Kansas Legislative Wrap-Up

The Kansas Legislature adjourned at 3:28am on Monday, May 2 after its shortest session in 42 years.  The most pressing issues this year were addressing the budget shortfall and handling fluctuating revenue reports.  While lawmakers did not consider or pass much legislation that directly affects the home building industry, it is important for all small business to remain aware of what happens in Topeka.

Budget

At the end of April, the Consensus Revenue Estimating Group (CREG) reported a $228 million revenue shortfall for the remainder of this and the next fiscal year.  The legislature’s proposed solution includes:

• Transferring $185 million from the state highway fund to the general fund.  KDOT estimates the sweep will delay 25 planned projects through 2019 at a cost of $553 million.
• Delaying payment of $99 million from the state pension plan – KPERS – to be repaid at 8% interest by June 2018.
• Reduced funding for higher education and removing last year’s tuition cap on state universities.
• Authorizing Governor Brownback to make as much as $80 million in cuts, or 3%-5% across the board to cut all state agencies.  The only exemption is K-12 education funding.

Taxes

There was a strong effort this year to repeal the non-wage income tax exemption for LLC’s, S corporations, and sole proprietorships that passed in 2012.  However, the legislation failed in the House with a vote of 45-74, meaning the tax exemption will remain.

Property tax legislation also received a great deal of attention this year.  Lawmakers passed a bill moving up the effective date from January 2018 to January 2017 for the tax lid on cities and counties.  After that time, they may only raise property taxes higher than the rate of inflation by taking it to a public vote.  The bill also modified the current exemption provisions.

Workers Compensation

The legislature unanimously passed a bill allowing workers compensation claims to be filed electronically and eliminating the requirement for the Department of Labor to maintain a licensed physician on staff.

Going Forward

Legislators may have to return to the Topeka for a special summer session depending on the outcome of the Supreme Court’s equity decision on the new school finance formula.  Regardless, this summer will also be election season.  All seats in the House and Senate are up this year – candidates have until June 1 to file for election.