KASB Legislative Roundup, Thur. May 14Scott Rothschild
The House Committee on Taxation Thursday evening approved a bill that would give local governments, including school districts, more authority to issue no fund warrants to cover expenditures in excess of current revenues caused by, or resulting from, a federal, state or local disaster or emergency, including a financial, public health or disaster emergency, declared by a federal or state official.
No funds warrants are basically short-term bonds issued to cover unanticipated expenditures that exceed revenues. The bill would require the borrowing to be repaid within five years through a special tax levy. Current law allows no fund warrants to be issued for other purposes. The bill would also permit the Kansas Developmental Finance Authority to issue bonds for state agencies or local governments to finance transfers or expenditures related to disasters or emergencies.
Finally, the bill raises the maximum interest rate for Kansas municipal bonds. The maximum rate for such bonds is tied to U.S. Treasury bill rate, was has fallen so low that finance experts believe it will be difficult for local governments in Kansas to sell bonds unless the rate is raised. The Legislature approved a temporary increase as part of the state budget bill passed at the end of the regular 2020 session.
These changes were amended in SB 235, but the path forward is unclear. If passed by the House of Representatives, the bill would return to the Senate, which could agree to the new provisions. However, House leaders say no decision has been made on whether the House will consider any bills on general orders next Thursday during the final one-day session of the 2020 Legislature. The new provisions could also be considered in tax bill conference committee, but no meeting has been scheduled.
The House Tax Committee also approved an amended version of SB 294, called a “truth in taxation” proposal that would require most local governments – but not school districts – to send special notices and hold a hearing and separate vote to raise property taxes above a “revenue neutral rate.” It also repeals the current tax lid on local governments. (School districts were exempted because they have a different set of budget and tax levy limits and voter input requirements under the school finance system and are not under the tax lid.)
The House committee amended the bill to delay its effective date by one year. Earlier this week, the Senate Assessment and Taxation Committee voted to place the provisions of SB 294, without the one-year delay, into a House-passed bill, HB 2118. If approved by the Senate next week, that could set up a vote in the House to approve the Senate version or send the issue to conference committee to consider the House version. The Senate committee also advanced amended House bills that would adopt a grace period delaying the due date of May 10 for property taxes to Aug. 10 without interest or penalties, and to place in law the Governor’s executive order delaying the state income tax filing from April 15 to July 15.
The House Appropriations Committee meets at 9 a.m. this morning to consider oversight of federal funding coming to Kansas to deal with the COVID pandemic and may receive proposed budget amendments from the governor.
The House Judiciary Committee meets at 3:30 p.m. today to continue a discussion of liability protections for medical providers, businesses and other entities, which could include educational institutions. It is also scheduled to receive a briefing on the governor’s authority to issue disaster and emergency declarations and executive orders. The committee will also meet Monday. The Senate Judiciary Committee meets next Monday through Wednesday and is expected to consider similar issues.
Earlier this week, the State Finance Council approved an extension of Gov. Laura Kelly’s disaster declaration only to May 26, rather than June 14 as authorized under current law. Republican leaders say they want to set limits on the Governor’s authority when the Legislature meets Thursday,. Yesterday, Kelly allowed some business and functions to move to the second phase of her state reopening plan but delayed that step for others. Here is a link to Kelly’s plan.