The KBA Advocate is the weekly KBA legislative newsletter that contains up-to-date information on legislation that impacts your practice. It is only published when the legislature is in session and is sent to all KBA members electronically via the KBA Weekly.
Things can happen instantly in the Kansas Capitol and after 108 days of gridlock on taxes and school finance both chambers were able to push through both measures last night. The House acted first on both items passing school finance bill (CCR for SB 19) 67-55. The Senate adopted the same CCR for SB 19 on a 23-17 count. This measure adds around $295 million to K12 over the next two fiscal years. for many this is still not enough to satisfy the Kansas Supreme Court but others are willing to let this ride and make the court strike it down.
The Tax plan (CCR for SB 30) followed a parallel path by getting passed in the House Chamber first on a not close to veto-proof majority of 69-52 while the Senate is nearly there when they adopted the bill 26-14. The tax bill will raise almost $1.2 BILLION over the next two years but run into some issues four years out. The Senate passed the bill at 12:20 am this morning, less than a minute later Gov. Brownback issued a press release stating he intends to Veto the entire bill. This will force both chambers to attempt a Veto Override for the third time this session. The House garnered 84 votes on a different tax plan in the Spring but the Senate fell 3 votes shy. Then in April the House failed to override the Governor’s Medicaid expansion veto. How this override attempt progresses will determine if we spend the next week or so drafting a new plan that can either get 84/27 to override or something with a lot less taxes that gets us to 63/21/1.
The House Appropriations committee spent better part of last Thursday discussing tobacco securitization. There were two bills discussed, HB 2429 and HB 2430. Th first bill provided the framework for selling bonds based on the revenue generated from the tobacco Master Settlement Agreement while the second bill gave direction on where the funds would be used and for what time.
The shorthand is the state of Kansas will provide to a financing company $18 million per year for 30 years ($540 million total) in exchange for $320 million in FY18. That $320 million will be used to payback KPERS ($90 million +8%) & pay down KPERs in FY18. Thereby lowering the overall budget shortfall. The $18 million taken from tobacco settlement was originally earmarked for Children Initiative Fund and Key Funding. This $18 million will be replenished using fund received from the increase on sales tax on cigarette sales. This is a complex and controversial budget maneuver and it appears to have very little support. The main proponents were conservatives from both chambers and the KS Chamber of Commerce.
Both chambers also pushed thru a concealed carry bill that exempted some state hospitals from the July 1st mandate to either have security in place or allow concealed carry users to enter the premises. The bill exempts public hospitals, mental health centers and adult care homes to ban firearms. Colleges and universities are still subject to the July 1st requirement.
Finally, Sen. David Haley announced his candidacy for Kansas City, KS Mayor. He will challenge incumbent Mark Holland in the August primary. Should Sen. Haley win the election the Kansas Senate will be left without a member having any type of formal legal training.
The Kansas Legislature returns from a four day weekend, hopefully regrouped and refreshed to make a final push to end the session. When they return, it will be Day 102, the 4th longest session in Kansas history. Both chambers still struggle with a tax plan, but the House has at least passed a school finance plan that adds $280 million over the next two years. The bill, HB 2410, has several very good policy pieces but many are concerned that funding levels are far from adequate. Should the Senate concur with HB 2410, it could be signed by the governor before the week is out. Then it just needs to be approved by the Kansas Supreme Court. Should the court strike it down, we can expect to be back for a special session.
The Kansas Senate returns to debate its version of school finance, and should they pass their plan, both chambers will most likely head to a conference committee to hammer out the details. The Senate will also leap head first into the conceal/carry debate. There appears to be a compromise that state hospitals, primarily metal health facilities, will be allowed to continue their exemption from conceal/carry laws going into effect July 1st. The big issue is whether universities will also be exempt.
It is important to note that the House school finance bill was nearly amended to put “teacher due process” rights back into state law. Currently, due process is established by contract between individual school districts and teachers. The KBA is concerned with this provision because this provision was added to a bill introduced, by the KBA, HB 2186. The Senate did not take kindly to that amendment and decided not to run our bill on the floor. If the teacher due process amendment had been included in the school finance bill, we could have stripped it from HB 2186 and moved our bill through the legislative process. Alas, that is not the case, and the Senate has “gutted” HB 2186 and replaced it with the Senate school finance plan.
Finally, Rep. Pete DeGraaf (R-Mulvane) announced his resignation earlier this session due to health issues. Last week his son-in-law Jesse Burris (R-Topeka/Mulvane) was elected to succeed him. Rep.-Elect Burris is a licensed Kansas attorney who worked at the Kansas Department of Health and at the Kansas Secretary of State’s office. He plans to commute during the workweek and return home on off days. This addition brings our lawyer/legislator number up to 15.
The Kansas Legislature headed home for the weekend last Friday guaranteeing at least a month-long veto session. There have been several warnings of a 7-day work week to finish off the year but those threats have gone unfulfilled. We first had Mother’s Day and this past weekend may high schools were celebrating graduation. We can expect to hear a similar threat this week by leadership but with Memorial Day coming up fast those threats may again be idle.
After three weeks, nothing has really changed. The politics remain the same as do the fiscal issues. The state is still in the hole $450 million on July 1 and another $450 million for FY19. K12 plan may run an extra $150 million for FY18/FY19. Those floor debates are still on the horizon.
The issue remains how to pay for these shortfalls and school finance. Earlier this session, the legislature passed a bill that would have funded state government with $590 million but Gov. Brownback vetoed that measure, and the Kansas Senate was unable to override the veto (the vote was 24-16; they needed 27). Thus, far the options are poor: pass a plan similar to the one Gov. Brownback vetoed and hope to override it, or pass a plan that doesn’t cover the hole and make cuts.
Timing is also significant since the Kansas Supreme Court has set a June 30th deadline to come up with a new school finance plan. This deadline has given Democrats and some Moderates leverage over the debate, but leadership would prefer to pass a tax plan prior to the school finance formula to limit Supreme Court review options.
Some hope to create a new money tree by removing the sales tax exemption on a few professional services. Rep. Kristy Williams (R-Augusta) is pushing to restore a sales tax on the following:
The KBA has concerns regarding sales tax on collection agencies. Several law firms engage in debt collection activities as do some doctors' offices, or CPA’s for that matter. Removing the sales tax exemption on collection agencies may prove to be a trickier option than initially envisioned. Debt collection is a volume business that relies upon phone banks, email and snail mail contact. Very little is done face-to-face which means the production can be moved out-of-state or internationally to avoid the sales tax. This would leave in-state entities that cannot move as easily at an economic disadvantage. The KBA is engaged on this topic and has expressed our concerns to the pertinent parties.
After ten days of Veto Session, the legislature has made little progress on the state budget and might have gone backwards on tax policy. Last week the Senate shot down another tax plan. This plan was like one passed during the regular session but ultimately vetoed by Gov. Brownback. The plan would have closed the LLC Loophole, stopped the glide path to zero income tax and reverted to a 3-tiered tax bracket again. Overall, it would have raised nearly $1.1 BILLION over the next two years. This is a bill most democrats and moderates campaigned on but the x-factor is the cost of school finance plan.
Many are hesitant to pass a tax plan before the final numbers are in for school finance because the tax plan may not raise enough money to fund both. This would lead to another fight on raising taxes and another vote. So, we wait until they complete the school finance issue.
Speaking of the school finance issue, it has long been agreed that funding levels should be increased by $150 million per year for 5 years, for a $750 million bump. However, this bill has been amended nearly 60 times, with dozens more amendments to come. Many of these additions will require more money. How much more is unknown, but democrats believe leadership is using the amendment process to create a bill so large, it is impossible to fund. The endgame for this strategy is to run out the clock without a school finance plan, force an agreement on a smaller plan with the promise to fix it later, allow some of the governor’s proposals (securitization etc.) to be discussed again, and pass a much smaller tax increase with some cuts. For conservatives/leadership to accomplish this, they must break the Mod/Dem coalition built upon school finance. How this plays out remains to be seen.
For KBA purposes this has been a good week. Both chambers have passed HB 2153 dealing with public benefit corporations, and the bill now heads to the governor’s desk. Special thanks to the KBA General Corporation Code review subcommittee chaired by Bill Matthews. Members include, Bill Quick, Prof. Hecker, Prof. Harper-Ho, Joe Jarvis, Bob Alderson, Bill Wood and several members of the Kansas Secretary of State’s Office. Once signed, this brings to a close a nearly three-year project to update the Kansas General Corporate Code.
Also, the judicial budget got their extension on a surcharge bill passed last Thursday. The bill will now go to the governor’s desk. I am happy to report that the judicial budget will be funded to requested levels, sans pay raises for employees. Democrats bit their tongues in voting for the surcharge bill because this single provision raised a fee from $59 to $100. Many thought this was too large an increase on individuals already having difficulty paying fines/fees. Rep. Carmichael carried the issue to the Democrats during caucus and did a fine job of clarifying the issues. Many thanks to him.
Beginning next Monday, both chambers will work 7 days a week till the job is done. Items that still need to be completed are FY18 & FY19 budgets, the school finance formula & a tax plan to pay for it all. This could take a while.
On Monday, the Kansas Legislature returned to finalize the 2017 session. To close shop and head home for the year, legislators must agree on three items: a biennial budget, a tax policy capable of paying for that biennial budget, and a school finance plan that includes a revenue source.
Legislators will attempt to resurrect a tax plan previously vetoed by the governor that includes a three-tiered tax bracket system, closes the LLC loophole, and stops the “glide-path” to zero income tax policy implemented in 2012. That proposal would see the highest earners pay an additional .85% per year. The main difference is that this proposal does not include a retroactive provision. The hope is to secure a 2/3 majority that would survive a gubernatorial veto. Getting to that number is tricky in the Senate.
The state did receive some good news on Monday as April revenue numbers showed a slightly higher than projected increase. Kansas took in $1.8 million more dollars than previously forecast. This was in line with projections from the April Consensus Revenue Estimating Group, but it still leaves the state in a $900 million hole.
The school finance issue will also play a vital role in ending the session since the Kansas Supreme Court added a June deadline to their spring decision. The basic format would be to increase school spending by $150 million each year for five years. The issue is how to pay for the increase. Sen. Jim Denning has proposed a utility tax of $3 per individual water meter and $10 for business meters. This would raise $159 million in revenue that would be earmarked for schools.
If legislators could agree on these items in short form, they could adjourn as early as next week. However, odds-makers believe we are in for a long veto session. We will know a lot more once the tax bill is debated by the Kansas Senate this week.
The Kansas Legislature will begin its Veto Session on Monday, May 1. Historically the Veto Session is a rather short event when legislators put the final touches on a budget and attempt to override any vetoes the governor has signed. This year, there remains much to accomplish—including crafting the FY18 & FY19 budgets, agreeing to a school finance plan and figuring out a way to pay for it all.
Legislators are faced with a $900 million shortfall over the next two fiscal terms. This means raising additional revenue or figuring out how much to cut and from what section of the government. Neither are attractive options, which means a long drawn out veto session.
While the legislature grapples with funding issues, the court system is in the middle of an important election. This election is for the statewide chair of the Kansas Supreme Court Nominating Commission. This election is by mail-in ballot, which if you are registered with the clerk of the court, you should have already received.
To be eligible to vote and receive a ballot, you must be a resident of the state of Kansas and comply with KSA 2016 Supp. 20-170. If you neglected to register, you are unable to vote in this election.
The candidates for Chair of the Kansas Supreme Court Nominating Commission are:
Mikel Stout, Wichita
Mary Curtis, Lawrence
Your ballot, along with your signed certificate, must be received by the court on or before May 15, 2017. Please use the self-addressed return envelope enclosed with your ballot and certificate.
The Kansas Legislature reached First Adjournment mid-afternoon on April 7. This deadline effectively kills any bill not already passed by at least one chamber. Of course, there are exceptions and those are very similar to the exceptions used after Turnaround (House Appropriations, Senate Ways & Means, Tax etc.). The plan is to return on May 1to pass a tax plan, to set the budget for FY18 & FY19 and finalize a school finance formula with a revenue stream. None of these are easily accomplished and many forecast an extended Veto Session.
The Kansas Legislative Research Department has complied a listing of those bills that have already passed the legislature and been signed into law by the governor. To review these new laws please visit the following link: http://bit.ly/2oaEqc9.
On the judicial branch front, I am happy to report that HB 2041—extending the judicial branch surcharge fund—passed both chambers, but the Senate amended the bill to include parts of HB 2053 dealing with debts owed the courts and the process for collecting those debts. HB 2041 as amended will now be voted on as a conference committee report.
In addition, the judicial branch required an extension of the DUI reinstatement fee to help fund its budget. The court receives a percentage of the fees collected for reinstatement of a driver’s license after the conviction of a DUI; this amounts to nearly 950K. The House passed this bill on April 7 on a 72-52 vote. The concern was that the increase of $41 was too great and would merely increase the instances of driving while suspended.
The remaining judicial budget issues concern personnel increases. For its part, the Kansas Senate passed SB 189 giving all state employees a 2% raise. House Appropriations included a raise for Judicial Branch employees totaling $6 million and added approximately $840,000 in new positions related to juvenile justice. There is a push to limit these increases to nonjudicial personnel.
The Judiciary Conference Committee consists of six members: the chair, vice-chair and ranking minority members of the Senate and House Judiciary Committees. The Senate members are Sen. Richard Wilborn (chair), Sen. Julia Lynn (vice-chair) and Sen. David Haley (ranking minority). The House is represented by Rep. Blaine Finch (chair), Rep. Fred Patton (vice-chair) and Rep. John Carmichael (ranking minority).
The conference committee negotiated 12 bills that passed both chambers but with differences that had to be reconciled. These bills are considered “bills in conference”. The conference committee also discussed bills that have only passed one chamber. These bills are referred to as “conference-able” bills. The committee can bundle bills that meet a subject matter requirement, including those bills passed by only one chamber.
The judiciary conference committee considered and agreed to combine SB 50 and contents of HB 2397 during conference. House Sub for SB 50, as amended, would create an unconscionable act or practice under the Kansas Consumer Protection Act related to the unauthorized practice of law, and amend law regarding membership of the Advisory Committee to the Kansas Commission on Interstate Cooperation and the Joint Committee on Special Claims Against the State.
House sub for SB 50 passed the KS Senate 38-0 and waits for approval by the Kansas House during Veto Session.
Both of our proposals dealing with arbitration passed the Kansas House. However, HB 2186 – Enacting the Uniform Arbitration Act was amended to include a teacher due-process provision. The House passed the amendment 66-59 and then passed the bill 72-53. The Senate was not interested in debating the teacher due process issue so HB 2186 remains below the line and will not be considered this session.
HB 2126 dealing with ADR in trust instruments also remains below the line in the Kansas Senate due to a growing concern that democrats would try to amend the teacher due process provision into it. This proposal has passed the Kansas house twice now both times on near perfect votes, 124-0 & 122-0.
Finally, HB 2125 passed the Kansas House 124-1 but failed to get out of the Senate judiciary committee. Sen. Mary Pilcher-Cook had ideological concerns about benefit corporations. However, I am happy to report that this bill was discussed and agreed to in judicial conference committee. The language in the bill was removed and placed into Sen Sub for HB 2153. It will be voted on during the Veto Session.
Rep. Steven Becker (R-Buhler) and Rep. Boog Highberger (D-Lawrence) introduced a bill to repeal major portions of a law passed last year allowing the Kansas Secretary of State to certify the list of attorneys registered with the court. Many lawyers are concerned that their personal information (home address, SSN, etc.) could be compromised. This bill will undo those requirements and remove the KSSOS from the equation. This bill failed to be passed by House Judiciary.
SB 63, as amended, would enact the Revised Uniform Fiduciary Access to Digital Assets Act (2015). The Act would authorize access to digital assets by four common types of fiduciaries. Specifically, the Act would apply to: A fiduciary acting under a will or power of attorney executed on or after July 1, 2017; a personal representative acting for a decedent who died before, on, or after July 1, 2017; a guardianship or conservatorship proceeding commenced before, on, or after July 1, 2017; and a trustee acting under a trust created before, on, or after July 1, 2017. SB 63 was approved by the governor on April 4, 2017.
SB 86 as amended, would amend the Kansas Open Records Act (KORA) regarding fees charged for public records, who may request and inspect public records in Kansas, the format of minutes kept at meetings of state legislative and administrative bodies and agencies, and the exemption for criminal investigation records in KORA. This bill is a concern to our Title Standard Committee as it limits access to public records to Kansas citizens. There are currently no plans to work the bill.
There are only five days left until First Adjournment, which means committee meetings are over and most work will take place on the floor of either chamber or in conference committees involving members of both chambers.
The judicial branch budget continues to be unresolved. As it currently stands, none of the judicial branch budget requests have been passed. HB 2041, the judicial surcharge extension, has been referred to the judicial conference committee, and the senate still has HB 2279, DUI reinstatement fees, below the line for debate. The senate passed over HB 2279 yesterday due to a new $25 fee added to the bill. If the DUI reinstatement bill is not passed, the judicial branch is looking at a $950,000 shortfall.
Most pressing is the uncertain judicial branch salary increase issue. To date, both chambers have discussed raising salaries for judicial branch employees, but there remains a concern about increasing judges’ salaries.
For their part, senators passed SB 189 last Thursday. This bill gives all state employees a two percent raise. House appropriations included a raise for judicial branch employees totaling $6 million and added approximately $840,000 in new positions related to juvenile justice.
Muddying the water is the recent revenue shortfall for March. The state was down $12 million for the month, although it is still up around $48 million for the year. Many legislators have expressed a desire to wait until the veto session before revisiting the judicial branch enhancement issue and then only if more funds become available. With the downturn in revenue for March, an April miracle seems unlikely.
The court has sent out a “Call to Action” on the judicial branch budget. Should you wish to participate, you can locate your legislators using the following links:
Last week, Senate judiciary heard and worked the KBA proposal concerning ADR in Trust instruments. The bill is uncontroversial and was passed out favorably on Wednesday, March 20. The committee also heard HB 2041 which extends the judicial surcharge fee through FY19. That bill was also passed out of committee on Wednesday but the committee decided to add another judicial funding bill focused on DUI reinstatement fees. That bill, HB 2279, is worth $950K to the court, and if the bill is not approved, the court will face a shortfall for the next 2 fiscal years. Both pieces of legislation should go to the Senate floor before the next deadline.
The Senate judiciary committee also heard HB 2125 concerning benefit corporations. Unfortunately, the committee decided not to work the bill, so it remains in committee. To pass the bill this session, it will need to navigate the conference committee process. This is a viable option that is amenable to both chairs. If you recall, the KBA used the same process last session to pass the General Corporate Code update.
On Monday, House judiciary heard HB 2397, dealing with the Unauthorized Practice of Law. It passed out of committee on Thursday. The bill was amended to include further clarification that court employees and court-approved individuals (think CASA and domestic abuse advocates) were exempt for this law. The committee then used a procedure called bundling to add the UPL bill (HB 2397) to a senate bill dealing with the lack of lawyers in the Senate (SB 50). Thus, the provisions for the UPL bill are now embedded into SB 50. If you are interested in tracking this bill as it moves through the process, the bill to watch is House substitute for SB 50.
The judicial branch funding issue has gotten considerably more complicated this week as Sen. Laura Kelly (D-Topeka) added pay increases for classified and non-classified state employees. The idea was to give non-classified employees and correction officers a two percent increase but give all classified employees a six percent raise. Non-classified and corrections employees received raises last session, so this helps bring everyone up. However, it is not entirely clear whether certain judicial staff would see these enhancements because they may not be part of the classified state employee workforce.
Yesterday, Rep. Bill Sutton made a motion in House appropriations that would add $6 million for nonjudicial salary increases and $840 K to help fund personnel to implement the juvenile justice act. This is a reduction from the $22 million the General Government Budget sub-committee recommended. Interestingly, Rep. Sutton is chair of the General Government Budget, and by this motion, overruled his own committee. It is important to at least get some form of employee raises into the mega-budget to avoid serious pay-go issues on the House side.
Rep. Sutton did agree to discuss further enhancements during Omnibus, but absent any new revenue, this would be unlikely. If the money isn’t added in committee then a floor amendment would be needed to add the funding. However, pay-go rules dictate that any funding added on the floor must be accompanied by an equal or greater cut. Thus, it is harder to add money on the floor than in committee.
Both chambers will be on the floor next week working bills leading up to the second house deadline, Thursday, March 30th (the deadline for consideration of a bill by the second chamber—the opposite chamber from the one in which it originated). Drop Dead Day or First Adjournment is Friday, April 7th.
Chief Justice Nuss took center stage this week as he addressed a joint session in the House chambers for the State of the Judiciary speech for the first time in five years. Nuss focused on the judicial branch’s many programs and efficiencies but the main point of the address was to advise the legislature of the need for salary adjustments for judges and staff.
The Kansas Senate passed a rescission bill late last night that avoid any late year cuts. There were at least three attempts to pass across the board cuts of 2.0 percent, 1.0 percent and 0.5 percent. None garnered more than 10 votes. In the end, the Kansas Senate passed a bill 27-13 that transferred $280 million from long term investments and delayed again payments to KPERS. The bill will head to conference committee with the House for further negotiations. It is expected that the State will end the year with a positive balance of $50 million.
The KBA will provide testimony on three bills next Monday in Senate Judiciary. They include HB 2125, Benefit Corporations, HB 2126 ADR/Mediation in trust instruments, and HB 2041 extending the judicial branch surcharge fee.
Each bill has already passed the House on near perfect votes, 123-1; 124-0 and 122-0 respectively.
The Senate Judicial Committee has been very active this past week, hearing 17 bills. That pace will continue as they have a full agenda through Wednesday. Thus, hearings will be truncated to accommodate the large number of conferees.
Bill Matthews will represent the KBA on HB 2125, Benefit Corporations, and I have the pleasure of explaining our trust bill and the surcharge extension bill.
House Judiciary has a full set of hearings this week as well. On Monday, they heard a newly introduced bill creating an unconscionable act or practice under the Kansas consumer protection act for people who engage in the unauthorized practice of law. The KBA will monitor is proposal and share testimony from the hearing when available.