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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.

 

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100 Days and Counting!

Posted By Joseph N. Molina III, Tuesday, June 2, 2015
The Kansas Legislature continues to be bogged down with the budget/tax process. Late Sunday and into early Monday morning, the Kansas Senate worked on a tax amendment offered by Sen. Steve Abrams (R-Arkansas City), which would have ended all but six sales tax exemptions while speeding up income tax cuts for individuals and corporations. Supporters of the bill argued that removing the sales tax exemptions was the only way to close the budget shortfall without raising taxes. After six hours of debate the only thing agreed upon was a reduction in the state sales tax from 6.15 percent to 5.95 percent. This would add $118 million to the budget hole. The Senate could not agree upon any other tax policy.

 

See http://www.kansas.com/news/politics-government/article22761891.html; and see also http://www.therepublic.com/view/story/857a50087ed14aae86c7c4a4a4c472f3/KS--Kansas-Taxes

 

The quote of the night came from Sen. Greg Smith (R-Overland Park), who in support of the Abrams amendment, said "Taxes are wrong. Taxes are legalized theft.” Smith is a retired police officer and current history teacher.

 

The main drag on the tax discussion was the veto threat from Gov. Sam Brownback on any tax plan that called for a more aggressive tax on business than what he proposed on Saturday.

 

The Brownback plan includes:

  • Increase sales tax to 6.65 percent;
  • Eliminated income tax on bottom 388,000 taxpayers;
  • 50-cent tax on cigarettes;
  • $30 million in tax amnesty;
  • Tax "guaranteed income” for some LLCs; and
  • Make changes to the allowable exemptions for single/married taxpayers.

The rub is that amnesty may only bring in half of the projected revenue, and the tax on guaranteed income would also fail to meet expectations since LLCs can simply rename the earnings and avoid tax.

 

Complicating matters is the strong possibility of state employee furloughs starting on June 7. The state will run into cash flow problems and may be forced to lay off workers should a budget not be in place by next Saturday. Rumor has it that a possible budget work around is getting drafted but no one knows what it looks like.

 

On the judicial branch front, the Kansas Senate reconsidered Saturday’s rejection of the court budget and passed it out easily 25-14. The hang up on Saturday was the non-severability clause proposed by Sen. Jeff King (R-Independence). While this provision is not being challenged, last year’s budget bill containing local control policies contrary to a centralized court system are being challenged. To rule against those local control policies would trigger the non-severability clause and cause budget issues for the courts. The Kansas House will take the court budget up soon.

 

The good news: should the court budget be signed by the governor prior to the June 7 furlough deadline, the courts would have the authority to use funds to side step an otherwise difficult June for state employees. First things first, the Kansas House need to adopt the conference committee report that contains the judicial budget bill, HB 2005.

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Kansas Legislature in Overtime

Posted By Joseph N. Molina III, Tuesday, May 26, 2015

The Kansas Legislature continues to be bogged down in the budget/tax process, and not much was accomplished last week in this regard. The Kansas Senate, who has a debatable proposal, decided to postpone their tax discussion till this Wednesday. The House plan remains in committee.

 

The Senate Plan – S. Sub. for HB 2109

  • Increase sales tax to 6.5 percent; food at 6 percent;
  • 50-cent cigarette tax;
  • Eliminates all deductions but mortgage interest, charitable, and property taxes but accelerates the percent deductible;
  • Increase motor fuel tax by 5 cents;
  • Tax amnesty;
  • Freeze income rates.

The House Tax Committee Plan – Sullentrop Plan

  • Leaves the charitable deduction intact, accelerates the haircut on the mortgage interest, and property taxes paid and eliminates all other deductions ($97 million)
  • Tax "guaranteed payments” of certain business entities ($23 million)
  • Freeze the current income tax rates ($22 million)
  • Increase sales tax to 6.5 percent and lower sales tax on food to 5.9 percent ($128 million)
  • Increase state motor fuels tax by 5 cents ($81 million)
  • 75 cents cigarette tax ($53 million)
  • Increase liquor enforcement tax to 10 percent, sunsets after 1 year ($14 million)
  • Tax amnesty ($30 million)
  • Manage Care Organization Tax Agreement ($48 million)

The tax plan, at this point, is the major hold up. Both chambers are wary of increasing taxes but from the proposals being forwarded, it appears they are out of options. There is not much else that can be cut without going back on promises. It would not be surprising to have the House pass a tax plan that is merely concurred to by the Senate. After which the House would simply agree to the items in the Senate’s version of the state budget. This way the House would get some blame for raising taxes while the Senate gets blamed for having too big a government. There is not much good news in the Capitol these days so lessening the amount of blame might be the end game here.

 

With the tax plan being hammered out in committee for debate later this week the Legislature had ample opportunity to work on bills that failed to pass during the regular session.

 

The most notable from last week are as follows:

  • SB 34 – Prosecutorial power to the Kansas Secretary of State. SB 34 gives the KSSOS independent power to prosecute election crimes. This was a very controversial idea given that local prosecutors and the Kansas Attorney General’s Office has power to prosecute these crimes. The bill passed 67-55 and is headed to the governor for signature.
  • HB 2104 – Local elections. HB 2104 is another controversial bill that would move local elections from the spring to the fall of odd numbered years. This bill also repeals the presidential primary. HB 2104 passed 64-58 and is also head to the governor for signature.

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Day 90 (Plus 1)

Posted By Joseph N. Molina III, Tuesday, May 19, 2015
The Kansas Legislature has officially reached overtime with the 2015 session. Legislators have failed to pass a budget or a tax plan before the 90-day deadline. As such, legislative staffs—mainly office assistants—are no longer in the Capitol, and legislators will have to fend for themselves on most things clerical.

 

The main hold up is the tax plan. Both chambers have a reasonable grasp on how much the state will spend but no idea on how to pay for those expenses. Last Friday the Kansas House attempted to pass a tax plan calling for a higher state sales tax that was met with a resounding defeat.

 

This plan, H. Sub. for SB 270, would raise the state sales tax rate from 6.15 percent to 6.85 percent but lower the tax on food to 5.90 percent. This would raise nearly $140 million. Itemized deductions would be limited to property tax, mortgage interest, and charitable contributions. The standard deduction would remain at $7,500 for married couples but only $3,000 for singles. The state would offer tax amnesty to individuals who failed to pay taxes. This would generate $30 million. After all this, the ending balance would only be $16.1 million for FY17. Not nearly enough to handle any missed revenue projections.

 

The sales tax increase is a nonstarter with conservatives and most believe the democrats will not vote for any tax increase. And don’t expect any help from the Senate because they are dealing with a member who only wants to raise property taxes on farmers in western Kansas. With this being said, it was no surprise that H. Sub. for SB 270 failed on a voice vote.

The plan is to reconvene this week and try to find some common ground between all factions. One idea floating around in a 4-6 percent across the board cut. This would get votes from small government legislators and allow them to hold their nose for some form of tax hike.

 

As for the judicial branch budget, the conference committee reached an agreement yesterday. Attached you will find two PDFs that list the differences in each bill. You will notice the House bill appropriating more money for both FY16 and FY17. The House also has a severability clause that allows the funding sources to survive any constitutional challenge. The Senate version has the exact opposite language. The agreement was to fund the court’s based on the House proposal but keep all the policy language crafted by the Senate.

 

The heartburn was the nonseverability clause. House negotiators were concerned that funding levels may not be kept level next fiscal year but the nonseverability clause would remain. The answer was to draft language keeping funding static. Democrats on the conference committee refused to sign the report so procedurally both chambers will have to run a "Agree to Disagree” motion in order for the report to be passed with less than unanimous agreement.

 

See http://www2.ljworld.com/news/2015/may/18/bill-threatens-de-fund-kansas-judicial-branch/.

 

Not much else going on but with so much free time some legislators may begin to get bored and try to work some pet projects. We will see how this all unfolds.

 Attached Files:

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Capitol Focuses on Taxes

Posted By Joseph N. Molina III, Tuesday, May 12, 2015

This week is off to a rather quick start as House Tax committee worked throughout the day to put together the first tax package to help close the revenue shortfall for FY 16 and FY 17. The legislature is attempting to close a $406.4 million hole in FY 16 and a $367.9 million hole in FY 17. Attached is a spreadsheet from the Kansas Legislative Research Department that breaks down the revenue vs. expenditures for the next two years.


Three are a number of ideas on the table; the most prominent is closing the passive-income loophole. Closing the loophole could raise revenue by $133 million. Also of note is a statewide sales tax increase to 6.5%. This would provide an additional $165 million. Combine these two tax increases with the Managed Care Organization privilege fee of around $60 million and you begin to get close to a zero balance. However, these are not easy pieces of legislation to pass. Many conservative republicans are not fond of raising any taxes. Some would rather cut our way out and leave income tax rates were they are currently. This first tax package will be tested very soon.


Last week the Kansas House approved their version of the judicial budget (HB 2365) as well as the uniform family support act (SB 105) and the Business Entity Standardization act (SB 276).

The judicial budget was approved 108-10. That is significant since this issue will need to be negotiated with the Senate version (HB 2005). The House version provides nearly $5 million more state general funds in FY 16 and almost $9 million more SGF in FY 17. The House understands this issue and with such a large majority voting in favor it will be hard to walk away from their higher funding level proposal.


SB 276 BEST Act is headed to the governor now that it has passed both chambers. As will SB 105, UIFSA.


An interesting side note is that the House approved a measure allowing for the use of hemp oil to treat seizures and gave authority for industrial hemp to be studied.

 

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Tags:  budget  deficit  tax 

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Wrap-Up Session Continues

Posted By Joseph N. Molina III, Tuesday, May 5, 2015

After a rather slow start to the final leg of the 2015 legislative session things began to pick up in week two. The governor announced a deal on wind energy yesterday, making the Renewable Portfolio Standard voluntary in exchange for property tax exemptions. This was a huge issue in 2014 that spilled over to 2015. Not much had been done on RPS so this agreement was a bit of a surprise.

 

Another big news item was movement of the Kris Kobach bill (SB 34) to allow the Kansas secretary of state to prosecute voter fraud cases. This bill passed out of the House Judiciary Committee after a decent debate. Now it heads to the House floor.

 

The judicial branch budget is being debated in the Senate today. HB 2005 contains $97.6 million in Stage General Fund and provisions to extend the surcharge fee ($9.5 million), allow the transfer of e-filing funds ($2.25 million), and expands fees for all dispositive motions ($575,000). HB 2005 fails to fund the Judicial Branch at the original budget request of around $110 million. The big hold up is the non-severability clause added to the budget bill to keep 2014 policy pieces in place. Currently there is a lawsuit challenging these 2014 policy pieces. See https://www.brennancenter.org/sites/default/files/analysis/Buying_Time/Petition%20for%20Declaratory%20Judgment%202-18-15.pdf.

 

Should the court grant the declaratory judgment the non-severability clause would be enforceable and funds to the judicial branch would be at risk.

 

The House has its own version of the judicial branch budget. That bill, HB 2365, is very similar to the Senate proposal with similar funding numbers. However, the House version lacks the non-severability provision but contains a proviso to study merging the Supreme Court Law Library with the Washburn Law School Library. This proviso, proposed by Rep. Virgil Peck (R-Tygo), requires the Supreme Court to fund a report to the House Appropriations and Senate Ways and Means committees on the feasibility of Washburn Law School assuming the duties of the Kansas Supreme Court Law Library.

 

Also please look for the quick passage of the BEST Act concerning business filings. That bill, SB 276, was placed on the Consent Calendar yesterday.

 

Finally, the Kansas Bar Association is hosting a CLE at the Capitol again this year. This CLE is free to any lawyer-legislator. Stan Hazlett will provide an hour of ethics on Wednesday, May 6.

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Legislators Return for Wrap-Up Session

Posted By Joseph N. Molina III, Tuesday, April 28, 2015

The state budget or lack thereof is the primary focus as legislators return to the Capitol tomorrow. The big issue is how to close the $400 million budget gap that spans the next two fiscal years. Some legislators have said that all reasonable options are on the table. This sounds a lot like the possibility of revisiting the income tax cuts that are the reason for the budget shortfall. That option does come with a lot of political challenges, not the mention the possibility of a veto by the governor who wants to move to a consumption tax.

 

Should the legislators try to cut their way out of this budget mess they run into another issue, namely K-12 block grants. This bill, SB 7, was signed into law already which essentially takes more than half of the state budget off the table. Add the KPERS bonding bill and the HOPE Act, and there is little less than 30 percent of the budget left to make cuts.

 

There appears to be no consensus on which option to pursue so the likely outcome would be a mix of both. Look for attempts to push a tobacco tax and then to modify the income portion. See http://www.kansascity.com/news/local/news-columns-blogs/the-buzz/article19800882.html.=.

 

To see how deep the budget hole is, visit State Revenue Estimates Memo - http://budget.ks.gov/files/FY2016/CRE_Short_Memo_April2015.pdf. See also http://kansaspublicradio.org/kpr-news/kansas-budget-hole-grows-deeper-new-revenue-projections-not-good.

 

As if the budget issues weren’t enough both chambers continue to get pressure to expand Medicaid. Now the Federal government might even consider withholding funds. See http://kaiserhealthnews.org/news/tennessee-and-kansas-also-get-warning-expand-medicaid-or-risk-losing-hospital-funds/.

 

While this does add to the stakes federal coercion has proven to less than an effect technique in Kansas.

 

To break up the routine committee meeting process, the Kansas Bar Association will be hosting another CLE at the Capitol this year. This CLE is free to any lawyer-legislator. Stan Hazlett will provide an hour of ethics next Wednesday, May 6.

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Revenue Poor

Posted By Joseph N. Molina III, Tuesday, April 21, 2015

The April Consensus Revenue Estimates were released yesterday, and the findings were very poor. Estimators lowered, again, projections for this fiscal year, as well as FY16/FY17. The state is $87.5 million short for the remainder of this year but executive branch staff believes they can make it through without further changes to the current budget.

 

FY16/FY17 is a different story that will be told by Gov. Brownback on Thursday when he releases his budget amendments. The governor will have to come up with almost $400 million. This includes the lowered revenue estimates of $98 million for FY16 and $108 million for FY17.

Leveling off the budget will be more difficult since the school block grant bill and KPERS bonding provisions have already been passed. These two items make up a significant part of the overall state budget, so cuts would have to be made to the smaller portion of the state budget.

 

The legislators could also look at raising taxes, removing sales tax exemptions, or even raising the statewide sales tax to make up for the shortfall.

For their part Kansas legislators have said education, social services, and pensions need to be funded. The question is at what level. It is important to remember that the recently passed school finance block grant bill was a policy bill, not an appropriations bill. This means that the school block grant bill is not funded yet. Changes could be made to the omnibus budget bill that impacts the school block grant bill. The likelihood of that is quite remote but so is a massive infusion of sales tax revenue.

More will be learned Thursday when the governor releases his ideas to close the budget shortfall.

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First Adjournment

Posted By Joseph N. Molina III, Monday, April 6, 2015
The 2015 legislative session reached a major milestone a full day early when legislators gaveled out for First Adjournment on Thursday, April 2. The deadline was set for April 3, but with little movement on the budget, leadership wanted to bank the extra day for the veto session. The Legislature has pushed off the large items so the extra day will come in handy.

 

Some big bills did pass both chambers prior to the end of the regular session. The constitutional carry bill probably got the most press with equal amounts of praise and concern. See http://rt.com/usa/246645-kansas-concealed-carry-law-signed/.

 

Fiscally, the Legislature passed out a major piece of Gov. Brownback’s revenue plan by passing a KPERS bill allowing the state to bond out $1 billion dollars. This will save the state around $60 million in the short term, but cost much more in interest going forward.

 

The rest of the revenue/tax plan is still up in the air. Even the governor is stepping away from his proposal to increase taxes on cigarettes/alcohol.

 

This makes things very dicey since the proposed state budget is around $200 million in the red. To get to a balanced budget, more cuts will have to be made (hard to do with school finance/KPERS off the table now) or raise some type of tax somewhere. Just a quick side note – revenue for March was down another $11 million. See http://abcnews.go.com/Politics/wireStory/kansas-collected-11m-taxes-expected-month-30037386.

 

On the judicial branch front, not much has been done to pass the court budget. The judicial branch budget is stuck in the Senate as of now. The bill now contains policy language linking voluntary local judicial district budget controls to funding. Some have said tying the policy provisions, which include a non-severability clause, to the FY16/FY17 judicial budgets is a shot at the Solomon lawsuit in south-central Kansas. See http://www.courthousenews.com/2015/02/20/judge-stands-up-to-kansas.htm.

 

How the judicial budget evolves from here might also depend on if the three-judge panel enjoins the school finance block grant passed earlier this year. See http://kcur.org/post/motion-filed-stop-block-grant-school-funding-kansas; see also http://cjonline.com/news/2015-03-25/brownback-signs-school-block-grant-funding-bill.

 

The Legislature has already responded with a warning shot should the three-judge panel make the school finance issue a hot topic again. Sen. Mitch Holmes (R-St. John) proposed a bill increasing the reasons a Kansas Supreme Court justice could be impeached. SB 297 would allow the House of Representatives to file articles of impeachment for a variety of transgressions, including failure to adequately supervise subordinate employees (think the law clerk who tweeted about the Kline disciplinary hearing) and attempting to subvert fundamental laws and introduce arbitrary power (think school finance). The Senate would be the judge/jury should article of impeachment be passed by the House.

 

This is not the only bill aimed at the judicial branch this session. Below are just a few more that either affect the selection of judges/justices, attempts to alter the operations of the court, or deals with funding the judiciary. The KBA will monitor these bills very closely during the Wrap-Up Session.

Judicial Selection

Court Operations

Judicial Budget

Legislators will return on Wednesday, April 29 to finalize the state budget, pass a tax bill, and tie up any other loose ends. The general thought is this process may take some time and look for a mid-May adjournment, if not later.

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Conference Committees Begin

Posted By Joseph N. Molina III, Tuesday, March 31, 2015
Last week the Kansas Legislature worked through a number of bills before breaking for an early weekend. The Senate churned through 20 or so bills, including their version of the state budget. The Senate version does not include any K-12 funding (block grant bill signed into law by the governor) or the Judicial Branch budget. The House has yet to debate their version of the state budget.

The House did pass out a controversial abortion ban and a constitutional carry proposals aimed at allowing anyone over the age of 21 to conceal carry without a permit.

This week legislators will begin working in conference committees. The Judicial Conference Committee meet today to provide an overview of bills in conference, bills that are conferenceable and bill stricken from the calendar.

Generally, for a bill to be in conference it must pass both chambers but be amended by at least one of the chambers. This creates two different versions of the same bill requiring both chambers to reconcile the differences in conference. For a bill to be conferenceable it merely must have passed one chamber.

Thus far the Judiciary Conference Committee has three bills in conference and they anticipate four more being added this week. As such, only seven bills will be in conference. Further restricting how many bills can be passed by the conference committee is the 4 bill bundling rule passed this year. No bill in conference can have more than four additional bills added to it.

In addition, the conference committee is limited by the topic of the bills bundled. Only bills with similar topics/headings can be bundled together. These are often broad categories, bill on courts or criminal procedure but this session there are a number of bills so specific that they are difficult to bundle with other more general topics.

As such, we can anticipate there being less bill bundling this session. Of note will be a court bundled bill, a DUI bundled bill and a sexually violent predator bundled bills. Of most interest to the KBA is the court bundled bill, which will include SB 59 (magistrate judge jurisdiction), HB 2112 (county law libraries), SB 183 (debts owed to courts) and SB 184 (court fees restitution and dormancy).

The following bills are unlikely to be discussed the remainder of the session:

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Making the Push Toward First Adjournment

Posted By Joseph N. Molina III, Tuesday, March 24, 2015

Friday, March 20 marked the end of most committee meetings and the push to first adjournment, which is on Friday, April 3—12 days away.

 

Both chambers finalized their budgets with House Appropriations combining the judicial branch budget with the mega-appropriations budget. The Supreme Court is still underfunded in the House version but nothing that will require furloughing judicial employees this year. The Senate Ways and Means Committee pushed out the judicial branch budget in a single bill. Sen. Jeff King (R-Independence) added docket fee funds, dispositive motion fee funds, and some state general funds to the proposals, but he also recommended that the policy pieces pasted last session continue forward into FY 2016/2017. The idea is to force the court to allow judicial districts the opportunity to control more of their budgets. This recommendation was also a warning shot in response to the Solomon lawsuit filed earlier this year. The Senate proposal was placed into a House bill to allow the House the possibility of a vote to concur without committee hearings on the policy pieces.

 

The KBA had two hearings last week, which include SB 197, applying open meeting requirements to the Supreme Court nominating commission and SB 105 enacting UIFSA. SB 197 was supported by the Kansas Press Association because of the new provision forcing the governor to release the names and city of applicants to the Kansas Court of Appeals. SB 197 was opposed by the KBA, Office of Judicial Administration, Kansas Association for Justice, and Kansas Association of Defense Counsel. There were no oral conferees, all testimony was written. The bill failed to get out of House Judiciary Committee; however, it may come up during conference committees.

 

SB 105 would enact the uniform interstate family support act. The Kansas Judicial Council introduced this bill and the KBA supports this bill. The Committee on Federal and State Affairs heard the bill and passed it out favorably. The passage of SB 105 protects more than $21 million in federal aid for child support enforcement cases.

 

The KBA did not fare as well with its probate and trust proposals as all three failed to pass into law. The Senate Judiciary Committee supports HB 2109 clarifying transfer on death deeds but wants more time to craft an amendment. That pushes the issue into the summer and off till next January. The Senate Judiciary Committee also felt that HB 2101 making ADR/mediation enforceable in trust documents was unnecessary as it is current uses without the need of a new statute. Finally, HB 2102 never got a hearing in the House and died at Turnaround.

 

The KBA did push out three bills this week. They include:

These bills are uncontroversial and should be passed on to the governor prior to the first adjournment deadline.

 

Also, an undisclosed member of House Appropriations Committee introduced HB 2411.

This bill would abolish the current Court of Appeals and replace it with a Court of Criminal Appeals and a Court of Civil Appeals. This idea was introduced two years ago by former Rep. Lance Kinzer.

 

HB 2073 also failed to get a hearing and move forward in the process. As you remember HB 2073 deals with retirement ages of judges in Kansas.

Finally, the next two week both chambers will be on the floor debating and passing bills. This will also allow them to conference on a number of bills amended by either chamber. During this period it is common for issues to be incorporated into amended legislation. This is truly the "sausage-making” portion of the session. The KBA Advocate will be providing updates as we move toward First Adjournment.

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