After adopting the one and only budget bill of the 2013 Legislative Session, the Kansas Senate adjourned around 2:00 a.m. - a few minutes ago. Although June 2nd would technically be the 100th day, it counts as 99 since they worked straight through from Saturday, June 1st.
Both the House and Senate had to have a Call to adopt the one and only budget bill of the 2013 session, where the doors are locked and everyone is supposed to report to the chamber to vote, while hesitant legislators are cajoled and/or more forcefully convinced to vote for the bill at hand. Each chamber was then able to manage to get just the majority needed to pass the bill - House Substitute for SB 171. In the House, the vote was 63-51. In the Senate, 21-15. No Democrats supported the bill.
It is an ugly budget - every legislator could easily name at least one objectionable facet of the bill. The items that garnered the most attention were cuts to higher education - the Regents Institutions, cuts to the Department of Corrections that one senator suggested would create a "catch and release" policy, large sweeps of funds from Transportation and other agencies - including $9.5 million from tobacco dollars that are supposed to be earmarked for children's programs, and the fact that the budget bill did not include a carveout for the long term services and supports for intellectually and developmentally disabled populations from KanCare. $202 million in additional bonding debt was included over the protests of many legislators, to fund a larger than expected state share of the NBAF project in Manhattan.
The policy that may end up having the most impact is a House created salaries and wages cap based on funding spent up to March of this fiscal year. That policy is certain to prevent agencies - such as Division of ABC - from being able to fill important staff positions that have been held open to hold down expenses. Some of these positions have been unfilled for months or years now.
See budget bill description here.
The final Tax Bill, HB 2059, which passed the House 69-45, did not seem much different than the three proposals shot down by the House in the preceding weeks. The House ultimately gave in to the Senate and Governor's preference to extend most of the sales tax hike that was instituted as a temporary measure in 2009. That 1 cent sales tax hike was put in place to address the dramatic loss of state revenues during the economic downturn of that time and was scheduled to have .6 cents drop off this year (retaining .4 cents for the state highway fund).
The House had put up a fight - arguing that most, if not all of the sales tax should be allowed to expire and that failing to do that would be going back opn a promise to the Kansas voters. Governor Brownback and Senate President Susan Wagle argued that the sales tax extension is necessary to pay for the major tax policy that was passed last session in HB 2117 - eliminating income taxes for most small businesses, and crucial to furthering the administration's objective to move Kansas toward a no-income tax state policy. It also includes other "pay-fors" such as reducing certain tax exemptions. The bill passed the Senate 24-13. Again, no Democrats supported the bill - and warned their Republican colleagues that it was a $769 million tax increase. Supporters claim that, if you include the costs of the 2012 Tax legislation HB 2117, it is an overall tax decrease.
The final bill brings the state sales tax rate down a bit, from 6.3% to 6.15%. It did not include the further reduction of sales tax on food - an idea that was part of a couple of earlier options that failed to pass the House. Perhaps the most noticeable impact on tax filers is the setting the Kansas standard deduction levels for married taxpayers filing jointly and for single heads-of-household at $7,500 and $5,500 respectively, beginning in tax year 2013. Legislation enacted in 2012 had raised both standard deduction levels (from $6,000 for married joint and $4,500 for heads of household) to $9,000. The battles over itemized deductions, such as the property tax deduction and others, had mixed results. Charitable deductions are preserved. But most other itemized deductions are reduced by 30% in 2013; 35% in 2014, 40% in 2015, 45 % in 2016, and 50% in 2017 and thereafter. The bill includes a section to repeal deductions for gambling losses.
A new series of individual income tax rate cuts would be provided beginning in tax year 2014, when the current bottom bracket of 3 % is reduced to 2.7 %, and the current top bracket of 4.9 % is reduced to 4.8 %. In tax year 2015, the top bracket drops to 4.6 %. The two rate brackets would be set at 2.4 and 4.6 %, in 2016; 2.3 and 4.6 % in 2017; and 2.3 and 3.9 % in tax year 2018.
Further reductions to state income tax rates would be provided as early as 2019 if certain tax revenues increase over the prior fiscal year. That trigger would occur if certain taxes (named in the bill) exceed the previous year by 2% or more. This mechanism was very important to the House conferees.
The bill also partially restores the food sales tax rebate program, which had been repealed in 2012 HB 2117. The income tax credits would now be nonrefundable, but the rebate is partially restored.
The bill includes other tax provisions as well, including a benefit for storm damaged property.
See the tax bill description here.
The evening had a few surprises, when the House rejected the bill to delay education Common Core standards - a bill the House had demanded before they would debate the budget bill. The House also rejected a Judiciary measure that included prosecutorial powers much desired by Secretary of State Kris Kobach.
The Legislature will return for its official - and mostly procedural - adjournment Sine Die on June 20th - typically lasting only an hour or two.
