The Kansas Senate last night gave tentative approval to a modified version of the Governor’s revenue bill, a key step in avoiding cuts in K-12 education funding. Final action on HB 2059 is scheduled for today.
The bill is projected to raise $316.2 million more than the current law in Fiscal Year 2014 and $276.5 million in FY 2015. The largest revenue measure in the bill is maintaining the state sales tax rate at the current 6.3%, rather than allowing it to drop 5.7% on June 30, as scheduled under current law. The Senate Committee of the Whole modified another component, allowing a gradual phase-down of state income tax deductions as the state income tax is reduced. This measure raises $103.8 million in FY 2014 and $119.7 million in FY 2015. The Governor had proposed immediate elimination of the home mortgage interest and property tax deductions.
The committee turned back several amendments to allow the sales tax to drop on June 30. Those efforts were mostly supported by Democrats and moderate Republicans who had originally supported the sales tax when it was adopted as a three-year emergency measure. Supporting the sales tax extension were many conservatives who had opposed the sales tax increase when it adopted three years ago.
The Senate version also contains the Governor’s proposal for continuing reductions in state income tax rates. Those cuts could produce another budget shortfall if state revenues growth slower than historical averages.
Also Tuesday, the House Taxation Committee Tuesday approved an alternative to the Governor’s revenue plan that was inserted as a substitute bill into SB 84. (Placing the plan in a Senate bill is designed to expedite negotiations with Senate.) Unlike the Senate version, the House bill allows the state sales tax rate to drop from 6.3% to 5.7% on July 1, as scheduled under current law. However, it keeps 0.4% of the sales tax flowing into the state general fund for the FY 2014 and 2015. Beginning in FY 2016, the 0.4% would go to the state highway fund. Under current law, that 0.4% would go to the SHF beginning in 2014. This change is expected to raise $179 million for the state general fund in FY 2014 and $202 million in FY 2015. The bill also provides a phase-out of income tax deductions, rather than immediate elimination, raising $108 million in FY 2014 and $87 million in FY 2015. The total additional revenue under this plan is about $137 million less than the Governor’s plan for each of the next two years.
The Governor’s original tax plan was expected to raise $455.4 million in FY 2014 and $356.0 million in FY 2015. The House committee plan raises $287.4 million in FY 2014 and $290.5 million in FY 2015, but much less beginning in FY 2016. The Senate plan raises $316.2 million in FY 2014 and $276.5 million in FY 2015, but revenues begin to decline in FY 2017 and FY 2018. Because both the House and Senate revenue proposals raise less than the proposals in the Governor’s budget, each chamber will have to make adjustments to either reduce spending below the Governor’s proposals or reduce the state general fund ending balance.
This morning, the Senate Ways and Means Committee begins assembling
its version of the state budget bill for the next two years. The House
Appropriations Committee approved its version Tuesday.
The House Elections Committee delayed its scheduled hearing on HB 2227 until this afternoon at 1:30 p.m. The bill would shift local municipal elections, including school boards, from April of odd-numbered years to November of odd-numbered years. However, it maintains the non-partisan nature of these elections and does not require all local officials to run for at-large positions – differences that were included in HB 2271, which received a hearing last month.