Windfall? Not Really. & Kansas Teacher of the Year Team Visits Legislators

Jan 29, 2019 by

Fiscal note on SB 22, tax cut bill, is out … and it’s a doozy!

The fiscal note for SB 22, the so-called “windfall” tax bill being pushed by Senate President Wagle (R-Wichita) is out and it’s big. Passage of SB 22 would strip about $400 million out of the state treasury in three years – $191 million in 2020 alone.

The issue is relatively simple to understand. When Congress, with the full support of all six conservative Republican members of the Kansas delegation, passed the Trump tax bill they simply ignored the fact that their huge tax break for the wealthy would result in a state tax hike for average Kansans. By raising the standard deduction in the federal tax code, they wiped out itemization for most middle-income taxpayers. And since the state and federal codes are “coupled,” that means that if you can’t itemize on your federal taxes, you can’t itemize on your state taxes. Thus state taxes for most middle-income earners went up.

The Department of Revenue released three hypothetical Kansas taxpayers (married filing jointly with 2 children and a federal adjusted gross income of $120,000; married filing jointly with no children and a federal AGI of $60,000; and married filing jointly with one child and a federal AGI of $60,000). In those three scenarios, the first taxpayer with the AGI of $120,000 saw an increase of $39 in state taxes due to the federal law while the other two saw an increase of $12. That state tax increase was not passed by the Kansas legislature but instead by Trump and the congressional Republicans.

Kansas Republicans are aghast and seek to immediately decouple from the federal tax code to prevent this increase. Wagle wants to do this so quickly that she formed a special committee in the Senate naming herself as chair to get it out of committee this week. Today the Kansas Chamber and some corporate tax advisers talked to the committee about provisions in the bill that would exempt corporations from paying state taxes on overseas earnings that are “repatriated” to the U.S.

KNEA is neutral on the policy – whether or not to adjust the Kansas tax code to deal with the unintended consequences of rushed tax changes by Congress is a decision the Legislature should debate. But we are not neutral on the impact. If a bill is passed that strips nearly $200 million out of the treasury in one year with more than $100 million per year lost in the following two years, how does the Legislature plan to pass a responsible budget that funds our schools and restores service cuts across agencies? And perhaps that is the point.

We all know what happens when tax policy is done in a rush! Trump and his supporters in the House and Senate in Congress rammed through their tax bill without having any idea of its impact and the harm it might do to middle income taxpayers. Sam Brownback and his allies rammed through a tax bill in 2012 that brought Kansas to the brink of collapse.

So here’s our plea. Stop the rush! Be deliberate; consider the consequences of each change; look for alternative ways to address the issue without decoupling. Try exercising a little restraint. SB 22 will strip too much money out of the Kansas treasury while we are still in recovery from the Brownback disaster.

Kansas Teacher of the Year Team 2019

KTOY Team 2019

As today was “Kansas Day,” it was a perfect time to celebrate all that makes our state great, including the dedicated professionals who work so hard to make sure our kids are safe, learning and growing in our public school classrooms. The 2019 Kansas Teacher of the Year team is recognized for its members’ outstanding contributions to their students, but also works to be a strong voice for educators during the year. Today, the team addressed a joint House and Senate Education Committee to bring both their optimism and concerns before our state representatives.

2019 Kansas Teacher of the Year, Whitney Morgan

The 2019 Kansas Teacher of the Year, Whitney Morgan shared some of what she believes would be beneficial for students including embracing diversity, targeted interventions, smaller class sizes and professional development. Whitney teaches English and English for speakers of other languages in Kansas City, Kansas.

Team member Sharon Kuchinski, a high school social studies teacher from Leavenworth, gave some very strong testimony over concerns for the difficulty our state is facing attracting new teachers to the profession, particularly when many teachers- but certainly early career educators- are faced with working multiple jobs in order to make ends meet.

We applaud the Kansas Teacher of the Year team for their efforts and advocacy. The team will continue to meet with various groups throughout the state, including Kansas NEA, to share their insights throughout the coming days and weeks. We look forward to hearing and learning from them.

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Of Taxes, College Credits, and the Sad Case of Foreign Languages

Jan 28, 2019 by

Tax decoupling on the Senate fast track

There’s been quite a tax kerfuffle in the Senate. Tax Committee chair Caryn Tyson (R-Parker) appeared to have fast tracked a tax giveaway bill – the so-called “windfall” bill. Her intent was to decouple part of the Kansas income tax code from the federal income tax code. 

When Congress adopted the Trump tax cuts for the wealthiest Americans, the changes they made to the code would prevent many middle income Americans from itemizing deductions and instead taking a higher standard deduction. But since the state code and federal code are “coupled,” itemization would go away for most Kansans but without the benefit of a higher Kansas standard deduction. Thus some Kansans would see their state income taxes go up. 

This additional tax revenue is being portrayed as a “windfall” to the state that the state never planned on getting. Republican conservatives are crying foul and demanding that the state give this revenue back to the taxpayers (and conveniently forgetting that the entire Kansas Republican Congressional Delegation gleefully voted for the Trump tax changes). 

So here’s where things get sticky. Tyson’s bill also included a number of other tax changes not related to the income tax changes. Then Tyson invited the Kansas Chamber to present their wishlist of tax changes to benefit corporations. These are tied up largely in two complex provisions dealing with overseas earnings – the GILTI provision and the Repatriation provision. 

It was clear that Tyson intended to put the corporate tax revisions into the bill which would further clutter up the package. 

And, that’s when Senate President Susan Wagle (R-Wichita) stepped in. Wagle apparently wanted to go in a slightly different direction and so she formed a new committee to deal specifically with federal tax implications naming herself as Chair – The Senate Select Committee on Federal Tax Implementation.

Speculation is that Wagle wants the decoupling for itemized deductions and the GILTI and Repatriation provisions requested by the Chamber but doesn’t want them jumbled up with a bunch of unrelated provisions. Some say Tyson disagreed, wanting to push her bigger tax bill. 

That’s where things sit right now. And Wagle’s Select Committee will be meeting Tuesday through Thursday this week to hear SB 22, the bill decoupling from the federal tax code. The plan is to have final action by the Committee on Thursday.

The Governor is opposed to the decoupling at this time, urging the Legislature to go slowly on tax issues. No one has yet been able to accurately determine the impact of the decoupling and Kelly is suggesting that until that can be done – possibly this summer – there should be no changes as those changes could have a significantly negative impact on the state budget.

Meanwhile, the House Tax Committee, instead of rushing into the abyss, are engaged in thoughtful discussions about the actual impact of the federal tax changes on Kansas taxpayers, whether or not there is an alternative to decoupling that would accomplish the same thing, and what the fiscal impact of each option might be.

More tax issues being discussed

The House Tax Committee moved on to discussing new options on the collection of internet sales taxes.

This discussion is the result of a recent US Supreme Court decision that changes the standard for collection of sales taxes on internet sales. In the past, under a decision called the “Quill Decision,” sales taxes on internet sales were required only if the the seller had a physical presence in the state. This new decision – the “Wayfair Decision” – overturns the physical requirement and says physical presence or economic presence counts.

States are adopting a minimum sales threshold under which an internet sales provider would be required to collect destination sales taxes. Most states have adopted $100,000 in sales as the threshold; some have an either/or situation – either $100,000 in sales or 200 sales transactions in the state. Also in this discussion is how to handle the sale of digital properties like Netflix, Hulu, iTunes, etc.

The Kansas legislature will likely take this matter up.

Concurrent enrollment discussion in K-12 Budget Committee

A discussion in a meeting of the House K-12 Budget Committee focused primarily on the issue of concurrent enrollment programs for Kansas high school students.  Dr. Blake Flanders, President and CEO of the Kansas Board of Regents, joined Kansas Commissioner of Education, Randy Watson to present a plan to grow the current program.  Both presenters extolled the virtues of attainable post-secondary programs and the impact those graduates have upon the Kansas job market, salary growth and overall growth of economic prosperity.  

By growing the concurrent enrollment program, along with other pathways to post-secondary opportunities, more students in all parts of Kansas can seek certificates, undergraduate and graduate degrees.  Under this program, teachers of concurrent enrollment courses would be employed and paid by the district while the post-secondary partner institution- typically a community college- would receive funding for tuition, books and supplies for each enrolled program student.  The tuition fee- paid through an allocation of state dollars to this program- would be approximately $275 per course.  

Both the committee chairperson, Representative Kristey Williams (R-Augusta) and Vice-Chair Representative Kyle Hoffman (R-Coldwater), had questions regarding the funding amounts, who would be paid (the district or the college) and why this program would- in effect- be akin to double paying for students.  The funding amount- per enrolled student- is the median of a range of tuition amounts from ongoing programs throughout the state.  Dr. Flanders indicated that it would be the institution that would receive the funds under this program but that local agreements with districts could push portions of those funds back to the district. 

Are foreign language studies disappearing?

Last week we were sitting the House K-12 Budget Committee listening to a discussion on school performance and the Kansas school accreditation system. At one point Chairperson Kristey Williams (R-Augusta) commented on the importance of foreign language instruction. As Kansas educators know the value of studying foreign languages, we were pleased and surprised to hear a representative mention a subject other than STEM subjects.

But today we came across an article in the Chronicle of Higher Education reporting that from 2013 to 2016, colleges in the United States lost 651 foreign language programs (among those were 118 Spanish programs, 129 in French, 86 in German, and 56 in Italian). By comparison, only one program was lost between 2009 and 2013.

Given the global world in which we operate and in which today’s young people will compete, we hope this is an anomaly and not a trend but expectations are that the decline will continue into 2020.

You can read the article in the Chronicle by clicking here.

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Governor’s Budget funds schools, health care, foster care… but does not raise taxes.

Jan 17, 2019 by

Kansas Governor Laura Kelly

Governor Kelly outlined her vision for Kansas in her first State of the State Address last night and the focus was on three areas: 1) funding our K-12 schools to end the “cycle of litigation,” 2) expanding Medicaid to provide health insurance for 150,000 more Kansans, and 3) restoring our foster care system so that children are cared for. One thing the Governor’s budget does not include is a tax increase.

This morning Budget Director Larry Campbell appeared before a joint meeting of the House Appropriations and Senate Ways and Means Committees to put some meat on the bones of her speech. Campbell served as a Republican State Representative from Olathe before being picked by former Governor Colyer to serve as Budget Director. Governor Kelly has kept Campbell on. He is noted for his even temper, pragmatic outlook, and ability to work “across the aisle” to find solutions to complex problems.

Kelly’s budget is a one year budget except for K-12 education with is a two-year budget. For the past eight years, the Legislature has adopted two-year budgets but Kelly is breaking with that cycle this year, instead focusing on moving ahead for one year while the state continues to recover from the failed Brownback tax experiment that left Kansas on the brink of bankruptcy.

Under Kelly’s budget State Foundation Aid (BASE) would rise from the current $4165 in 2019 to $4436 in 2020, $4569 in 2021, $4706 in 2022, and $4846 in 2023. Beginning in 2024 the base would rise by the Consumer Price Index each year. This funding would provide for the inflation factor that the Supreme Court noted in the last Gannon school finance decision.

The proposal would:

  • Add $521 million from 2020 through 2023 for State Foundation Aid,
  • Fully fund LOB State Aid each year,
  • Continue funding for mental health intervention teams and the Juvenile Transitional Crisis Center in 2020,
  • Fully fund ACT and/or WorkKeys tests in 2020, and
  • Include $950,000 for the Education Super Highway, which will enable $9.5 million in matching federal funds for rural internet broadband initiatives.

Kelly asks the Legislature to pass her school funding plan by February 28 in order to satisfy the Supreme Court ruling.

Here’s what Governor Kelly had to say about education in her speech last night:

[T]hroughout Kansas’ decades-long debate over school funding, we’ve fallen into a troubling pattern. It begins with a promise from elected leaders to fund our schools. Then a failure to follow through on that promise.


That is going to change this year. This year, we will end this cycle of litigation and meet the needs of our students and teachers once and for all.


The days of doing the bare minimum to fund our schools are over. It stops now.


Remember, just a few short years ago, schools closed early because they literally could not afford to stay open. Test scores dropped for the first time in a decade. Class sizes grew – some with more than 30 kids in a single classroom.


Superintendents and principals struggled to hold their districts together, often taking on multiple roles like counselor or bus driver. Sometimes they even refused to be paid, just to keep their budgets above water.
Teachers fled the state. And those who stayed received an average salary that ranked 42nd in the nation.


The consequences were tangible and the scars are lasting.
Never again.


The consequences were tangible and the scars are lasting.
Never again.

We’re going to properly fund our schools this year. And next year. And the year after that. Every year, every month, every day that I’m governor. 

And we’re going to make sure our schools prepare our children for a changing economy. Modern classrooms with modern technologies.

Because at the end of the day, we need our children to graduate high school or college or technical school so they can find jobs right here in Kansas. So they can stay here and raise their families close to home.

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Committees continue to gather information; Governor Kelly gives State of the State Address

Jan 16, 2019 by

Kansas Governor Laura Kelly delivering her first state of the state address.

House Appropriations gets thorough update on revenue resources

Chairman Troy Waymaster opened the appropriations committee with a round-robin introduction of members, legislative staffers and his personal staffers.  Waymaster called his committee the “best committee in the House” because this committee will “have its hand on everything the state government does.”  If introductions by the dedicated staff focusing of fiscal analysts and revisors is any indication, Waymaster is probably right.  

Following introductions, an agent from the Kansas Department of Revenue, gave a summary of Kansas revenue estimates and forecasts.  In summary, while FY 2018 ended better than forecast, several state and national factors could negatively impact FY 2019 estimates.  The revenue official continued to describe the forecast as a “mixed bag” of good and bad indicators as we move into an uncertain economic future.

Chairman Waymaster noted, that agriculture is KS leading economic driver and Pres. Trump’s shutdown is impacting KS agriculture due to frozen stimulus payments to farmers which came as a result of the negative impact from Pres. Trump’s tariffs.  The revenue official agreed that negative impacts upon agriculture could certainly impact the state economy and consequently the revenue estimates.

What remains very clear, is that the FY 2019 approved state budget leaves an ending balance of $905 million.  With this money on hand, the state is in a position to fully fund public schools according to the Kansas Constitution for the first time in almost a decade.  There is also enough to begin to address some of the myriad other budget issues left behind by the Brownback / Colyer administration, like KPERS, highways, and social services. 

Today, many of those reps who supported the Brownback agenda that created the budget holes we’re dealing with now, are pushing not for filling those holes, but instead warning against the threat of a bleak national economy on the horizon and the need to hold onto our reserves.  We call on our representatives to take the final step in fully funding public schools according to the constitution by using the surplus to account for inflation adjustments in the ‘out-years’ of the funding formula.  Doing so now while the money is available would end litigation and more importantly, give our students access to a fully funded and constitutional K-12 experience.  

Tax policy: Understanding GILTI and Repatriation

The Senate Tax Committee met again today to continue discussion of SB 13 with the Kansas Chamber of Commerce bringing in more information and an tax expert from the Seaboard corporation to explain the GILTI and Repatriation provisions of the Trump/Ryan tax reform and their impact on Kansas taxes.

We can assure you that these provisions have no direct impact on individuals but instead impact what corporations pay in income taxes and they both deal with overseas earnings.

It’s best to let the experts explain these provisions to you, so click here to get an understandable explanation of GILTI. Then click here to get an understandable explanation of repatriation. They are both short reads and might be illuminating.

House Ed and House K-12 Budget Committees meet today

The House Education Committee met for the first time today simply to get to know each other and to review their committee rules. There are plenty of new faces this year including many freshman. The new freshmen are Dave Benson (R-Overland Park), Rene Erickson (R-Wichita), Cheryl Helmer (R-Mulvane), Mark Samsel (R-Wellsville), Adam Thomas (R-Olathe), and Rui Xu (D-Westwood). John Toplikar (R-Olathe) is technically a freshman now although he served a number of years ago in the Legislature.

New to the Committee are Stephanie Clayton (D-Overland Park) and Steven Johnson (R-Assaria). Rounding out the committee are Steve Huebert (R-Wichita), Brenda Dietrich (R-Topeka), Jim Ward (D-Wichita), Adam Smith (R-Weskan), Jim Karleskint (R-Tonganoxie), Mark Schreiber (R-El Dorado), Jane Vickrey (R-Lousiburg), and Jerry Stogsdill (D-Prairie Village).

The K-12 Budget Committee today received the same school finance overview that was presented to the Senate Education Committee yesterday.

Governor Laura Kelly gave her first state of the state address: schools, Medicaid expansion, and the Foster Care System

In her first state of the state address, Governor Laura Kelly laid our three priorities for Kansas. We need to fund our schools and end the cycle of litigation; we need to expand Medicaid to help 150,000 Kansans get health insurance, to keep Kansas tax dollars in Kansas, and to preserve our rural communities; we need to overhaul and restore our failing foster care system.

We’ll talk more about her speech after we review it more thoroughly, but in the meantime, you can read it by clicking here or watch it by clicking here.

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Legislature Jumping Right In

Jan 16, 2019 by

It’s not usual for us to have four committee meetings to attend on the first day of the session – often it’s not usual to have four on any day of the first week. But not so this year. We’ve been in the statehouse all day today!

First big tax bill

First up was a meeting of the Senate Assessment and Taxation Committee where they planned an informational hearing on a bill, SB 13. Informational briefings are often held before a bill has been officially referred to a committee in order to get a jump start on learning the issue.

SB 13 is a new version of CCR 2228 which was defeated at the very end of the 2018 session. This so-called “windfall” bill has a number of parts in it but the most talked about has been a provision decoupling part of the Kansas income tax code from the federal income tax code.

When the Trump/Ryan tax reform bill was passed at the federal level, it was aimed at tax relief primarily for the highest earners. It ended itemized deductions for many taxpayers by putting in a restriction tying itemization to a certain percentage of income. Since most people don’t hit those thresholds, they essentially can no longer itemize. And since the Kansas tax code is coupled to the federal code, the same thing applies to state income taxes. If one can no longer itemize on their federal taxes, one can’t itemize on state taxes.

Many middle income taxpayers who could itemize in the past can no longer do so and as a result, they may have seen an actual increase in taxes or, at best, saw no benefit from the federal law.

If SB 13 were to pass, these taxpayers could once again itemize deductions on their state income tax forms. Unfortunately, as tax relief goes, this would benefit few Kansans – it is estimated that somewhere between 20 and 25% of Kansas taxpayers were itemizing before the change. Certainly, the highest income Kansans were itemizing and continue to do so now. Itemization tends to benefit higher earners and as incomes decline, so does the ability to itemize deductions. While this change will provide some relief to those taxpayers who were itemizing and lost the ability, it would also have a significant fiscal impact on the state tax revenues.

Since five of the nine members of the Committee are co-sponsors of the bill, we would expect it would have an easy time in committee.

Gannon is topic in two committees

Revisors (the folks who write statutes for the Legislature) gave presentations in the Senate Education Committee and the House K-12 Budget Committee today.

Essentially, these presentations are intended to bring the committee members up to speed on how school finance got to the point it is today and what the Supreme Court ruled in their most recent finding. Essentially, the Court found no problems with the structure of the school finance formula but still called the funding inadequate but only because it did not account for inflation in the years during which the funding is to be phased in.

Committees Getting First Briefings on the State of Kansas Revenues and the Budget

The Senate Ways and Means Committee was the first to receive an update on the status of the state’s budget and predictions about revenue collections.

So far, things are looking stable with ending balances available for several years. But as if to remind us of the need to stay the course on maintaining and managing our revenue stream, they noted that by 2022, we could be back to a 0% ending balance.

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