2017 Legislative Report

By SEAN GATEWOOD

This was a very long session, it tied the record (114 days) the Legislature set in 2015. Clearly, the legislature came in with a very different makeup this year than what it had in the recent past. It was a completely different atmosphere and dynamic due to the large shift to more “moderate” Republicans and Democrats. This led to a series of public standoffs between the Legislature and the Governor. Education, taxes, and Medicaid expansion were the largest issues for the session, and the two branches of government clearly differed on these subjects.

Taxes

The Brownback tax “experiment” was brought to an end this year with the passage of a new tax plan over his veto. This tax plan gets rid of the “Glidepath”, a provision in the 2012 tax plan that required the state to ratchet down taxes anytime the state’s revenues exceeded the consumer price index for inflation. This element meant that the state could never make progress on its debts or make investments. It also ended the LLC, LLP, Chapter S, Sole Proprietorship exemption that allowed over 300,000 Kansans not to pay income taxes. Not only did this provision contribute to the budget shortfalls of the state, and was clearly unfair but it also prevented many farmers and small business owners from deducting farm losses on other income and carry losses forward. You will now be able to do that. This new tax plan is retroactive back to January 1st. If you will have a liability then you should contact your tax professional or the Kansas Department of Revenue about your quarterly taxes.

Rate Comparison Chart:

Married filing jointly

2012

2013-2016

2017

$0-$30,000

3.5%

2.6%

3.1%

$30,000-$60,000

6.25%

4.6%

5.25%

$60,000 and up

6.45%

4.6%

5.7%

As you can see the taxes are still lower than they were before the 2012 tax bill and this may prove to be an issue in years to come as we wait on a school finance formula and there are significant underfunding related issues in a variety of state agencies. In the future I believe there will have to be further tax increases to adequately fund the government. Tobacco tax increases made a strong run this year as did liquor taxes, they may be part of the solution in the future.

Education formula

SB19 ended block grants and reinstated a formula similar to the previous formula.  

The Governor said in a statement that the Legislature “missed an opportunity on this  issue”. But due to the Kansas Supreme Court decision, was forced to address the chronic constitutional underfunding of Kansas K-12 schools. This is a complicated formula so due to the number of provisions in the formula I have elected to highlight a few of the key elements to it.

1. Base state aid per pupil is $4,006 in FY 2018 and $4,128 in FY 2019. This is still far below the FY 2009 level of $4,400. This is the biggest cause for concern among people watching the Supreme Court on this issue. The question of adequacy will certainly be challenged.

2. All day Kindergarten is now being funded.

3. Supplemental Local Option Budget State Aid was returned. This is important because of the stark differences between wealthier districts and poorer districts to give some equity to the system. This was done because of the inequity decision made by the Supreme Court.

4. Low and High enrollment weighting was brought back. Rural schools needed this due to declining enrollment and costs associated with running a rural school are higher and are not as well covered relative to enrollment.

5. Bond and interest aid: districts with less than 260 students must obtain State Board approval for aid for new facilities; state aid is prohibited for extracurricular facilities as defined by the State Board unless for safety or disability access; the State Board may not authorize new bonds statewide in excess of the amount of bonds retired in the previous year; exemptions are districts which have not had a bond issue in the previous 25 years or have not reached the 14 percent cap requiring State Board approval.

6. Expansion of the tax credit scholarship act to individuals and other entities where it had previously been limited to corporations.  This program allows individuals, and businesses to lower their state tax liability via a tax credit by donating money to private schools.

Medicaid/KanCare Expansion

KanCare Expansion made it far further this year. In years past, the issue had not been heard in committee with the exception of 2014, and then it was only heard in the House committee. This year, the bill was passed by 81/125 in the House and 25/40 in the Senate. Unfortunately, the Governor disagreed with the Legislature and to overcome the veto a bill needs 84 and 27. I am reasonably certain that a veto could have been overridden in the house but the Senate is a different story. Senators Wagle, Tyson, Peterson, Baumgardner, Alley, and Estes should all be targets for us to flip if this legislation is to be successful. Unfortunately, there are consequences to the Legislature’s inaction on this issue. I am reasonably certain that we will see hospital closures in the coming year. There will also likely be more outreach clinic closures.

Health/Senior Care

The 2017 budget restores the $2.1 million cut to the Senior Care Act in 2016. This program, funded primarily with State General Funds, provides supports and services to older adults who need a little help to stay in their homes but aren’t yet Medicaid eligible.  The costs associated with helping older adults with household chores, assistance with medications and yard work pays great dividends for them and is far less expensive than institutional care.

In 2015 the Governor cut medical provider reimbursement rates by 4% in order to balance the state’s budget. The cut was part of a package of cuts that were needed in order to shore up the state’s budget due to the shortfalls caused by the 2012 tax plan. This cut was particularly devastating because of the loss of the federal matching funds. The cut of $56 million to provider rates actually resulted in cuts totaling $120 million because of the loss of federal funds. The federal government matches the state contributions so the cut that was estimated to cut $56 million actually cut nearly $120 million to providers. The cuts had a significant impact on medical providers around the state, especially rural providers. That cut was restored this year, although it was not done in the best of ways. There was a tax increase called the “privilege fee”. This is a tax on health insurance companies. The Managed Care Organizations (MCOs) that run KanCare were taxed but so were the private insurance companies like Blue Cross were as well. This will be paid by all of us through our insurance rates. 

2018 Session

Noxious Weeds

This issue came up again this year but was quickly put to rest. I think there is serious interest in overspray/drift regulation.

Farm Loan Programs

Low interest loans could be a piece of the solution to the current farm crisis. The state has had this sort of program in the past and it should look at doing it again. We should consider how to leverage our beginning farmer program and our veterans outreach programs with this.

Water Plan Funding

$1.4 Million in funding was put back into the water plan this year but that is not nearly enough to address the clearly unsustainable water situation we have in Kansas.

Renewable Energy

This legislature seems much more willing to discuss sustainability and I believe that they would be much more willing to look at renewable energy programs than the legislatures have in the immediate past. We should be thinking about programs to promote renewable energy, especially programs that would not cost the state money. I think a sales tax exemption for equipment would be interesting. There could also be low interest loan programs that could assist in this as well and would be low cost to the state. This could also be a piece of water sustainability puzzle too.

Telemedicine

This issue was briefly heard this year and there is a groundswell of interest in it. There is likely to be an interim committee on the topic and action next year. Everyone agrees that telemedicine is a good thing. The controversy is over mandates and payment. The key questions that need to be resolved are:

  • Which services should be offered in this form?
  • Should reimbursement be at the same rate as in-person services?
  • Should insurance companies be required to cover these services, if so which services and at what rate?

KanCare Expansion?

KanCare expansion as mentioned above came as close as you can get without success. Clearly, this is a priority and there is interest. The only reason I put a question mark behind this is due to the AHCA at the Federal level. As it stands, one of the nastier provisions (at least for Kansas) is that it prevents Kansas from expanding its Medicaid program.

Food Sales Tax

This issue seems to come up every year. It is widely popular the issue has been and will continue to be how to pay for it.

Final Note on Health Care:

The “Repeal and Replace” bill to eliminate the Affordable Care Act is making its way through Congress. Right now it is in the Senate. Senator Pat Roberts has expressed his support for the bill, but Senator Moran has stated that he cannot support the bill as currently written. I think this is an important opportunity for our members to reach out to his office and let him know about our concerns about the bills impact on rural communities. If this bill passes rural hospitals in Kansas will close. The rough math suggests that 100,000 more Kansans will be uninsured. Medicaid will be gutted and that will have drastic impacts on people with disabilities and older Kansans. We encourage members to contact Senator Moran to express your opinion on rural healthcare: 202.224.6521

2017-07-21T13:41:06+00:00