Terry L Calloway

Ten weeks into the session, the House Taxation Committee had prepared a number of tax bills and the House was able to debate a holistic approach to tax policy. This week the House worked to reduce state spending and implement a tax structure that responsibly moves toward the elimination of personal income tax and reduces corporate income taxes. At the beginning of the week, the House passed a bill to reduce $35 million in state spending in the current fiscal year. On Thursday and Friday, the House debated policy changes to provide a simplified tax structure and lower income taxes to foster economic growth and investment.

Below is an overview of This Session at the Statehouse, a preview of upcoming events, and this week's Kansas Trivia Questions. I have also posted a new Press Release.

This Session at the Statehouse

House Passes Bill Saving $35 Million

Last Friday, Governor Brownback made allotments that reduced the FY 2011 budget by $56.5 million to ensure state revenues for the year could cover the expenditures. However, the Governor does not have the statutory authority to create an ending balance through the allotment processes. Although allotments balance the budget revenue, they do not leave the state with an ending balance on July 1.

In order to provide a healthy cushion, the House Appropriations Committee drafted a bill containing provisions from the rescission bill that were agreed to by both the House and Senate conferees during the conference committee process. On Wednesday, the House passed this bill which accomplishes a $35 million balance at the end of FY 2011.

Update on the Kansas Public Employees' Retirement System (KPERS)

KPERS is a defined benefit plan. Currently the state contributes 8.17% of the SGF to KPERS' state and school group. In order to meet statutory requirements, that will increase to 21.4% by 2033 and we will still not have caught up to the actuarial required contribution. The KPERS contribution from the SGF that year will be over $1.9 billion. A past multiplier increase from 1.4 to 1.75 over time was never funded and has exacerbated the unfunded liabilities of the KPERS system.

To fill this growing deficit, the House Pensions and Benefits Committee passed HB 2333 that increases the state's contribution to KPERS from .6% to .8% and adjusts future benefits by changing the multiplier for future service from 1.75 to 1.4. The multiplier change does not apply to those who have already retired. Those who have worked for twenty–five years will keep those years at the 1.75 rate. If they work an additional eight years or more, those years will be credited at the lower multiplier. HB 2333 also provides for funds raised through the sale of state assets to be directed to KPERS.

Tax Debate

March to Economic Growth Act (MEGA) – The MEGA bill reduces the corporate and individual income tax with a trigger based on growth. If state tax receipts increase over the immediately preceding fiscal year, then a corresponding reduction in both taxes will occur. The overall goal of this bill is institutional change that will shift to more consumption (sales) taxes and less production (income) taxes. The House is committed to collecting Kansas tax revenue by growing the economy rather than increasing the tax rate on current revenue streams. By providing a consistent and less complicated tax structure, this bill limits the role of state government and fosters business growth and investment. People vote with their feet. From side–by–side comparisons we know that states without individual income tax experience population and revenue growth at a consistently higher rate than states with high rates.

During the debate, two amendments were approved. Representative Carlson proposed reduction of the sales tax rate to 5.7 beginning in 2013. The second amendment was from Representative Brown and steps down the corporate income tax rate to 3.5 while working to eliminate the personal income tax completely.

Creation of Rural Opportunity Zones (ROZs)

On a 102 to 18 vote on Friday, the House passed Governor Brownback's ROZ strategy to grow shrinking rural counties through income tax exemptions for certain out-of-state taxpayers who relocate to those counties. The targeted counties are: Barber, Chautauqua, Cheyenne, Clark, Cloud, Comanche, Decatur, Edwards, Elk, Gove, Graham, Greeley, Greenwood, Hamilton, Harper, Hodgeman, Jewell, Kearny, Kingman, Kiowa, Lane, Lincoln, Logan, Marion, Mitchell, Morton, Ness, Norton, Osborne, Pawnee, Phillips, Pratt, Rawlins, Republic, Rooks, Rush, Russell, Scott, Sheridan, Sherman, Smith, Stafford, Stanton, Trego, Thomas, Wallace, Washington, Wichita, Wilson and Woodson.

Promoting Economic Growth Through Tax Credits

SB 61, which passed the House 92 to 22 on Friday, changes the High Performance Incentive Program (HPIP) income tax credits and expands the individual development account tax credit. SB 61 modifies the HPIP program beginning in 2013 to allow a portion of previously earned HPIP credits, which have been carried forward to be claimed against the tax liability. In addition, SB 61 expands the refundable tax credit available to individual development account program contributors from 50% to 75% greatly increasing its attractiveness to businesses and its usefulness as an economic development tool.

Reducing Government Waste in Food Sales Tax Refunds

SB 193 requires social security numbers to verify the identities of dependents for those claiming food sales tax refunds. This legislation is aimed at reducing food sales tax fraud and saving state money by ensuring proper documentation.

Smaller Government Through Public Participation

On Friday, Governor Brownback announced the launch of a website that allows Kansans to submit laws and regulations they believe should be repealed. When an idea is submitted to the website, http://repealer.ks.gov, the office of the Repealer will run a cost-benefit analysis on each law or regulation. Laws picked for repeal will be sent to the government entity with jurisdiction. Kansans who submit repeal proposals will receive a status update within thirty days of submitting their idea. The goal of this website is to identify and eliminate state laws and regulations that hinder opportunities for Kansans and Kansas businesses.

Looking Ahead

As the session draws to an end, the schedule changes focus from committee action to floor action. Next week, the House is scheduled to be in session for the majority of the day Monday through Wednesday to pass legislation that has been voted out of committee. The House will not hold session on Thursday and Friday to allow conference committees to negotiate the differences between the House and Senate versions of legislation.

The overwhelming 2010 elections and a Republican governor have created a dynamic opportunity. The House is motivated and energized to restructure state government to ensure fiscal responsibility and long-term sustainability. In the previous two months, the House has introduced over four-hundred pieces of legislation while the Senate has introduced a little over two-hundred.

Kansas Trivia Questions

Question: Route 66, as the song goes, went “from Chicago to L.A., more than 2,000 miles all the way.” How many of those miles were in Kansas?
Answer: Approximately twelve miles near Galena.

Question: Hector, a ghost town in Greeley County, was named after what friend of Horace Greeley?
Answer: Greeley's dog

Question: What was the first county to receive a name and who was it named after?
Answer: Doniphan, named for a hero of the Mexican-American War, Col. Alexander W. Doniphan.

Question: The Picher Field which includes southeastern Kansas, was the world's leading producer of what mineral before World War II?
Answer: Zinc

Question: Can you name 3 Kansas towns with the shortest names?
Answer: Amy, Gas, Elk, Way, Wea are some of them.