Time for the Annual Midnight Assault on Public Education

Jun 6, 2015 by

Just like in 2014, when legislators waited until past the midnight hour on the last nights of the session, when they added the repeal of due process rights for teachers and the first step in vouchers – corporate tuition tax credits – last night they decided to launch yet another attack on public schools, inserting an expansion of the corporate tax credit program into a new tax bill.

This was done about 7:00 pm in a conference committee by tax chairs Les Donovan (R-Wichita) and Marvin Kleeb (R-Lenexa). Donovan said this was very important to help the Catholic Diocese of Wichita. Yes, there he was, arguing the importance of using tax dollars to fund religious education.

It has been reported that this came about due to demands from extreme right Republicans. They apparently refuse to support a tax bill unless it harms public education.

The new tax bill, HB 2109, went on the floor of the Senate about 12:20 am last night. Much of the initial debate centered on the voucher program which Donovan had a difficult time explaining. Democrats Oletha Faust-Goudeau (Wichita) and Pat Pettey (Kansas City) peppered him with questions.

The debate went on for about an hour when the chair recognized Majority Leader Terry Bruce (R-Hutchinson) who told the Senate that there were some problems with the bill and that they would need to pause the debate, adjourn, and return in the morning. First, he told them, there would be a tax conference committee about 9:00 or 9:30 in the morning. The Senate then adjourned until 10:30.

All of this kept folks wondering if there were drafting errors or if it had been determined there were not enough votes to pass the bill. 

Whatever the reason, the session convenes for the 107th day today.

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Budget and Taxes Moving? Maybe.

Jun 4, 2015 by

House passes a budget bill

It was a real surprise when the House adopted the conference committee report on SB 112, the budget that still needs $400 million in additional revenue to balance, without any discussion.

Chairman Ryckman explained the bill and Speaker Pro Tem Peggy Mast asked if there was discussion and then quickly announced that seeing no one, Ryckman could close on his motion to adopt the report.

The report was adopted on a vote of 64 to 48.

Democrats called foul, noting that Rep. Sharon Schwartz (R-Washington) had her light on, an indication that she wanted to speak, but was not recognized. Democrats had planned to speak at length about their concerns.

The report now goes to the Senate for their consideration. That is likely to happen today. If the Senate also adopts the report, it goes to the Governor. Of course, they can vote it down and then consider HB 2135, the budget that balances by cutting 5.7% from all agencies. This would be a $181 million cut to K-12 education.

Tax Conference Committee Meeting

With the passage of SB 270 in the House and HB 2109 in the Senate, there are now two tax bills in conference. The. Only similarity is that they both contain the tax amnesty plan.

The House bill (SB 270) also contains:

  • The restoration of a property development tax credit,
  • The repeal of the sunset on rural opportunity zones,
  • Permission to raise local sales taxes in three counties, and
  • A fire district property tax clarification.

The Senate plan (HB 2109) also contains:

  • The Christmas tree farmer tax break,
  • SSN required for tax credits,
  • Repeal the alumni association property tax exemption,
  • Requiring KDOR to send motor vehicle registration letters,
  • Ending “double dipping” on sales tax exemptions,
  • Capping local property tax increases, and
  • Cutting the food sales tax to 5.7% on Jan. 1.

At the first conference committee meeting, House Chair Marvin Kleeb indicated that the House had some interest in the Senate positions but also concerns with the property tax cap. They agreed to meet again at 11:00 today.

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So Close, Yet So Far Away

Jun 3, 2015 by

Once again, the Senate took up HB 2109, their tax bill. They’ve been at it for several days now, each night abandoning the debate as it became apparent things were not going well.

Yesterday, Senator King (R-Independence) offered an amendment that would include:

  • The tax amnesty plan,
  • The Christmas tree farm amendment previously offered by Senator Holmes,
  • The Social Security amendment previously offered by Senator Tyson fixed to address the military problem brought up by Senator Kelly,
  • The Department of Revenue tax letter amendment previously offered by Senator Baumgardner,
  • The repeal of the alumni association tax exemption previously offered by Senator Pilcher-Cook,
  • The “double dipping” on charitable contributions amendment previously offered by Senator Smith.

The effect of the King amendment is to bring the bill back to a much earlier form but include some amendments that had been adopted previously and send it off to conference.

King argued that the big floor debate has been held and now it’s time to let the conference committee cobble together an agreement to bring forth for a vote by both chambers.

Senator Hensley who had argued strongly that such a debate was needed and necessary indicated that he would support this amendment provided that the Senate conferees would also carry other Senate positions that had been approved on the floor, particularly the sales tax positions.

The King amendment would keep the sales tax at 6.15% for all purchases.

Far right conservatives continued their opposition to sending such a bill to conference. They want assurance that there will be no report coming forward that would reinstate income taxes on the 330,000 businesses now exempt. Senator Melcher likened this bill to the Trabant – the notoriously unreliable East German automobile.

It became clear the no promises were being made at this time on any of those points which caused Hensley to rethink his support of the amendment.

The amendment was ultimately adopted on a roll call vote of 21-17, the bare majority.

Senator Francisco (D-Lawrence) then offered an amendment to lower the food sales tax rate to 5.7% beginning on January 1. This would be consistent with amendments adopted by the Senate in earlier debates. Hensley pointed out that the last Senate position on sales taxes was 5.7% on food and 5.95% on everything else.

The Francisco amendment was adopted on a vote of 24 to 11.

At this point, King noted that adoption of the Francisco amendment set up a technical conflict elsewhere in the bill that would require an additional amendment. Since it would take several hours to have the technical fix drawn up as an amendment, the Senate chose to rise and report progress, adjourning until today at 10:00.

If adopted today, this tax bill would produce about $30 million in additional revenue – only $370 million more until the budget is balanced!

An earlier amendment by Senator LaTurner (R-Pittsburg) that was adopted on a vote of 30 to 8 would prohibit increases in property tax collections to exceed inflation without a vote of the people is also in the bill as it stands now. Coupled with state cuts, this could have a devastating effect on local units of government.

Budget bills down to two

Yesterday we reported that the budget conference committee was planning to put out three bills – one, the budget as it has already been proposed (needing $400 million), another just like it but with a 2% cut to a few agencies (not education), and a third with a 6% cut across the board (including education).

The committee got back together in the afternoon and Senator Masterson (R-Andover) withdrew the proposal with the 2% cut meaning that there are now two budget bills up for consideration.

SB 112, which goes to the House, is the budget as it was originally proposed that needs $400 million in additional revenue to balance, and

HB 2135, which goes to the Senate, which has a 5.7% across the board cut that will balance the budget but provide for no ending balance.

A 5.7% cut to education would be about $181 million. KASB calculates this to be an average cut of $369/pupil.

PNA bill to the Governor

The conference committee report on HB 2353 was adopted by the House yesterday. This action sends it to the Governor for his signature.

The bill makes some technical clean-ups to SB 7, the block grant bill, and enacts changes to the Professional Negotiations Act that are in line with the KNEA, KASB, KSSA, USA/KS consensus agreement.

The changes move the notice and impasse dates to later in the year, maintain the current list of negotiable items, mandate that salaries and hours are negotiated every year and that each side may choose up to three items from the list that must be negotiated. All other items may be negotiated by mutual agreement.

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Senate Rejects Another Tax Plan

Jun 2, 2015 by

Yet Another Plan Goes Down

After Sunday night’s defeat of the Abrams amendment to HB 2109 (the Senate tax bill), Senate leadership regrouped and on Monday brought forth a new amendment based on the Governor’s tax proposal.

The plan, carried by Tax Committee Chairman Les Donovan (R-Wichita), contained the following:

  • The itemized deduction proposal – repealing all but charitable contributions, home mortgage interest, and property taxes paid with the latter two at 50%.
  • Taxing the “guaranteed payments” in income tax exempt businesses (governor’s proposal).
  • Freezing the income tax rates through tax year 2017, dropping them to 2.0/4.1% in 2018 and 2019; and 1.9/3.8% in tax year 2020.
  • Raising the threshold under which one would owe no income taxes (governor’s proposal)
  • Repeal the remaining food sales tax exemption.
  • Raise sales tax on everything to 6.5% on July 1; drop the sales tax on food to 6.0% on Jan. 1.
  • The tax amnesty program.
  • Increase cigarette tax by $0.50/pack.
  • Tax e-cigarettes at $0.20/ml.
  • Assume the MCO fee increase.

Senator Anthony Hensley (D-Topeka) asked that the amendment be divided into three parts. Part A would be raising the threshold under which one would owe no income taxes (governor’s proposal); part B would be the sales tax provisions; part C would contain the remainder of the amendments.

Part A, exempting some of the lowest income Kansans from paying income taxes, passed on a vote of 33 to 4 with only Abrams, Donovan, Ostmeyer, and Smith voting NO. Francisco did not vote; Arpke and Wilborn were absent.

The next vote was on the sales tax increases. The tax increases failed on a vote of 8 to 30 with only Donovan, Holmes, Kerschen, King, Longbine, Olson, Powell, and Wagle voting YES.

The third part, which was everything else in the above list was voted down on a voice vote.

The Senate then adjourned for the day to return today at 10:00 am.

Senate again adopts HB 2353

Earlier both the House and Senate had adopted HB 2353, the bill containing clean-up fixes to the block grant bill, SB 7, and the education community’s PNA consensus bill.

It was discovered later that there was an error in the drafting of the bill that had to be fixed so both chambers brought the bill back up and formed a conference committee to fix the error. This was accomplished during a meeting at the rail. No changes were made to the PNA provisions.

Yesterday the Senate adopted the conference committee report. Now it only needs to be adopted by the House.

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The Weekend Warriors at Work!

Jun 1, 2015 by

Friday saw things fall apart under the dome after House leadership crafted a plan by which they could end tax debates on the floor and push the whole of decision making into a conference committee.

Having watched the Senate debate a tax plan crafted by Sen. Les Donovan (R-Wichita) only to kill it on a vote of 1 to 30, legislators came up with the idea of putting a minimalist bill into conference. In this way, they would have tax conference committee reports to act on and not bills – a conference committee report cannot be amended so this action would dramatically limit what happens in floor debate.

The House passed a small tax plan – basically only the amnesty program – in SB 29 and shot it over to the Senate. Since this was a bill that the Senate had already passed in another form, all they could do was vote to concur in the House changes or non-concur and form a conference committee.

Senate leadership offered a motion to non-concur and form a conference committee but Sen. Anthony Hensley (D-Topeka) immediately offered a substitute motion to concur in the bill. If adopted the Hensley motion would send the bill to the Governor and if defeated, it would kill the bill outright.

Hensley argued that it was wrong to simply put all decision making into the hands of the six members of the conference committee and essentially deny a real voice to all the other Senators and Representatives. He was joined in this argument by the hard right conservatives including Mary Pilcher-Cook (R-Shawnee), Greg Smith (R-Overland Park) and Dennis Pyle (R-Hiawatha).

Sensing their best laid plans going haywire, it was decided to break and go to caucus to discuss the issues. Upon returning, Republicans had united. They voted down the Henlsey motion and then reconsidered their action, passing a motion to non-concur and send the bill to conference.

Now we are at a point where the bill will be taken up in conference. We expect that the conferees will assemble a comprehensive plan and send it out in a report to be voted up or down in both chambers. Each plan that fails will send the conference committee back to craft another, attempting to figure out how to get 63 votes in the House and 21 in the Senate.

On Saturday, things went very slowly with very little progress noted.

Probably the most important event was the Governor’s press conference at which he finally stepped in and suggested a plan.

The Governor’s plan would:

  • Tax the “guaranteed payment” provisions in the now-exempt businesses at the lowest income tax rate, 2.7%.
  • Raise the sales tax to 6.65%.
  • Raise cigarette taxes by 50 cents/pack.
  • Eliminate income tax deductions except home mortgage interest, property taxes paid, and charitable contributions. Charitable contributions would be at 100%, mortgage and property taxes at 50%.
  • Raise the bottom income threshold at which income tax is owed thereby eliminating about 388,000 individuals from the income tax rolls.
  • Slow the reduction in the income tax rates but continue the “march to zero.”

Much of the rest of the day was spent in caucus meetings.

There were two committee meetings at the rail.

The conference committee on HB 2353 (containing technical clean-up to the block grant bill and the education community’s consensus PNA bill) met to correct a mistake made in the bill drafting. HB 2353 will be considered once again.

The Senate Ways and Means Committee met to introduce a tax bill that would provide an income tax check-off for K-12 education. Think Chickadee Check-off for schools!

And that brings us to Sunday.

Despite being set to begin at 1:00 (House) and 2:00 (Senate), both chambers gaveled in and almost immediately recessed.

House Republicans decided to provide their members with a survey in an attempt to find out what taxes might get the support of 63 members. The Senate Republican caucus heard from Revenue Secretary Nick Jordan who assured them that the Governor would veto any bill that taxed the businesses now exempt.

The House came back at 4:00 and by 4:30 had adjourned until 10:00 Monday.

The Senate came back in at 4:13 to take up Sen Sub for HB 2109, a tax bill.

Several amendments were quickly offered and adopted:

  • Senator Tyson (R-Parker) offered an amendment to require people to hold a social security card and work for a full year before qualifying for any tax credits.
  • Senator Pilcher-Cook (R-Shawnee) offered an amendment to repeal a tax exemption for alumni associations.
  • Senator Smith (R-Overland Park) offered an amendment that would end the opportunity to double dip when making charitable contributions (someone buys something for a non-profit using the non-profit tax exemption and then takes an income tax deduction for the contribution).
  • Senator Holmes (R-St John) offered an amendment allowing Christmas tree farmers to benefit from the LLC business income tax exemption.
  • Senator Baumgardner (R-Louisburg) offered an amendment directing the Department of Revenue to continue sending out detailed car registration letters; the DOR had recently decided to change to simply sending a reminder postcard to save money.

These amendments were all adopted.

Then came the biggie. After a long dinner break, the Senate reconvened at 8:00 to begin debate on an amendment from Sen. Abrams (R-Arkansas City).

The Abrams amendment was 81 pages long and contained a number of provisions. Essentially, it repealed many sales tax exemptions and used the savings to decrease the sales tax rate and accelerate the march to zero.

The repealed exemptions would have had the effect of forcing schools, non-profit hospitals, and youth development organizations (Girl Scouts, Boy Scouts) to pay millions of dollars in sales taxes. Debate was heated with some conservatives blasting the legislature for granting these exemptions to “special interest groups with big lobbyists.”

The debate showed deep divisions within the Republican caucus. Senator Melcher insisted that non-profit hospitals should pay up just like for-profits and Senator Donovan argued that non-profit hospitals take care of the poor and uninsured as part of their charitable mission.

Minority Leader Anthony Hensley (D-Topeka) called for the question to be divided, separating the sales tax decrease from the repeal of the exemptions. The sales tax decrease was adopted but the debate over exemptions raged on until it was finally defeated on a vote of 9 to 30.

At this point, the Senate recessed to hold caucus meetings. It was becoming increasingly clear that this was a disaster in the making.

Press reports indicate that the Republican caucus meeting was raucous.

In an attempt to cobble something together that the whole caucus could support, Senator Donovan offered a version of the Governor’s plan.

The first part to be attacked was the taxing of guaranteed payments on some of the exempt businesses. Senator Denning (R-Overland Park) called that “fictitious,” saying that it was simple to get around that and avoid paying taxes. They would be in the same position next year. He is reported to have asked, “Are we going to fix this turd or not?”

Senator Greg Smith (R-Overland Park) said the plan was “smoke and mirrors” and reportedly said, “You can take this plan and shove it!”

The biggest sticking point appears to be the conflict between Republicans who believe that businesses should be put back on the tax rolls in some fashion and the Governor who has vowed to veto any bill that does.

With things going south and tempers getting frayed, leadership decided to halt the proceedings and, at about 2:00 am, they put the debate on hold and went home for some much needed sleep.

Today should be interesting!

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