This Week in Topeka
Business, Education and Local Government News from the Legislative Session week of Feb. 19-23, 2007
This is intended to present an overview of the past week in the Kansas Legislature and is created for the members of the Overland Park Chamber of Commerce. Please contact my office if you would like additional information on any of these issues at firstname.lastname@example.org, 785-296-7615.
\”Turnaround Week\” officially ended in the Legislature on Thursday night the 22nd with each chamber getting their bills passed over to the other body and thus meeting the deadline for doing so, which was Saturday the 24th. The Senate won\’t be back in session until Tuesday, the 27th and the House won\’t return until Wednesday the 28th.
1) The House Taxation Committee held a hearing on Tuesday the 20th on HB 2495, which would lower the corporate income tax surcharge. Currently, corporations are assessed a 4.0 percent tax rate on the first $50,000 of income. Any amount in excess of that $50,000 is taxed at a rate of 7.35 percent, which is the 4.0 percent base rate plus a 3.35 percent surcharge. This bill would reduce the surcharge rate from the current 3.35 percent to 2.95 percent in tax year 2008. In tax year 2009, the rate would be reduced further to 2.75 percent. The base rate of 4.0 percent would remain unchanged.
Since House Taxation Committee\’s bills are exempt from the Turnaround Week deadline, the bill could be reported out of committee as early as the week of the 26th. The Chamber wholeheartedly supports this bill, as it will give the state a more favorable tax climate and make us more competitive with our neighbors; so we will continue to advocate its passage and provide an update as things progress.
2) HB 2496, which would streamline and simplify investment and job creation tax credits was passed over on the House calendar on Thursday the 22nd and effectively killed because an amendment was offered to tie the job credits to the federal minimum wage. The bill originated in the House Economic Development and Tourism Committee and is thus not exempt from the Turnaround deadline. This bill could be reintroduced in the exempt House Taxation Committee later in the session without the minimum wage provision, so we\’ll continue to track it and report any updates. It\’s not completely dead yet.
3) SB 83, the unemployment insurance tax reduction measure, passed the House Thursday by a vote of 122-0. The bill would specifically amend employment security law by adjusting employer contribution rates. For rate years 2007 and 2008, the following unemployment employers\’ contribution rates would apply:
* For new employers, the rate would be 4.0 percent of wages paid during the calendar year except for new employers engaged in the construction industry would pay a 6.0 percent rate. * For experienced employers with a positive balance in the employer account at the Kansas Department of Labor, they would pay the following:\” Rate Groups 1 through 5 – Zero\” Rate Groups 6 through 28 – 50.0 % of current rate \” Rate Groups 29 through 51 – 60 % of current rate
The bill would provide that if the Employment Security Trust Fund balance falls below a prescribed amount, the reduction for 2008 would not occur. Finally, the bill would amend the definition of \”employer\” under the employment security law to include anyone who employs one or more persons for any part of a day during a calendar year.
By an overwhelming vote of 80-31, an amendment was added that eliminates the decades-old \”waiting week\” before an employee can begin receiving unemployment benefits.
Overall, this is a big win for the business community, whether or not the \”waiting week\” amendment remains as part of the bill going forward.
There were bills both to repeal the minimum wage altogether and to increase it to the federal level – both of which failed to pass before the Turnaround deadline. SB 71, which would repeal the minimum wage in Kansas could be \”blessed\” however and thus come up later in the session, so we\’ll continue to track it and report on any developments.
HB 2457, \”The Kansas Taxpayer Transparency Act\” passed the House Thursday by a vote of 102-20. The bill authorizes the Secretary of Administration to set up a searchable Web site on which all sorts of tax data can be assessed by the public. An early version of the bill contained language to allow the publishing of which Kansas businesses have taken advantage of state training grants and tax credits and to what extent. The Chamber was opposed to having that information published since it could reveal sensitive and confidential data to businesses\’ competitors. Thankfully, that entire section of the bill was amended out and it passed without those provisions.
STAR Bonds & TIF
Legislation to separate and clarify STAR Bonds language from Tax Increment Financing (TIF) language did not pass before the Turnaround deadline, so it will have to be blessed to be considered going forward. Otherwise, we\’ll see a new bill later in the session.
Initiatives & Referendums
HB 2082 failed Thursday night by a vote of 19-88. The bill would have amended current law regarding initiative and referendum by lowering the number of signatures required for a petition initiative for a city ordinance from 40 to 25 percent of the persons who voted in the last election, depending on the class size of the city. Currently, for cities of the second and third class (smaller cities) the threshold is 40 percent. For larger cities, the threshold is 25 percent. Counties are not included in the current statute, and have no general initiative procedure.
The Chamber opposed passage of this bill on the grounds costly petition initiatives and referendums are not in line with representative democracy.
Two bills saw action on the Senate floor regarding Local Option Budgets (LOB) for school districts – one passed and one didn\’t.
1) SB 143 passed the Senate by a vote of 40-0 on Thursday and would simplify the provisions of law relating to the procedures school districts must follow when adopting local option budgets (LOB). The bill would provide that the board of education of a district could adopt an LOB which would not be subject to protest and election if:
- The proposed LOB authority did not exceed the amount it was authorized to adopt under this section prior to the effective date of this bill; or
- The proposed LOB did not exceed the statewide average percentage of LOB authorized for the preceding school year.
Under this bill, if the district proposed to authorize the adoption of an LOB in excess of the above, the resolution would be subject to publication, protest and election. In addition, the bill would maintain the current provision for a mandatory election if the district proposed to adopt a resolution authorizing LOB in excess of 30 percent of the state financial aid of the district. Under the bill, the maximum LOB would remain at 31 percent of the state financial aid of the district. The bill would provide that the LOB authority is permanent unless the resolution adopted by the board specifically states otherwise.
2) SB 61 failed to pass the Senate by a vote of 15-25 also on Thursday. It would have amended current law regarding local option budgets of school districts by eliminating the requirement of a mandatory election when a school district proposes to increase its local option budget above 30 percent of the state financial aid of the district.
At the hearing on the bill, Senator Vratil and representatives of the Kansas Association of School Boards and Shawnee Mission School District testified in favor of the bill. A representative of the Kansas City School District opposed the bill. In its fiscal note, the Department of Education estimated that if one-third of the state\’s school districts were able to increase their local option budget because voter approval was not required, additional state aid (State General Funds) for those larger local option budgets would amount to $2,650,000.
Johnson County State of the County Luncheon features Chairman Annabeth Surbaugh, Tuesday, March 27, 11:30 a.m. to 1 p.m., at the Ritz Charles Overland Park. Lunch is $28 per person or $275 for a table of eight. This is a pre-paid event. RSVP with payment to the Chamber by Tuesday, March 20 at email@example.com.
Next Week: Committees will reconvene to hear bills introduced in the Senate, while the Senate considers bills voted on in the House.