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Legislative Update from Brenda Dietrich

Rep. Greg Lewis Resigns

Accompanied by his wife Susan and son Joshua, Rep. Greg Lewis (R-St. John) announced his resignation from the Kansas House of Representatives, effective February 22.  Lewis is battling brain cancer, which is high grade level IV.  Rep. Lewis has served our state just as he’s lived his life - with honor, kindness and integrity. Greg and his family have a fight ahead of them as they battle this cancer, but their fight isn’t alone. The Kansas House stands with them in prayer and in gratitude. Lewis has served the 113th District since March 2015.



Rep. Lewis provided his colleagues the following:
 
“My parting advice to you is to enjoy each day, enjoy your family, your friends, your fellow legislators… but do not take yourself too seriously.  Serve your District with a servant’s heart.  This is the House of Representatives.  This is not the house of self-interest.  This is not the house of special interest.  This is the People’s House; long may it serve the People and this Great State of Kansas.”
 

House Action This Past Week

KPERS Obligation Funded
and Sent to the Governor—SB 9

On Friday, the House unanimously approved the bill, 117-0.  SB 9 invests $115 million into our public pension system and makes good on a payment that was deferred in 2016. 
It is worth noting that every Republican, Democrat, and Independent voted in favor of this legislation.  The Governor has 10 days to act on this legislation.
 
Highlights of SB 9:
  • Meet the actuarial required payment (ARC).  This will be the first time this has occurred in 25 years.
  • Increase the school group’s funding ratio, which is hovering too near critical status.  The school group has the lowest funded ratio currently at 61.6%, which is close to the critical code red status of funded ratio of 60% or lower.
  • KPERS states that postponing the payment costs the state $630K monthly or approximately $20K/day.

Sometimes we have fun on the House floor!

Lindsborg Celebrates 150 Years

On Tuesday, the City of Lindsborg was honored with HR 6012.  Lindsborg was founded on February 20, 1869 by the Swedish Agricultural Company.  Lindsborg was so named since several members of the company had “Lind” in their surname.  Lindsborg is known as “Little Sweden,” due to “its significant population of descendants of Swedish immigrants and Swedish heritage and traditions they maintain.”  Representatives Susan Concannon (R-Beloit) and Steven Johnson (R-Assaria) carried the resolution and joined in the wearing of historical Swedish clothing. We approved the Resolution with a resounding, “Ja!”

Committee Work – The Tax Committee

Tax - Internet Sales Tax

On Thursday, February 21st, the House Committee on Tax heard testimony on HB 2352, which would require internet retailers to collect and remit sales tax who have at least $100,000 in total gross sales in Kansas annually.  The bill would also require sales tax to be collected from all sales of digital property and subscription services, starting on July 1 of this year.  According to the Department of Revenue, this bill would increase state revenues by $41.1 million in FY 2020 (all funds).  The State General Fund would increase by $34.4 million, and the State Highway Fund would increase by $6.7 million.
 
Proponents emphasized the notion that online sales transactions erode a viable and fair revenue source for the state government, but more importantly local governments.  Moreover, they stated that local businesses are paying sales tax, while many companies without a physical presence in Kansas sell a greater amount to Kansans, but pay no tax.  Current law requires Kansans to report these online sales, but are seldom reported.  Several local governments and local chambers submitted proponent testimony.
 
Opponents maintained that this bill would impose an additional tax increase.  Some conferees opposed the bill due to the inclusion of travel intermediaries and the sales tax imposed on digital goods.
 
Lastly, the Kansas Chamber remained neutral on the bill, and proposed amended language to resolve some of the issues that the opponents expressed in their testimony. 
 
The committee has yet to take action on this bill.
 
Federal Windfall -SB 22

On Tuesday, February 19th, the House Taxation Committee heard testimony on SB 22, a bill that would make several changes to Kansas income tax provisions in response to changes to the federal tax code in 2017.  The bill would decouple state and federal tax codes from changes made in the 2017 tax cuts and allow Kansans to itemize deductions on their state returns when using the standard deduction on their federal returns.
 
On the first day of testimony, the committee concentrated on the individual components of the bill.  The Olathe Chamber of Commerce, the Overland Park Chamber of Commerce, and the Regional Wichita Chamber of Commerce, the National Federation of Independent Businesses, the Kansas Realtors Association, the Kansas Chamber and several other organizations voiced their support for this bill.  They stated that decoupling from the federal tax code would allow individuals and businesses to be protected from an unfair tax increase. 
 
Opponent testimony included the Kansas Center for Economic Growth, Kansas Interfaith Action, the Mainstream Coalition, and the Kansas Appleseed Center for Law and Justice.  The opponents asserted that SB 22 proposes a huge new tax experiment that Kansas cannot afford.  It was stated that the bill is not revenue-neutral and would solely favor multinational corporations.
 
On the second day of testimony, the committee focused on the corporate components of SB 22.  The committee heard from Brian Hamer, counsel at the Multistate Tax Commission and Michael Hale, Kansas Department of Revenue on what is happening in other states.  In addition, the committee reviewed the Global Intangible Low-Taxed Income (GILTI) information provided by the Tax Foundation on January 28.  From testimony, GILTI is a guardrail, “intended to tax what are deemed the supernormal returns of foreign subsidiaries, less a deduction, less a calculated partial credit for foreign taxes paid.”  GILTI would help curb international tax avoidance techniques, like profit shifting, to low-tax countries.

During the hearing, the committee heard from proponents Kansas Chamber, Seaboard, and Kansas Bankers Association.  The Chamber’s testimony stated conformity without modification results in a significant tax increase and that Kansas should decouple from the federal corporate income provisions.  Seaboard also supports decoupling, which would prevent the state from taxing foreign income that historically has not been taxed.  KBA testimony centered on the FDIC income tax modifications.  KBA supports the bill, which treats all financial institutions the same, rather than how the federal tax reform treats them (it eliminated the ability of certain financial institutions to deduct the costs of their FDIC premiums).  The Bankers Association is asking for Kansas to reinstate the full deductibility of this cost.

Additional written testimony notes that without SB 22, Kansas businesses will pay more in Kansas taxes.  Passage of the bill would “ensure Kansas remains competitive internationally as well as competitive with other states” (Century Link testimony).  Other considerations raised were that taxing foreign source income raises serious legal and policy issues, likely to be challenged in court.  Most states do not tax this income.  If Kansas were to tax, it would place businesses at a competitive disadvantage with other states (Cargill testimony).

The committee has yet to take action on this bill and I hope you can appreciate how very complicated this issue is for Kansas and other states.  The Tax Committee is studying this situation from all angles.

House Education and K-12 Budget Committees

Education

We had several hearings in House Education this past week.

HB 2233 – Requires school district to provide a stipend of $500 for every classroom teacher in order to purchase consumable classroom supplies (those supplies that can only be used for one year).  No additional funding would be provided for this expenditure.  In some of our larger districts this would result in an unfunded mandate of several million dollars.

HB 2183 – Requires a new class…Computer Science… to be added to the requirements for graduation and allowed as a science or math credit.  This was initiated by Cerner Corporation.

HB 2288 - Creates the Kansas student and educator freedom of religious speech act.  There was a detailed article written about this bill in the Capital Journal.

HB 2330 – One of many bills dealing with bullying.  This one sets specific policies and procedures to prohibit bullying and lists specific procedures to be taken to investigate bullying. This is similar to a bill we heard last session.

We also voted on 2 bills.

 HB 2166 — Requiring personal financial literacy courses for high school graduation. This bill, although amended to provide an option for students to substitute a financial literacy course for a math course, did not make it out of committee.  Curriculum and graduation requirements are determined by the State Board of Education.

HB 2144 — Budget and taxing authority of community colleges; articulation of credits; and student residency requirements. This bill was amended to only deal with transparency issues that would ask the Trustees of the Community Colleges to post information on their web-site.  It was passed out of committee.

K-12 Budget Committee

We have had one hearing this past week on:

HB2257 — Requirements for school district bullying policies; investigation of complaints
Information Presentation:
  • School Budgeting - Mike O'Neal, Kansas Policy Institute
  • Review of School District Budget Process - Dale Dennis, KSDE
  • State Performance Data- Mark Tallman, Kansas Assn of School Boards

Visitors in the Office

I had two Nursing graduate students visit about public policy issues.  Kathy Baird and Dina Cox.  It was wonderful talking to them about how the legislature works and about their policy concerns.


 

Bills Introduced

During the week of February 18th – February 22nd, there were a total of 20 House Bills introduced as of Friday February 22nd.  Additionally, one House Concurrent Resolution was introduced.

Click here to view all introduced legislation in the House:
http://kslegislature.org/li/b2019_20/measures/bills/house/

Reminder of Dates

Monday, February 25th  Last day for non-exempt committees to meet.
Thursday, February 28th Turnaround – Last day to consider non-exempt bills in house of origin.
Thursday,
March 27th
Last day to consider non-exempt bills not in originating chamber.
Friday,
April 5th
Drop Dead Day.  No bills considered after this date except bills vetoed by the Governor or Omnibus Appropriations bills.
Wednesday,
May 1st
Veto Session begins.
Friday,
May 17th
Day 90.

Contact Me

If you have any questions about the activities in my committees or want to share your views on any of the issues before the legislature, please feel free to email me or call my office.
 

Representative Brenda S. Dietrich
Room 165-W State Capitol Building
300 SW 10th St.
Topeka, KS     6612
785-296-7648

Contact Brenda

Room 165-W
300 SW 10th Street
Topeka, Kansas 66610
Phone: 785 296-7648
Email Brenda


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