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2017 Legislative Session Budget, K-12 Funding and Taxes

12 Jun 2017 6:00 PM | Anonymous

This extended session was all about filling a budget hole, creating a new K-12 Education Finance Plan and changing tax policy.  The Governor's proposal to double liquor enforcement taxes was not approved, but legislators caution that if they are ordered to revisit the 2017 K-12 Education Plan - tobacco, liquor and motor fuel taxes will be likely targets.

There are some interesting changes in the budget bill.  In addition to the Governor’s proposed budget, HB 2002 includes State Employee Wage Increases of 2.5 percent for all except elected officials and those who have had recent wage increases and 5.0 percent for employees who have not had a wage increase in five years.  Kansas will also open an on-site state employee health care clinic in Topeka at a cost of $2.7 million.

The Legislature rejected the Governor’s plan to securitize the Children’s Initiatives Fund / KEY fund.  It also rejected the plan to consolidate the Board of Barbering with the Board of Cosmetology, but did agree to merge the Office of the Securities Commissioner with the Insurance Department.

A number of programs received small funding boosts, including behavioral health, services for persons with disabilities and the senior care act.

The Legislature also extended the exemption for state mental health hospitals and other public health facilities to continue to ban concealed carry on those premises.  Other public buildings must allow concealed carry or provide armed guards and metal detectors at all entrances in order to assure that no one is carrying guns.  The Governor asked for the exemption for state hospitals, but some think he might veto the bill because it extends to KU medical center and county or city owned health facilities.  (A Governor’s Budget Amendment provided late in the session estimated it would cost over $12.5 million to hire 180 full time employees and buy equipment for the state hospitals in fiscal year 2018.)

SB 30 is the income tax bill that became certain after the Senate and then the House overrode the Governor’s veto last Tuesday.  The new tax policy does not fully roll back the tax cuts from 2012, but it does remove the LLC exemption and raises income tax rates.  The bill is projected to bring in an additional $582 million in FY 18 and $624 million in FY 19.  However, the budget still requires sweeps from the Kansas Highway Fund, transfers from the Pooled Money Investments Board, and delayed KPERs payments.  There may also be healthy internal borrowing in FY 18 to bolster the reinstatement of the 4% Medicaid cuts that were part of the Governor’s allotments in May 2016.  That funding is to be covered by increased HMO privilege fees, but those fees won’t come in until March 2018.

On another note, projected receipts from expanded gaming (casinos) are dropping – forecasts were reduced $2.8 m in FY 17, $6.5 m in FY 18, and $7.8 m in FY 19.  The Legislature adopted HB 2313 which will allow for Lottery vending machines, which is expected to increase lottery receipts.  That bill also includes a conference committee amendment permitting fraternal organizations to install pull tab vending machines, also facilitated by the Kansas Lottery.

Finally, there is a group of legislators – including many Democrats, who believe the new education finance plan passed in SB 19 last Tuesday will not pass Supreme Court scrutiny, and they could be back in Topeka in July for a special session.  That bill spends an additional $186.6 million in FY 18 and $283.8 million in FY 19 to satisfy the Supreme Court decision that K-12 funding is inadequate.

If you have questions about the budget or any other legislation, feel free to contact Amy.

Kansas Association of Beverage Retailers       P.O. Box 3842, Topeka, KS  66604      Email KABR  

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