The 2007 Kansas Legislative session reached first adjournment at about 3:00 a.m. Wednesday morning after a flurry of activity debating and passing conference committee reports. The House and Senate will be in recess until April 25th when we’ll return for the traditional wrap up session.
Key measures passing the legislature and sent to the governor included a tax relief package that the House & Senate negotiated in the closing days of the session. Here the House clearly prevailed in pushing for more tax relief than the Senate had wanted to offer. The total package of cuts saves Kansas taxpayers nearly $32M the first year. The largest tax cut eliminates the state franchise tax over time. The threshold for application of the tax would increase to $1M this year and then the rate is cut 25% per year until eliminated. Kansas businesses would enjoy $7M in tax relief the first year, rising to $48M in the 5th year when the tax is eliminated. Total savings to businesses over 5 years is estimated to be $135M.
For Social Security recipients the legislature passed a measure exempting the first $50,000 of social security income from state income taxation. Next year the exemption would cover the first $75,000 of income. The five year total for SS tax relief is estimated to be nearly $57M. An increase in the Earned Income Tax Credit for poor Kansans also passed. The break is worth about $7.5M this year and it boosts to 17% the percentage of federal earned income tax credit the state matches. Five-year tax savings are estimated at $45.8M. There is also an increase in the Homestead Property Tax Relief credit in the tax relief package. The maximum credit increases to $700. The tax relief package, coupled with the earlier passage of major breaks in the unemployment security tax totaling nearly $82M means huge savings for individual taxpayers and Kansas businesses this year and for years to come.
The legislature has also sent to the governor increases in the state pay plan. The state’s nearly 22,000 civil service workers will receive 2% salary increases and money will be set aside for average 2% raises for 20,400 workers outside the civil service. In addition, civil service workers will receive a one-time $860 bonus in December. About 1,500 civil service workers whose salaries are 25% or more below market rates would receive additional 5% salary increases. Longevity bonuses paid to employees who have worked for the state 10 or more years would increase from $40-$50 per year. The total cost of the new pay plan is estimated at $86.5 next fiscal year.
Prior to first adjournment the legislature was successful in passing the state budget for fiscal years 2007 and 2008. Republicans were successful in limiting spending increases to about 5.1%, significantly less than the Governor’s spending proposal. School districts were given additional local option budget authority in the bill and the presidential preference primary was scuttled. Still ahead, however, is work on the Omnibus Appropriations bill, the final budget bill of the session. We’ll take the final budget piece up when we return to Topeka April 25th. The State’s Consensus Revenue Estimating Committee meets during the break to release the final revenue estimates before final adjournment and that announcement will affect the legislature’s final spending decisions. Left to be determined is the final tally of funding that the state will make available to our community colleges and universities for deferred maintenance needs on their buildings.
A potentially dramatic additional gambling vote may come during the warp up session. The Governor wants to run a trailer bill to make revisions to the gambling proposal that narrowly passed and to add the provisions she promised to get the 2 Senate votes needed for passage. Now that the Governor got her 2 votes, there is talk that she may abandon the bill in a classic “bait & switch” maneuver. My next report will be in 3 weeks.