Legislative & Political Update
December 3, 2018
On November 6, 2018, State Senator Laura Kelly (D-Topeka) was elected to be the next Governor of the State of Kansas. She will be sworn into office on Monday, January 14, 2019, which is the date in which all constitutional officers are sworn in along with members of the Kansas House.
Within a week of her election, Governor-elect Kelly announced her transition team to help her review state government agencies and programs in advance of naming her own cabinet members and senior agency officials.
The formal Transition Team is composed of the following individuals:
- Joyce Allegrucci, former chief of staff to Governor Kathleen Sebelius (2003-2009);
- Duane Goossen, former Republican state legislator and former budget director under both Republican and Democrat administrations (Graves and Sebelius/Parkinson);
- Natalie Haag, former chief counsel to former Republican Governor Bill Graves (1995-2003); and,
- Jordanna “Jordy” Zeigler, Laura Kelly for Governor campaign manager.
In addition, there are a handful of unnamed quasi-members of the transition team who have been advising the governor-elect on transition matters. In the coming weeks before the session begins, and Laura Kelly is sworn in as governor, announcements will be made as to who cabinet officials and leading policy appointees will be under her administration. Until then, it is something akin to parlor game of speculation on who is under consideration for what job… and some of that speculation being promulgated by individuals essentially campaigning for a position, but that’s the way all transitions are, particularly when the change in power involves the other political party.
At this writing, various members of the transition team and others are meeting with the leadership of state agencies to get familiarity with the status of programs, review budgets, evaluate personnel and related intelligence gathering in order to bring recommendations for change back to the core transition team recommendations.
The Kelly Transition Team has a website for information and a way to submit applications for positions in the Kelly Administration:
Only one of forty Senate seats were up for election this year, as the Senate is not scheduled to stand for election until 2020. Republicans control the Senate by a 31-9 margin and that did not change with the race for the 13th Senate District which saw Richard Hilderbrand (R-Galena) successfully stand for election for the final two years of the term originally won by Jake LaTurner (R-Pittsburg). LaTurner was appointed State Treasurer in 2017.
There will be four new members in the Senate next year from the 2018 roster due to the victory by Kelly and her running mate, Senator Lynn Rogers (D-Wichita) as well as the victory by Senator Vicki Schmidt (R-Topeka) in her race for Commissioner of Insurance. In addition, Senator Steve Fitzgerald lost a primary race for the 2nd Congressional District and opted to resign from the Kansas Senate rather than return for the final two years of his term.
As of today, replacements for Fitzgerald, Kelly and Rogers have been selected through the precinct committee process with the selection for the Schmidt seat yet to come. We expect to see committee chair and membership assignments rearranged a bit before 2019 in the Senate, but most likely not wholesale change, as the Senate leadership elected following the 2016 elections serve four-year terms coinciding with their Senate terms. The Senate President has absolute control over committee chair positions and committee membership assignments.
Senate leaders are:
Susan Wagle R-Wichita Senate President
Jim Denning R-Overland Park Senate Majority Leader
Jeff Longbine R-Emporia Senate Vice President
Anthony Hensley D-Topeka Senate Minority Leader
Interestingly enough, the split between Republicans and Democrats didn’t change even though all 125 seats were up for election. Republicans maintain an 85-40 majority, which is the same numbers for R’s and D’s for the past two years. Conservatives appear to have picked up 6-8 seats in the Primary and General elections, which will make the House more conservative than it has been for the past two years.
House leaders are elected for two-year terms and both Republicans and Democrats caucused today to select their leaders for the next term.
Speaker of the House Ron Ryckman (R-Olathe) was reelected to a second two-year term as Speaker, the top leadership position in the House. Speakers of the House, by tradition, do not serve more than two terms, but it is not unprecedented for a Speaker to be defeated when standing for reelection or leave public office for other reasons. Ryckman was challenged by a former Representative Owen Donahoe (R-Shawnee) who returns to the House after being out for a number of years. Ryckman won by a vote of 80-4. Like the Senate President, the Speaker of the House has absolute control over committee chair positions and committee membership assignments.
Given retirements, legislative defeats and changes in both Republican and Democrat leadership positions, we can expect to see significant changes in House chair and membership assignments before the session begins.
The Number Two leader in the House the past two years was Don Hineman (R-Dighton). He was challenged by a more conservative member of the Republican caucus and lost his reelection bid. Rep. Dan Hawkins (R-Wichita) defeated Hineman by a vote of 48-35, which some might suggest gives a pretty good idea of the split between conservative and moderate Republicans in the House. I am unsure moderates have 35 votes in the House. Time will tell.
Hawkins chairs the House Public Health and Welfare Committee and has been an outspoken opponent of the expansion of Medicaid coverage in Kansas. He will be in a strong position to continue his opposition to any Medicaid expansion bill or one germane to amendment, but his replacement as committee chair will also be critical to how this issue is considered next year (or not considered).
The Number Three position in the House was vacated when Rep. Scott Schwab (R-Olathe) chose to run (successfully) for the office of Secretary of State. Two candidates emerged as players for the Speaker Pro Tem position, which was won by Blaine Finch, R-Ottawa on a vote of 56-28.
Finch has held two major roles in the House for the past two years and likely has to vacate both: Chair of the House Judiciary Committee and Rules Chair for the House. The latter role is important to Leadership as the initial arbiter of rules for floor debates, including questions of germaneness.
For the Democrats, Minority Leader Jim Ward (D-Wichita) sought reelection to the top Democrat post but was defeated by Tom Sawyer (D-Wichita) a former Minority Leader himself. Ward defeated Tom Burroughs (D-Kansas City) two years ago when Burroughs sought election to a second term as Minority Leader. Sawyer won by a vote of 24-16.
Assistant Minority Leader Stan Frownfelter (D-Kansas City) sought another two-year term as well but was defeated by Valdenia Winn (D-Kansas City) on a vote of 21-19.
There are a handful of other leadership positions in the House, such as Whip, Agenda Chair, Caucus Chair, Assistant Majority Leader, etc. However, as one legislator told me, “the ones that really count are those with staff, an office and leadership pay.”
When the Legislature is not in session, the business of the legislative branch is governed by a House/Senate Leadership Committee called the Legislative Coordinating Council. The LCC is composed of the Senate President, Majority Leader, Minority Leader and House Speaker, Majority Leader, Speaker Pro Tem and Minority Leader. These seven leaders plus the Senate Vice President compose the nucleus of leaders of the Kansas Legislature. That’s not to say key committee chair legislators and a handful of other legislators do not have power within the legislative process, but they are not considered “in leadership.”
2019 Legislative Session.
The 2019 session will begin on Monday, January 14. Most likely an inaugural celebration will be held that evening and later that week, Governor Kelly will deliver her first State of the State address where she will outline her agenda and give some details on her budget.
Typically, the actual budget of the governor is formally delivered to the Legislature the day after the State of the State address and pieces are profiled by key budget staff members from the administration to key legislative committees (e.g., Senate Ways and Means/House Appropriations).
Governor Kelly has the good fortune to be coming into office when state revenues are consistently beating monthly estimates. October revenues were $6.8 million above estimates and November numbers came in $2.7 over estimates. The cumulative number over and above estimates this fiscal year is approximately $109 million (July 1, 2018 to November 30, 2018). Revenues are $221 million (8.9%) over FY 2018 revenues at for this time period.
Major issues of the 2019 legislative session are likely to include:
- Consideration of additional funds for K-12 education. The State remains in a lawsuit still held by the Kansas Supreme Court even after adding an additional $500 million into schools over the next two years. The most recent decision by the Court suggests an additional $100 million or so, plus an annual increase to account for inflation could get the suit settled. In the past year we have seen suggestions and even legislation to amend the Kansas Constitution to grant the Legislature the authority to determine “adequacy” of K-12 funding and take that authority away from the Kansas Supreme Court to determine, but there has not been the required 2/3 majority in the House and Senate to advance a proposed amendment to the Kansas Constitution to the voters. It is doubtful there is either the votes or the will to successfully consider that issue in 2019.
- Expansion of Medicaid. For years there have been efforts to expand the funding of Medicaid services to an additional 150,000 people (based upon estimates of who would be eligible). A bill made it to the governor’s desk in 2017 but was vetoed. An attempt to override the veto failed. With the House being significantly more conservative and the Senate likely to be slightly more conservative given Senator Schmidt’s absence, a Medicaid bill will be difficult to pass. That said, Governor-elect Kelly said she plans to convene a bipartisan group to consider some kind of alternative Medicaid expansion bill that can broaden its appeal in the legislative process. Of note, a conservative legislative organization called The Truth Caucus plans to solicit legislators to sign a “No Expansion of Medicaid” pledge similar to a “No Tax” pledge made famous by Grover Norquist with his “Taxpayer Protection Pledge” and his Americans for Tax Reform organization.
- State Government Reform. There will naturally be a number of changes in state policy due to the change in administrations. Most likely to see attention is the Kansas Department of Health and Environment, which oversees the privatization of Medicaid services called KanCare. Three entities were awarded contracts in 2012 to administer the State’s $3.4 billion Medicaid program. Contracts came up for renewal this year and one vendor lost out on renewal and another came in. Many in the Legislature have criticized this outsourcing contract and given the size and scope, we expect to see considerable attention paid to this program. Other agencies likely to garner attention include the Kansas Department of Children and Families and the Department for Aging and Disability Services.
- Key Appointments. In addition to cabinet positions and key staff, Governor-elect Kelly has the opportunity to fill a Kansas Court of Appeals judge in the near future and likely will have several more during her term as well as members of the Kansas Supreme Court. Appellate judges are selected by the Governor with Senate confirmation, a process that was put in place through legislation at the request of former Governor Sam Brownback. Appointees to the Kansas Supreme Court are vetted through the Supreme Court Nominating Commission composed of five attorneys and four nonlawyer citizens, with three names forwarded to the Governor for selection or rejection. In addition, during the next four years all three members of the Kansas Corporation Commission will see their terms expire, the first in March 2019. The KCC is the regulator of public utilities in Kansas, with certain exceptions (e.g., cooperatives, municipals, etc.).
- Transportation Plan. Kansas has made major investments in its highway and transportation infrastructure for at least thirty years. Ten-year comprehensive transportation plans were adopted by the Legislature in 1989, 1999 and 2010. During the 2018 legislative session, a thirty-five-member task force was created to develop recommendations to the 2019 Legislature to consider a new transportation plan once the current plan known as T-WORKS expires. The Joint Legislative Transportation Vision Task Force met throughout the state with final recommendations being discussed in Topeka on November 28-29. We expect to see a final report approved in January and then considered by various legislative committees (e.g., House and Senate Transportation and likely House Appropriations and Senate Ways & Means). There are twenty projects from the 2010 plan that were shelved when transportation funding was diverted to State General Fund expenditures and those projects are considered a priority, as well as increasing the State’s investment in preservation. New projects likely take a backseat for a few years as the supporters of transportation work within the budget process to just try to keep more transportation funds in KDOT instead of being diverted for non-transportation expenditures. Some task force members advocated for increased motor fuels taxes, registration, title and big truck fees to fund new transportation projects, while others suggest stabilizing the state’s budget, so funds earmarked for transportation and KDOT stay with KDOT would be a major improvement over current policy. Additional taxes and fees for transportation are not likely to be seriously considered next session.
- Mega Tax Bill of 2018. A major tax bill was killed on the final day of the 2018 legislative session is likely to return early in 2019. The fiscal note of the so-called “mega tax bill” was unknown and some legislators (e.g., Moderate Republicans and Democrats) were unwilling to pass a tax bill with an undetermined fiscal note. Estimates ranged from $100 million to $135 million or more. Large corporations represented by the Kansas Chamber and others were pressing hard for passage but came up a few votes short. They should now have the votes to pass the bill to the governor, but it is unclear whether Governor Kelly would sign the bill. Major components of the package included the following:
- Allow Kansans to itemize deductions even if they do not on Federal return;
- Acceleration of certain deductions being phased in over the next two years;
- Sales tax exemption for certain hospices, gold bullion & coins and other exemptions; and,
- Tax treatment of “deferred foreign income” related to Federal tax bill of 2017.
- Other Taxes. Given the sound footing the state finds itself in now, it is unlikely we will see any serious efforts to increase taxes in the next two years. Governor-elect Kelly and others in the Legislature would like to see the State begin to buy down the sales tax on food. When the state sales tax rate of 6.5% is combined with local sales taxes, the total can approach ten percent or more, placing the Kansas sales tax on food among the highest tax rates in the U.S.
- Electric Rates. During the 2018 legislative session there was quite a bit of discussion on Kansas electric rates as compared to surrounding states. The state’s two major investor-owned utilities merged earlier this year (Westar and KCP&L), making this issue primarily about them with a combined service territory of more than 1.6 million customers in Kansas and Missouri. Their combined company is called Evergy. Other electric utilities were drawn into the discussion of electric rates, including municipal providers, electric cooperatives and related entities, such as transmission line companies, wind energy developers and more. Proponents of downward pressure on rates included American’s for Prosperity, the Kansas Chamber, Climate & Energy (a green energy coalition) and an association of industrial customers. Electric rates is a complex matter and is not easily explained in the statehouse. Rates are generally under the purview of the Kansas Corporation Commission.
- Expanded Gaming. For more than a decade, the owner of failed pari-mutuel tracks has unsuccessfully sought legislation to increase the percentage of gaming revenues a track owner would receive from slot machine revenues. Although we could see yet another effort in 2019, as of this writing, the support for “slots-at-tracks” appears to have subsided. Since all three pari-mutuel tracks are owned by the same person – former Wichita billionaire Phil Ruffin – if he folds his proverbial cards on slots at tracks, the debate is all but over. The next major gaming debate before the Kansas Legislature is likely to be sports wagering. In 2018 the U.S. Supreme Court issued an opinion on a New Jersey case that effectively allows states to allow and regulate intrastate sports wagering. Several sports wagering bills were introduced during the 2018 session and an interim committee will hold hearings on the subject matter later this week with legislation likely to be seriously considered in 2019.
As stated before, “elections have consequences” and 2018 is no exception. Kansas stayed with tradition in that no party has successfully succeeded itself from a four or eight-year term in the governor’s office dating back more than 50 years and with a change in the executive branch come changes in the direction of the state. Democrat Governor Laura Kelly is adept at working within the legislative branch and that experience will serve her well in dealing with a conservative-led House and Senate. With Kelly, we will see steady and deliberate change from eight years of Brownback/Colyer leadership, which is a sharp contrast to what most expected we would see had Secretary of State Kris Kobach been elected governor. That said, there will be differences between the Legislative and Executive branches of Government over major policy matters and it is anyone’s guess how the most controversial matters will be handled.
2019 will be an interesting year and I look forward to seeing what it has to offer in the legislative process. If you have questions over matters of interest highlighted in this report or what lies ahead, please do not hesitate to contact me.