Under the Dome - April 27, 2012
Three days into the wrap-up session…
Education Conference Committee
The House/Senate Education Conference Committee called a meeting for Thursday morning but when it was found that some of the members were engaged in other conference meetings at the same time, it was cancelled shortly after it was scheduled to begin.
Senate Education Chair Jean Schodorf (R-Wichita) and House Education Chair Clay Aurand (R-Courtland) decided to wait until next week to get together.
The biggest issue now in that committee is the fate of Senate Substitute for HB 2200, the bipartisan school finance plan passed by the Senate. They House has not taken any action on a school finance bill this year.
Tax Conference Committee
This group has been meeting and there appears to be considerable movement. The problem is that fiscal staff need the time to analyze the proposals in order to find out what impact they will have on the state’s revenue stream.
On Wednesday, House Tax Chair Richard Carlson (R-St. Marys) shared a new plan that would have the one-cent sales tax increase sunset as in current law, provide local property tax relief by funding the local ad valorem tax relief fund as the Senate did, and eliminate the spending cap which was set at 2% in the Governor’s original plan and changed to 3% by the committee later. The cap was put in place so that all new revenue over the cap would be used to buy down and eventually eliminate the Kansas income tax.
On Thursday, the conference committee added more changes to their report, most of which deal with business taxes and, since they were not available to us in writing, we hesitate to try to explain.
So what we understand so far is that the tentative agreement on taxes includes:
- Sunsetting the one-cent sales tax increase as provided for in current law (the Governor had proposed making the increase permanent),
- Providing $45 million for the LAVTRF which helps local units of government hold down property tax increases,
- Eliminate the spending cap which would have been used to entirely phase out the Kansas income tax over time,
- Reduce the number of income brackets from three to two and lower both (highest income earners would have their tax rate drop from 6.28% to 4.9% while middle income earners would drop from 6.05% to 3% and the lowest income earners would drop from 3.37% to 3%).
In addition to making the sales tax increase permanent, the Governor had also proposed the elimination of many deductions and credits in order to minimize the immediate drop in revenue. The conference committee agreement restores most of those changes and so the cost to the state would be higher than the Governor’s plan.
If this plan were to pass, it would be very difficult for the state to maintain services over time and eventually more cuts would likely be needed to deal with declining revenue.
The committee will most likely meet again on Monday after the complete fiscal analysis is ready. It will be then that they will agree on the report or go back to work tweaking it.
So far the budget committees (Appropriations in the House; Ways and Means in the Senate) have been meeting separately to craft new budget proposals.
To be frank, we’re a little shaky on how this process will move forward. The legislature took the unprecedented move of adjourning the regular session without having passed a budget and the Governor did not issue a Governor’s Budget Amendment (GBA) following the April consensus revenue estimates.
A GBA was released yesterday dealing primarily with providing resources to Larned state Hospital which is in danger of losing its accreditation over staffing shortages.
It would seem that much of the Governor’s concern of late has been the Larned issue as well as his KanCare proposal which had run into significant opposition particularly from advocates for the developmentally disabled. As a result of that opposition, the Governor just backed away from privatizing services for the developmentally disabled.
No word yet on where the administration stands on Senate Sub for HB 2200! And of course, if massive tax cuts are adopted, the question of how to fund the bill becomes an issue.