House and Senate budget negotiators failed to reach agreement Monday on a bill aimed at filling a $281 million funding shortfall in the current fiscal year’s budget, something both chambers need before they can get to work on the next two-year “mega” budget bill.

The sole remaining issue separating the two chambers is funding going into the state pension system. And even though the so-called “rescission bill” is aimed at balancing this year’s budget, it has provisions that would affect state spending for the next two years as well.

In particular, the Senate proposal calls for delaying part of a payment into the Kansas Public Employees Retirement System this year but repaying that money over the next several years. But it also calls for repaying $115.5 million next year to make up for a payment that was delayed in 2016.

House budget committee chairman Troy Waymaster, R-Bunker Hill, said that’s a hard commitment to make because the next fiscal year is going to be difficult under any scenario. Although it’s generally agreed that lawmakers intend to pass a major tax increase sometime this session, the House is still waiting on the Senate to come up with a plan that has enough votes to override a governor’s veto.

Gov. Sam Brownback vetoed an earlier bill that would have raised about $1 billion in new income tax revenues over the next two years. The House voted to override that veto, but the override attempt fell three votes short in the Senate.

House passes industrial hemp bill

The Kansas House voted overwhelmingly Monday to pass a bill that would legalize the production of industrial hemp in Kansas. The 103-18 vote sends the bill to the Senate.

The bill establishes a pilot program that authorizes the Kansas Department of Agriculture to license commercial growers to produce industrial hemp, and for businesses to process the plant into various products. It would also authorize universities such as Kansas State University to conduct research into seed varieties, cultivation and commercialization of hemp products.

The bill defines industrial hemp as a form of cannabis with less than 0.3 percent content of THC, the intoxicating substance in marijuana.

State property values up nearly 6 percent in 2017

Property values in Kansas rose 5.9 percent in Kansas last year, the strongest year-over-year increase since the collapse of the real estate market that led to the Great Recession in 2009, the Kansas Department of Revenue said Monday.

That may be good news for the state, which relies in part on a statewide 20-mill property tax levy to fund public schools. The more money the state generates from that property tax, the less it has to add to the funding system from general fund revenues.

Revenue Department officials told the Senate tax committee Monday that the growth was largely due to a rebound in the residential real estate market. When the value of new construction is taken out of the total, the total value of existing property rose 5 percent.

The preliminary numbers only include residential, commercial and agricultural real estate, whose values are set by county appraisers. They do not yet include railroad property, public utilities or oil and gas wells, which are appraised by the state.

Revenue officials also cautioned that the final valuation numbers, which are due by June 1, will likely be smaller because counties are only now starting to hear appeals from property owners.