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.

At the start of the 2007 legislative session, Gov. Sebelius indicated that among her highest priorities were increased benefits to retired state employees, funding for all-day kindergarten, health care funding for children from birth to age 5 and increased funding for mental health services. Last week we learned, however, that instead of these priorities the Governor’s true top priority was to bring expanded gambling to the state. The gaming plan she crafted behind closed doors with out-of-state gaming interests and pro-gambling lawmakers, calls for the state’s portion of gambling revenues to go to state building maintenance, debt reduction and local ad valorem tax relief. Make no mistake, these are worthy places to spend money and perhaps better choices, but last week’s vote on gambling demonstrated that the Governor was more than willing to throw education, children, and state employees, including teachers, overboard in order to muster votes for her gambling initiative.
In lengthy floor debate, Republicans, who believe that expanded gambling in the state is bad public policy, offered a number of amendments aimed at making the bill more palatable. The Governor and pro-gambling legislators held off amendments aimed at targeting some of the revenues to teachers’ salaries, all-day kindergarten funding, additional benefits to retired state employees and funding for health coverage for children birth to age 5. I was the presiding member during the floor debate in the House and so was in a position to see the faces of every legislator during debate and votes on the various amendments. I could see the angst on the faces of many who wanted to vote on some of the amendments but couldn’t because they had either agreed with the secret coalition or had been ordered by Democrat leadership or the Governor to fend off all amendments. Local Democrat Representative Mark Treaster was quoted as saying his side had been told not to mess with the bill so he didn’t.
As a result, we are left with a flawed bill, one that supporters now admit needs to be fixed with what is called a trailer bill, legislation run after the main bill passes to clean up conflicts or technical problems. We are now told the trailer bill is also necessary to carry out deals made with two Senators who switched their “no” votes to “yes” in exchange for certain provisions or concessions. Our own Sen. Terry Bruce was one of the Senators who switched. He had assured me he was not in favor of the bill as it left the House and I’ll be interested to see what agreement was reached to cause him to change his mind. Without his change of vote, the measure would have failed and the bill would have gone to a conference committee where we would have had an opportunity to make the bill digestible and maybe even constitutional.
Controversy over gambling will likely extend the legislative session. We are scheduled to reach first adjournment Tuesday, but I can’t see us getting done by then. Negotiations over the budget and the various tax bills have stalled in the wake of the gambling vote and conference committees to iron out differences in House and Senate bills on a variety of issues were delayed when the Senate President failed to take final action on Senate bills and appoint conference committees before he started the gambling debate.