Self-Serve Beer Bill Advances

Last Thursday, the Senate passed a bill which legalizes the self-service of beer in Kansas.  That same day, the House Federal and State Affairs Committee held a hearing on the bill. Representatives of Brew Bank, Downtown Topeka, Inc. and the Topeka Chamber all spoke in favor of the legislation and discussed how this modernization in Kansas liquor laws will help communities across the state tap into their local entrepreneurial spirit and develop the kinds of attractive social settings today’s mobile workforce demands. The committee heard the testimony, discussed the bill briefly and then passed it on to the full House. The team advocating for this bill is working hard to persuade House leadership to allow the bill to come up on a vote as soon as possible.


Opportunity Zones

Last week, Governor Colyer announced that he had nominated downtown Topeka, NOTO and areas along the riverfront for designation as Opportunity Zones.  Designation as Opportunity Zones should encourage further investment in those areas.  The Topeka Chamber had worked closely with the City of Topeka to develop a strategic request to the Governor in early-March for designation of these areas. 

Opportunity Zones are a new economic development tool enacted by the Tax Cuts and Jobs Act of 2017 designed to encourage long-term investments in low-income urban and rural communities. Investors will receive favorable tax treatment for investing in designated opportunity zones. The idea is to “get capital off the sidelines” and encourage development in eligible areas. Based upon the number of low-income communities identified by the Federal Census, Colyer was able to nominate up to 74 census tracts in Kansas for designation as Opportunity Zones. A total of 190 eligible census tracts competed for nomination. Seventeen Topeka census tracts were eligible. The City did seek designation of all of them but the prioritization of the three key tracts paid-off when the Governor nominated each of them.


Work on School Finance Bill Shifts into Higher Gear

The House K-12 Education Budget Committee started work last Thursday on a school finance bill.  Lawmakers are still trying to determine how much money to put into the new funding formula. 

The bill addresses equity issues raised by the Kansas Supreme Court. On March 16 and again last Monday, the professor commissioned by the legislature presented her findings to lawmakers. She concludes that satisfying the Supreme Court will cost between $600 million and $2.1 billion, depending on how high the legislature wants to set the bar for such measures as high school graduation rates.  Currently, 86% of public school students graduate from high school. The state has previously declared its goal is 95% by 2021. The study seems to indicate that, on average, for every one percent increase in the graduation rate, school funding needs to increase 1.5%.  Lawmakers will need to agree on these performance levels before they can agree on funding.  Now that the study has been published, legislators are waiting for the state department of education to generate estimates of how much money each school district will receive from a school funding formula set at the various recommended levels.

The Senate Education Finance Committee is looking at property taxes as a possible source of funding to cover new school spending. Currently, school boards are allowed to set the Local Option Budget (LOB) at a maximum of 33% of their general fund budget. The Senate bill under consideration would require school districts to set their LOB at 30% of the general fund budget.  No action has been taken yet on this idea.


Economic Development Incentives

Last week, the Senate Ways and Means Committee passed out a bill which would extend the tax credits available under the High Performance Incentive Program (HPIP) from 16 to 25 years.  The amount of the credits that can be used after the 16th year is decreased, and the taxpayer can only use up to 10% of that reduced amount in any year. The bill addresses the concern that a large number of outstanding HPIP credits have yet to be claimed and if, for some reason, they were all claimed in a single year, the impact on the state’s budget would be severe.

The Senate Commerce committee also passed out a bill to review and evaluate the state’s economic development programs.  The bill creates the Joint Economic Development Incentive Review Committee, which would be required to develop an annual inventory of all Kansas economic development incentives. The incentives programs would be evaluated at least once every five years by the Legislative Post Auditor.


Tax Cutting Measures Considered

In an avowed effort to return to Kansas tax payers the roughly $135 million in increased revenue the state has collected as a result of federal income tax reforms, the Senate Tax Committee has passed out a bill that would allow Kansans to itemize their state income tax deductions even if they don’t itemize on their federal forms. The committee also voted to allow 100% deductibility of mortgage interest, property taxes, charitable contributions and medical expenses.  The bill also increases the standard deduction for Kansans by 25%, from $3,000 to $3,750 for single filers and from $7,500 to $9,375 for marrieds filing jointly; a measure intended to ensure the benefits extend to low income Kansans, too.  Finally, the committee agreed to lower the state’s 6.5% sales tax on groceries to 4% in 2020 and to 2% in 2021.  This, too, is widely considered to be a benefit which flows mostly to the poor. This entire raft of measures is being plated-up for consideration by the full Senate this week.


Internet Sales Tax

The Kansas Main Street Parity Act has advanced to the floor of the House. It would require out-of-state retailers and those who facilitate sales by an Internet retailer to collect Kansas sales and use tax.  The idea is that Internet retailers should not be able to avoid sales tax collection and gain an advantage over their “brick and mortar” competitors in Kansas. The bill also covers movies sold over the Internet and some other kinds of digital products and could raise over $70 million in additional state revenue.


Broadband Task Force Bill Advances

The Senate Utilities Committee last week passed the Broadband Expansion Plan Task Force to consider the issue of broadband access, especially in rural areas. The bill had previously passed the House but the Senate Committee insisted upon a number of amendments to it, including a provision ensuring a wireless carrier is among the task force members. The task force would be required to deliver a status report to the legislature in January 2019 and a final report the following year.