previous year; publication	On General Orders in House	02/06/2013 – House Committee Report recommending bill be passed as amended by Taxation
HB 2056	House Taxation Committee	Permitted use of tax information in certain tax actions and proceedings, and tax liens upon personal property	In House Taxation	01/30/2013 – House Scheduled Hearing in Taxation: Monday, 2/4/2013, 3:30 PM, Rm 582-N
HB 2057	House Taxation Committee	Concerning property taxation; relating to county appraisers; appointing interim appraiser	On General Orders in House	02/13/2013 – House Withdrawn from Consent Calendar; placed on General Orders
HB 2058	House Taxation Committee	Taxation of helium and certain other gases under mineral severance tax, and prohibition of certain refunds related thereto	On General Orders in House	02/06/2013 – House Committee Report recommending bill be passed by Taxation
HB 2059	House Taxation Committee	Income tax deductions and modifications and severance tax exemptions; basis of partner’s interest and shareholder’s stock; statutory clarification	In Senate Assessment and Taxation	02/13/2013 – Senate Withdrawn from Calendar; referred to Assessment and Taxation
HB 2060	House Taxation Committee	Prohibiting certain confined persons from receiving food sales tax refunds and homestead property tax refunds	In Senate Assessment and Taxation	02/08/2013 – Senate Referred to Assessment and Taxation
Bill Number	Bill Sponsor	Bill Subject	Current Status	Last Action
HB 2061	House Taxation Committee	Determination of Kansas adjusted gross income for certain subchapter S corporations	In House Taxation	01/30/2013 – House Scheduled Hearing in Taxation: Monday, 2/4/2013, 3:30 PM, Rm 582-N
HB 2069	House Commerce, Labor and Economic Development Committee	Public policy; certain city ordinances and county resolutions declared void	In House Commerce, Labor and Economic Development	02/06/2013 – House Scheduled Hearing in Commerce, Labor and Economic Development: Thursday, 2/14/2013, 1:30 PM, Rm 346-S
HB 2084