Taxes, school finance, budget and maybe a 7-day work week await Kansas lawmakers as they return

Sen. Carolyn McGinn, center, R-Sedgwick, leads a meeting of the Senate Ways and Means Committee on Friday in advance of lawmakers returning to the Statehouse Monday for the start of the final phase of the 2017 session.

? Kansas lawmakers return to the Statehouse on Monday to begin the final phase of the 2017 session, with many of the biggest issues of the year still standing before them.

Traditionally, this phase is called the “veto session” because they were only supposed to deal with bills that had been vetoed by the governor. More recently it has come to be called the “omnibus” session because they now use the time to pass a final, omnibus budget that is based on the new, updated revenue estimates that were issued during their spring break.

But this year, as with several years in the recent past, nearly every major issue that lawmakers were confronted with at the beginning of the session is still unresolved. That includes passage of a two-year budget, a new school finance formula and a tax package that can raise the estimated $1 billion or more needed to fund it all without making significant cuts to existing services.

Republican leaders in the House and Senate said this past week that taxes will be the first issue they try to resolve, followed by school finance and, finally, the budget.

“The budget will just fall into place after we’ve taken care of those other two issues,” House Majority Leader Don Hineman, R-Dighton, said glibly regarding the schedule.

Hineman said the first tax proposal to come up will likely be one being pushed by Sen. Jim Denning, R-Overland Park. Although details of that plan have not been made public, generally it would retain the existing two income tax brackets, raise individual income tax rates and repeal the so-called “LLC loophole” that exempts certain kinds of nonwage business income from state taxes.

“I think the first focus will be on the Denning two-bracket plan, see what the appetite is for that,” Hineman said. And if that plan should fail, he said, the focus will shift quickly to a modified version of the bill Gov. Sam Brownback vetoed earlier in the session.

Senate Democratic Leader Anthony Hensley, of Topeka, however, said he thinks that’s a bad strategy.

“I don’t think we’ll get anywhere on the tax issue based on what they’re talking about,” Hensley said. “They’re talking about a two-bracket bill, which isn’t going to get enough votes to pass. So once again, it’s an exercise in futility.”

The bill that may be waiting in the wings is one that previously passed both houses but was vetoed by Brownback. That bill also would have repealed the LLC exemption, and it would have created a third, upper-tier bracket and raised some individual rates retroactively to Jan. 1, 2017.

The House voted to override Brownback’s veto of that bill, but the override effort failed by three votes in the Senate. Among those voting against the override were Denning and Senate President Susan Wagle, both of whom said they objected to the retroactive provision on individual rates.

As things stand now, lawmakers will need to raise roughly $900 million in additional revenue over the next two years to avoid having to make significant cuts in current services.

In addition to that, however, they also must pass a new school funding formula, and the one being considered in the House would require $150 million next school year, and then $300 million above current spending levels in the following year.

Although that bill is full of details that will be the subject of some debate on the House floor, one issue likely to stir significant controversy is continuation of a program that offers tax credits to corporations that contribute to scholarship funds for low-income public school students to attend private and parochial schools.

A report by the Kansas State Department of Education in January showed that during the current school year, only 209 students were taking advantage of that program, and all but a handful of them were from the Kansas City, Kan., Topeka and Wichita school districts.

Meanwhile, both chambers have already established the major outlines of a two-year budget, although there are differences between the two chambers. One of the biggest issues left to resolve is whether to fully fund payments into the state pension system over the next two years.

Brownback has proposed making only three of the four quarterly payments each year, something lawmakers from both parties have said they oppose. But whether the state can afford to fully fund those payments may depend on the size of the tax package they can pass and whether they can overcome another veto by the governor of a tax bill.

But the budget debate may also set the stage for a debate over gun policy. On Thursday, the Brownback administration submitted its list of proposed budget amendments, including one asking for $24 million over two years to provide security at the four state psychiatric hospitals so they can ban concealed firearms in those facilities after July 1.

Lawmakers who support repealing a law requiring local governments, colleges and universities, and state hospitals to allow concealed-carry in their facilities starting July 1 will likely use that as an argument to show the cost of leaving the law on the books.

“That just demonstrates the extreme cost of equipping public buildings for this kind of security,” Hineman said.

He also said, however, that negotiations have been going on during the break to reach a compromise on gun policy that the National Rifle Association and its supporters will accept.

“Those negotiations haven’t totally played out yet,” Hineman said. “The negotiations have been taking place on a fairly regular basis, but there is still an avenue open for possible compromise. That window of opportunity is going to close pretty rapidly, though, so we’ll know soon if it’s going to work or not.”

Wagle said she plans to follow the same schedule of debating taxes first, then school finance and concluding with the budget. But she said she is not sure whether there will be a separate debate over gun policy in the upper chamber.

She did, however, criticize Brownback for requesting the $24 million for security at the state hospitals.

“I think it was disingenuous. You know, we’re out of money,” she said.

Both Wagle and House Speaker Ron Ryckman, R-Olathe, said before the break that when they returned they planned to meet seven days a week until the Legislature wrapped up its business.

On Thursday, though, Wagle said that may depend on how much progress they make during the regular work week.

“Our plan is, if it’s necessary to work weekends to make progress, that’s what we’ll do,” she said.

She also noted that Sunday, May 14, is both Mother’s Day and the 90th day of the session.

Traditionally, lawmakers try to limit sessions to no more than 90 days, but this year they have budgeted for an additional 10 days beyond that.