Dear Friend,

State of the State
Thanks to Smoky Hills Public TV for posting Governor Kelly’s address on YouTube. You can read the full transcript here. Highlights include: 

• Her support for the USMCA trade agreement and the Department of Commerce’s work to restore Kansas’ role in international trade.
• A new transportation plan that focuses on a two-year rolling schedule rather than a 10-year plan with little flexibility to adapt to changing transportation modes and population changes.
• Property and sales tax relief. 
• Refocusing the corrections system toward rehabilitation and workforce training, hiring additional officers to solve staffing shortages, and enhancing services for substance abuse and mental health.

Governor’s Budget – Budget Office Overview
Economic experts estimate Kansas will take in more than $900 million than was budgeted as of July 2020. Keep in mind, this is the result of tax reform in 2017 after years of neglect (and resulting lawsuits) from the state not doing its fundamental job. I support using this money to continue restoring the core functions of state government. There is much work yet to do within our foster care system, understaffing in corrections and short-supply mental health facilities, as well as maintenance work still pending on Kansas roads. 
 
I don’t agree with everything in the governor’s budget, reamortizing (refinancing for 10 additional years) KPERS, for starters, but here are some fiscally conservative proposals for your consideration:

1. Early debt payment: The legislature skipped KPERS payments and borrowed from multiple sources to sustain the 2012 tax cuts. By paying down more than $600 million in these debts, we can save $200 million in interest payments in future years. 
2. Sales Tax Relief: The governor wants to provide a low-income sales tax rebate for Kansans earning less than $30,000/year. An across-the-board 1% food sales tax reduction is a better alternative. This proposal would reinstate a food sales tax rebate as follows: 
                        
3. Medicaid Expansion: The plan includes $17 million for the Kansas portion of Medicaid Expansion, with the federal government bringing the remaining 90% of the funding to provide access to health care for low-income Kansans making less than $30,000/year for a family of four.
4. Schools: Continuing funding for the existing formula (which the Supreme Court said met the requirements of the Kansas Constitution) and increasing funding for special education and mental health. The formula includes an increasing commitment each year by about $90 million.

Growing the Kansas Economy
Each corner of our state needs to thrive for all of us to grow. I’m looking forward to helping with the Department of Commerce’s new Framework for Growth economic development plan and hope you will join me: 

• Please take the survey to ensure each corner of the state is represented. 

The House Republican Policy Agenda
Our Republican leadership in the House put together a package that positively impacts every Kansan in a tangible way. These bills will need hearings and votes to move through the process, but I think each will help move our state forward:

• Senior Tax Relief: Kansans collecting Social Security are exempt from state income tax if they make less than $75,000. We would increase that minimum to $100,000 to help seniors on fixed incomes address increasing costs.
• First-Time Homebuyer Tax Relief: Would allow Kansans tax-deductible savings for their first home in the state.
• Hospital Survival Fund: A $30 million matching fund to help hospitals discover new delivery methods. (Expanding Medicaid would do a better job and cost half as much.)
• Disability Employment Credits: Kansas businesses which hire Kansans with disabilities in integrated business settings would qualify for a tax credit for part of the cost of wages.
• In-State Scholarship: For Kansans who complete a certificate or 2-year program in an area of labor shortage. The students must commit to stay and work in Kansas for two years upon completion.

Floor Action

• This week’s Calendar. Times below are unless otherwise noted in the Calendar.
• Watch LIVE

There has been no activity on bills before the full House, but we were fortunate to host the Kansas Teacher of the Year finalists. Their inspiring stories remind me how our teachers’ commitments to Kansas students have built the state we enjoy today.
 
Committee Work
Federal and State Affairs – Listen Live 9 am weekdays
Committee members heard an overview of the Hodes v. Nauser lawsuit in which the Kansas Supreme Court ruled the state’s constitution protects abortion rights and blocked a common second trimester method for ending pregnancies. 

• HCR 5019 is a constitutional amendment to confirm the Legislature’s authority to restrict abortion. This resolution was in response to a Kansas Supreme Court ruling in April 2019 that stated the Kansas Constitution protects the right to abortion. This protection would stand even if the Roe v. Wade decision by the U.S. Supreme Court was overturned. Read National Public Radio’s coverage of the court ruling and news coverage of the committee vote.

Other hearings:

• HB 2477 would make election day a public holiday beginning this year – November 3, 2020.
• HB 2476 would require all public buildings in Kansas to display the National Motto, which is the phrase, “In God We Trust” with accurate representations of the flag of the United States and the Kansas state flag. Public buildings would include public schools and state and municipal buildings.
• HB 2400 would create the Kratom Consumer Protection Act to regulate the manufacture, distribution and sales of products containing kratom. Kratom is a tree native to Southeast Asia, with leaves that can have mind-altering effects similar to opioids and stimulants. Kratom is not currently illegal and can be easily obtained online. The bill would establish penalties for false labeling, compounding and selling of certain types of kratom mixtures, and prohibit selling or providing kratom products to those under 18 years old.

Health and Human Services – Listen Live 1:30 pm weekdays
We welcomed a briefing on the state of health in Kansas from the Department of Health and Environment, a presentation on the Kansas Meaningful Measures Collaborative which measures how Medicaid (KanCare) is meeting needs and achieving its mission, and a briefing on the trauma system in Kansas. One particularly interesting presentation was on the state’s Alzheimer’s Disease Plan (executive summary). 

• 54,000 Kansans over 65 have Alzheimer’s – and 151,000 Kansans are caregivers to someone with Alzheimer’s disease or related dementia.
• Last year, Kansas Medicaid spent $441 million in services on Alzheimer’s patients.
• The Alzheimer’s Task Force has requested a number of policy changes, including: 
  • Caregiver Training
  • Law enforcement training to recognize those with cognitive impairments
  • Alzheimer’s-specific respite programs for caregivers
  • High-risk early-onset access to services and support under the Senior Care Act

Taxation – Listen Live 3:30 pm weekdays
We are off-and-running into the deep weeds in Tax Committee – already burying ourselves in tax formulas. These are fairly complex, but I will attempt to break them down into English: 

• HB 2278 would create a new two-bracket income tax rate system based on a complex formula. One rate would be for those earning $50,000 and under ($100,000 for married filing jointly), and the other bracket would be for those over those thresholds. The formula would be based on taxable income and the number of filing periods. The Kansas Society of CPAs testified the bill would disproportionately impact those with incomes under $45,000, with no change in taxable income for those earning more than $95,000.
• HB 2466 would require paid tax return preparers to sign and include their IRS Preparer Tax Identification number on tax returns they prepare starting in 2021. Certified Public Accountants or individuals employed by a CPA firm would be excluded from the bill’s requirements.
• HB 2005 “Decoupling” is back: would allow taxpayers to itemize deductions on their state tax returns even if they did not itemize on their federal tax returns. As you might recall from last year’s tax discussions, currently, taxpayers can only itemize on their state returns if they did so on their federal returns. 

In addition to the bill hearings, members heard informational briefings on Rural Opportunity Zones, itemized deductions, consensus revenue estimates, and a review of tax-related legislation currently pending in conference committees.