They’re Back! Lawmakers returned to Topeka for the 2022 session and while day-to-day operations are more typical of years past, there is still an awareness that COVID continues to be an issue with which we must contend. If you plan to visit, please be aware that masks are not required to enter the building, but some legislative and administration offices ask that you wear a mask before entering their offices so having one handy is advisable.

 

State of the State/Budget

On Tuesday evening Governor Kelly delivered her 4th State of the State address to a joint session of the Kansas Legislature. Her speech touched on many themes but underscoring all of them was the fact that the State of Kansas sits on a surplus of nearly $3 billion – the largest the state has seen in the past 40 years.

Much of the governor’s speech focused less on deep policy discussion and more on the attitude and spirit of Kansans helping the state persevere despite the pandemic. Still, she did address a few policy highlights contained in her budget proposal.

A few of the more notable issues addressed by Governor Kelly during her speech:

• Allocating $600 million to the state’s “rainy day” fund
• Cutting the state’s food sales tax rate to zero
• Freezing college tuition rates.
• Restoring full funding for the state water plan
• Assisting Kansans with rolling out high speed internet access across the state
• Keeping her commitment to end extraordinary transfers from the “Bank of KDOT,” the state’s highway fund
• Using a sizeable amount of the surplus to pay off debt and eliminating accounting gimmicks that have been used over the years to shore up budget shortfalls and better manage cashflow

Many of the concepts have the support of lawmakers from both parties but the details on how these policies are enacted and how much of the surplus to allocate to her wish list will be the source of considerable discussion during the coming months. The talk in the building is to use the surplus in a fiscally prudent manner because it is one-time money. No doubt the legislature will have its own ideas on how to best utilize the surplus and those ideas will become clearer in the weeks ahead.

To view the Governor’s State of the State Address, click here.

To view the Republican response delivered by Speaker Ron Ryckman, Jr., click here.

 

Committee Hearings

It was a slow week for committee work with just a handful of hearings and presentations scheduled during the week. The tempo will pick up next week as lawmakers look to finalize legislation carried over from last year and begin hearings on new bills that are being introduced every day.

Lawmakers dealing with the budget received a briefing and economic outlook from Governor Laura Kelly’s Budget Director, Adam Proffitt and Director of Legislative Research J.G. Scott. To view Budget Director Adam Proffitt’s budget overview presentation to the legislature, click here.

Members of the Senate and House Redistricting Committees conducted preliminary work in advance of what will be a heavy lift for them as they work to create new legislative boundaries based on the just-concluded census. There are opportunities for the public to engage in the process, but unlike years past, maps submitted by the public must have a legislative sponsor. If you have interest in submitting a map or monitoring the work of the committees, for details on the process, click here.

Expect a lot of action in the tax committees in the coming weeks. The surplus revenues are creating quite a discussion point among lawmakers attempting to balance paying off debts, addressing long-term issues that have been deferred due to fiscal impact and returning revenue to taxpayers.

The House and Senate Commerce Committees will look at ways to address a persistent and ubiquitous workforce shortage plaguing the business community while lawmakers working on education issues will continue to address education expenditures and outcomes.

Lastly, there is optimism among supporters of medical marijuana that this may be their year to see legislation move across the finish line. It’s an issue the legislature has grappled with for some time, but looming elections seem to be playing a role that buoys the spirits of the issue’s advocates. Another long-term issue – sports betting – will also get additional attention this session.

 

LPA Report on Taxation and Exemptions for Government and Non-Profit Organizations

Last session Legislative Post Audit (LPA) was charged with looking at how the tax treatment of certain organizations potentially impacts competition with for-profit businesses. Its report released this week concluded that while there may be some appearance of competition, the analysis shows that the “true competition may be limited, at best.” LPA does add that variances by industry, difficulty in obtaining useful data and lack of research on the topic all contribute to less-than-clear cut answers to the question.

The report’s genesis comes from a long-standing debate that has pitted a chain of private, for-profit health clubs against community recreation facilities and centers operated by the YMCA. Some lawmakers receiving the report still believe more attention on the issue is warranted while others believe the report puts the long-standing issue to rest.

For the full LPA report, click here.

 

Bill Introductions of Note

SB 327 – Excluding separately stated delivery charges from the sales or selling price for sales tax purposes

SB 328 – Providing an income tax rate of 4.75% for individuals

SB 339 – Providing a 0% state rate for sales and uses taxes of food and food ingredients, providing for the levying of taxes by cities and counties and discontinuing the nonrefundable food sales tax credit.

SB 342 – Providing a 0% state rate for sales and use taxes for sales of food and food ingredients and providing for the levying of taxes by cities and counties, providing for an exemption from sales and use taxes for sales of farm products sold at farmers’ markets, and discontinuing the nonrefundable food sales tax credit.

HB 2457 – Requiring boards of education of school districts to increase the compensation of classroom teachers based upon annual school district budget increases.

 

Next Week

The legislature will be off on Monday in recognition of Martin Luther King, Jr. Day.

When lawmakers return to action on Tuesday look for hearings on the STAR Bonds economic development tool and a discussion around the Department of Labor and COVID-19 unemployment claims that consumed a considerable amount of time during 2021.

On Thursday, the Senate Assessment and Taxation Committee is scheduled to hold a hearing on HB 2316 – a bill that would eliminate the prohibition of applying a surcharge when purchases are made with a credit or debit card.

To read previous This Week in Topeka reports, CLICK HERE