2019 Legislative Session Update

March 8, 2019

     The 8th week of the 2019 legislative session was a short one. Legislators returned to work on Wednesday after the House of Origin break and not much is happening today in the statehouse. A full week of hearings will get underway next week with two weeks of committee hearings on tap and then another week of floor activity heading to the Second House of Origin deadline on Wednesday, March 27.

Taxes.
     The biggest issue of the short week was consideration on the House floor of SB 22, the mega-tax bill that is heading for a likely veto by Governor Kelly.
     As reported last week, the House amended the bill in committee to add in an internet sales tax component and a reduction of the sales tax on food. The House version is different than the Senate version, which means we are likely to see a House/Senate Tax Conference Committee take a look before sending the bill to the Governor. Comments from the governor’s office this week have not expressed much enthusiasm for the bill.
     SB 22 is now described in its title as follows:
Kansas itemized deductions, election, providing for deferred foreign income, global intangible lo-taxes income, business interest, capital contributions and FDIC premiums income tax modifications; sales and compensating use tax, imposition of tax, nexus, remove sellers, marketplace facilitators, rate of tax on food and ingredients.
     The Senate passed SB 22 by a vote of 26-14. The House advanced the bill to Final Action yesterday on a vote of 80-42, but on Final Action today, the vote was only 76-43. Should the governor veto the final work product, it will take a 2/3 majority of both the House and Senate to override her veto (27/Senate & 84/House).

K-12 Funding.
     The Kansas Legislature and the governor entered the 2019 session with the understanding that an additional $90 million in each of the next four years for K-12 education would or should allow the State to resolve the school finance litigation currently before the Kansas Supreme Court and perhaps give the Legislature a few years of breathing room before another case makes its way to the Court. Such was not the case this week when the lead plaintiff, Schools for Fair Funding, said a “mistake” was made on the calculation and the number needed is actually $270 million higher. House and Senate leaders have said that is not affordable. Even Governor Kelly has indicated she supports her initial number.
     Schools for Fair Funding suggest the Board of Education made a calculation error. The Deputy Commissioner of Education, Dale Dennis, said there is “no error involved” in media reports.
     As they say in the movies, “this may not end well.” Senators, even those who have been supportive of increased funding for K-12 are backing away from the new, higher numbers proposed by the plaintiffs, leading some legislators to call again for consideration of a constitutional amendment to allow the Legislature to be the determiner of sufficiency of K-12 funding.
     Obviously, there is much more to come on this subject.

Medicaid Expansion.
     The Governor and a number of legislators remain supportive of an expansion of Medicaid to an estimated 150,000 Kansans, but to date there appear to be no intentions of House or Senate Leadership willingly scheduling floor debate on this issue.
     The House Health and Human Services Committee scheduled three days of “roundtable discussions” over the Medicaid expansion issue this week but is not actually considering a bill.
     Most recently, the Kansas Health Institute pegged the state’s cost for expanding Medicaid health care coverage to 150,000 Kansans at $47.4 million. The Federal Government would cover 90% of the cost. Proponents argue the State is leaving hundreds of millions of dollars on the table that could help tens of thousands of Kansans receive health care services and the estimated cost to the State does not include benefits of economic activity, sustainability for rural hospitals and improved health of Kansas citizens. Opponents suggest the Federal Government could reduce or withdraw funding altogether someday and even at $50 million, the cost is unaffordable.

Electric Issues.
     An electrifying statehouse battle with large industrial customers, the Kansas Chamber, Americans for Prosperity and a green energy coalition on one side and virtually all of the electric providers in Kansas on the other have engaged in a battle over the need for a study of electric rates with the end goal producing legislation that could help lower electric rates in Kansas.
     The former group proposed a study with a number of items to be studied that appeared duplicative to a recent Kansas Corporation Commission study or portions that had no impact on rates (SB 69), while the latter group of electric interests indicated preference for their own bill, which would create a legislative-led task force (SB 181).
     Senate Utilities Chair Ty Masterson, R-Andover called on representatives of both sides to meet and see if a compromise bill could be negotiated. At this writing, it appears an agreement has been reached and we should see a revised work product in the form of SB 69 up for consideration in the Senate next week.
     The electrics have suggested agreement on SB 69 should preclude further consideration of other energy-related bills that the proponents of SB 69 have introduced this session. The sponsors of those bills have not agreed to stand down on their other legislative initiatives, but regardless of whether they support or stand down, none are expected to move once SB 69 is on its way to the House.

Transportation.
     The Legislature has begun scheduling bills originating from the Transportation Vision Task Force recommendations this week with more scheduled in the coming weeks.
Those bills include:

• Creation of a transportation planning program;
• Fees on electric and hybrid vehicles;
• Increased heavy truck permit fees;
• Allow cities and counties to exceed a property tax lid for certain transportation projects; and,
• Tolling Options.

     The Senate Committee on Transportation held hearings on SB 192 yesterday, which would allow KDOT to study possible tolling projects. Current law would require any tolling project to be fully-funded with tolls. SB 198 would allow a project to be partially funded, which could be beneficial for a local project requiring a match with State and Federal dollars in order to make economic sense.
     The Senate Committee on Transportation will hold hearings on SB 189 next week, which would impose a fee on electric and hybrid vehicles, with the premise being they pay little or no motor fuels tax to help fund highway construction and maintenance.

Sports Wagering & Expanded Gaming.
     The House and Senate Federal and State Affairs Committees are expected to revisit the issue of sports wagering in the next two weeks with an update scheduled for late next week in the House and possible hearings on a bill in the Senate starting the week of March 18.

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Please do not hesitate to contact me if you have questions in regard to matters highlighted in this report or other issues under consideration in the statehouse.
WBD

Legislative Deadlines.

• Wednesday, March 27 Second House of Origin Deadline
• Friday, April 5 First Adjournment
• Wednesday, May 1 Veto Session Begins
• Friday, May 17 90th Calendar Day

Legislative Information.
     You can access bills, calendars, legislative information and much more at the Kansas Legislature’s official website and also listen in on committees and watch House and Senate floor debate through a YouTube application found on the Kansas Legislature’s website:
www.kslegislature.org/li