After a three week break following first adjournment, the Kansas Legislature returns Wednesday for the traditional wrap-up session. The Legislature should finish its work for the 2008 session by the weekend at the earliest, and more likely the first part of next week.
The major remaining pieces of the legislative puzzle include the final budget bill for the fiscal year, consideration of either a veto override on the energy bill or a new compromise, and passage of final conference committee reports on issues held over from the regular session. Immigration legislation may also be considered during the wrap-up session.
The major budget work of the year always follows the last consensus revenue estimates preceding final adjournment. Those estimates were released April 16 and, unfortunately, the Committee decreased the overall estimates for both fiscal years 2008 and 2009 by a combined $129M relative to the previous estimate last November. The group consists of members of the Legislative Research Department, Division of the Budget, Department of Revenue, and three consulting economists from our state universities.
The decision to reduce fiscal year 2009 estimates relates primarily to the presumed effects on state revenues from the recently passed federal “stimulus” package. Because state tax rates are tied to the federal rates, the new federal depreciation and expensing provisions will automatically flow through and also affect state income tax rates. State revenue estimators have concluded that there will be a negative impact on state receipts that is in excess of any positive impact on sales or other state excise tax receipts occasioned by the federal stimulus package, which will put millions of dollars of rebates into the hands of Kansas taxpayers. The revenue estimators fear that, based on poll data, only about 19% of taxpayers will make new purchases with their rebate money. Approximately 45% claim they will pay existing bills and 32% claim they will put theirs into savings. The legislature relies on the estimating group’s projections, so, accordingly, the final budget bill for the session will reflect the projected lower revenues. House & Senate leadership have agreed to hold state spending increases this year to 5% or less, after back-to-back years of increases over 9%.
With regard to the status of the Sunflower Electric energy bill, the Governor vetoed a second attempt at a regulatory compromise and the House is within one vote of having enough support for a veto override that may well come up this week. In the meantime, a third compromise has been floated out that would reduce from 700-megawatts to 600 mega-watts the size of each of the two new proposed plants near Holcomb. The new proposal would also accelerate renewable energy development, add more load management/energy efficiency programs and would add carbon dioxide measurement and verification features. This is the best offer the Governor is going to get and a refusal to deal may well bring onboard sufficient votes for a veto override, if the votes aren’t already there. Recall that there has been broad bi-partisan support for the prior energy compromise. The bill is seen as critical for Kansas and particularly western Kansas which would benefit greatly from the resulting economic development in the area.