A few post session reflections. After 113 days, one short of the record for longest legislative session, every stakeholder can and will judge the outcomes of this session as positive or negative for Kansas.
I, for one, see many positives. SB 30, the comprehensive income tax bill, became law a little over five years after Governor Brownback had signed into law his signature tax policy. The Glidepath to Zero tag which the Governor had labeled his tax plan eventually would have eliminated the state income tax by 2020. The results of this failed tax policy, including the LLC exemptions, caused state revenues to plummet and created a $1 billion plus deficit for FY ’18 and FY’19.
SB 30, via the 88-31 and 27-13 vote to override the Governor’s veto by the House and Senate respectively on Tuesday, June 6th, provides a much needed revenue injection and implements some important tax credits for homeowners, families and individuals with high medical expenses. The re-establishment of a three-tier income tax structure allows top income bracket earners, now taxed at 5.7%, some separation from the individual tax payer earning just over $30,000 annually. This represents a large degree of fairness, especially for lower wage earners who had been paying as much as millionaires under the Brownback plan.
The new rates are as follows:
(Married Tax year 2012 Current law New rate
$0-$30,000 3.5% 2.6% 3.1%
$30,001-$60,000 6.25% 4.6% 5.3%
Above $60,000 6.45% 4.6% 5.7%
SB closes the loophole in the LLC exemption and places 330,000 LLCs, corporations, partnerships, farms, and sole proprietorships back on the tax rolls retroactive to January 1, 2017.
For families, the restoration of the Child and Dependent Care Tax Credit is important. This was a non-refundable state credit equal to 25% of the federal credit up to $263 for a single child or $525 for two or more children. For a family of four with earnings of $60,000 annually, the state tax liability would be $207.75 more than current law but the family would only pay an extra $92.25 if the Child and Dependent Care Tax Credit is applied. Compared to tax year 2012, the family would be paying $348.75 less under this new plan.
For the home owner, the current 50% deductible maximum for mortgage interest allowance will increase in FY’ 19 to 75% and to 100% in FY’ 20.
SB 30 phases in important medical deductions disallowed under the Brownback tax plan. Beginning in tax year ’18, Kansas residents will be able to claim 50% of medical expenses currently allowed as itemized deductions on the federal return. Deductibility increases to 75% in ’19 and 100% in ’20.
In other important action during the final days of session, HB 2278, which exempts community mental health centers, state-owned hospitals, and the KU Medical Center from current conceal/carry laws became law without the Governor’s signature on Thursday, June 15.
We now await the Supreme Court ruling on the adequacy of school funding as represented in SB 19. The Governor signed the bill this past Thursday. With the clock ticking towards the June 30 deadline, attorneys are preparing briefs and oral arguments in hopes of getting a quick turnaround by Kansas’s highest court in rendering a decision. There is always a chance that Kansas public schools will close on July 1 which would be unprecedented. State Attorney General Derek Schmidt has asked the court for a continuance beyond June 30 to relieve the tight timeframe.
The latest development in Governor Brownback being tapped for a position in the Trump administration indicates that he may leave Topeka before summers end and positions Lt. Governor Jeff Colyer for Governor. Time will tell on this but as key staffers resign, as in the case of Kim Borchers, Brownback’s Deputy Chief of Staff, this transition may be sooner than later. STAY TUNED.
I want to end this update on a somber note. Rep. Patsy Terrell (D). representing the 102nd district including Hutchinson, passed away on Wednesday, June 7. She was a colleague and friend who projected such a positive attitude and creative spirit. Patsy was a very caring person in the communities she represented and her love for helping others was apparent in her daily walk. She will be missed. A memorial service is planned in Hutchinson at the Fox Theatre on Saturday, June 24.
As always, it is a real pleasure and privilege in representing the 87th District.