15 March 2024 | Health Early Learning Education Economic Security Tax and Budget

2024 Statehouse Snapshot: Week 10

Photo: Senator O'Shea presents an amendment to SB 539 establishing a state child tax credit for children age 0-4. (Taken from the Legislature's YouTube stream.)

Kansas Action for Children
March 15, 2024

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Senate Passes Both a State Child Tax Credit and a Flat Tax

The Senate waded through a slurry of tax bills for more than seven hours yesterday, with some of the lengthiest debate surrounding SB 539, a controversial tax package that includes yet another tired flat tax proposal.

The bill’s expedited timeline provided limited opportunity to evaluate its new components, which included a declining flat tax rate and significant increases to personal exemptions. Yet it is likely to still face a veto from the Governor due to the inclusion of a single income tax rate.

After Senate debate and five amendment attempts (three of which were approved), SB 539 now includes the following:

A flat tax. But this time, everyone will pay the current top rate of 5.7%. The rate is scheduled to go down by 0.05% every year until 2029, where it will stay at 5.45%.
Accelerating the elimination of the state sales tax on food to July 1, 2024. (This was removed by Senate Tax but added back on the Senate floor.)
A minor change to the standard deduction amount for single filers ($3,500 to $4,000).
Significant increases to personal exemption amounts.
Increasing the property tax exemption from $40,000 to $100,000. (Originally increased to $80,000, but amended by the Senate to $100,000.)
Changes to the privilege tax rates for equity to corporate rates.
Fully exempting income tax on Social Security (originally eased the cliff, but amended by Senate Tax to fully exempt).
A refundable state child tax credit for children age 0-4 (added by the Senate).

It’s unfortunate the Senate keeps drifting back toward tax ideas that have been repeatedly rejected. But it was encouraging to hear a change in tone from some senators who seemed willing to walk away from a flat tax and toward a more reasonable compromise, like slightly decreasing the rates of our current three-bracket system (as was offered up as an amendment to the bill but failed).

We’re also encouraged by the Senate’s acceptance of a state child tax credit! While an earlier, more expansive amendment implementing a child tax credit failed on a different tax bill, the child tax credit added to SB 539 will give families much needed economic relief during their children’s most formative years.

This package is unlikely to be the bill’s final form, as it now moves over to the House, which will have its own ideas on tax relief for Kansans. Eventually, the two chambers will have to negotiate their differences and agree to a single bill. Based on the robust discussion from the Senate, we’re hopeful that the full Legislature will send the Governor a package that drops the baggage of a flat tax and focuses on the many good things giving tax relief to low- and middle-income families.

In other items of note from the Senate’s day of tax bill considerations, the chamber added two family-oriented amendments to Sub. for SB 60, a bill dealing with certain sales tax exemptions. The bill now also includes a back-to-school sales tax holiday and a sales tax exemption for menstrual products and diapers.

Medicaid Expansion Hearings Set for Wednesday

After a seven-year delay in the House and a four-year delay in the Senate, the Kansas Legislature will hold Medicaid expansion hearings this coming Wednesday.

A joint meeting of the Senate Committees on Ways and Means and Public Health and Welfare will hold an informational hearing on Medicaid expansion and the House Committee on Health and Human Services will hold an actual bill hearing on HB 2556.

We hope lawmakers will listen to and ultimately act on the powerful stories that will be shared by Kansans who will convey how Medicaid expansion would help them and their communities, particularly relating to the impact on kids and families.

In other health-related policy discussions, several bills are moving forward to address responses to emergency health situations, particularly in schools and at school-sponsored events. These include:

HB 2547, allowing school nurses to stock emergency supplies of epinephrine and albuterol);
HB 2579, authorizing emergency medical services to hand out over-the-counter medication;
HB 2487, giving immunity from prosecution for those responding to a drug overdose crisis; and
Sub. for HB 2494, putting in place cardiac emergency response plans in schools.

We’re glad to see positive health bills continue to move on and will monitor their progress as they would each save lives.

Child Care Regulations Back in Discussion

The House Committee on Commerce, Labor and Economic Development continued its work on child care this week, finishing its hearing on HB 2785 (Office of Early Childhood) and holding a hearing on House Sub. for SB 96 (changing child care regulations and ratios in law).

This bill was left over from last year, when putting regulatory content in law was a big topic during the 2023 session. But since last spring, the Kansas Department of Health and Environment has moved forward changes to child care regulations, and those are now waiting on the Attorney General’s Office for approval. We learned during the hearing that the Attorney General’s Office may approve those recommendations within the next few weeks.

The regulatory changes include slightly adjusting child-to-staff ratios and the qualifications and continuing education for child care professionals. Just as we did last year, we joined other early childhood advocates and stakeholders in opposition to the bill.

During the hearing, several committee members seemed interested in reducing rules and regulations, while others shared our concerns about potential safety risks to children. We’ll be looking to the Committee to consider the seriousness of cementing these types of child care standards in law, as doing so could prevent our early childhood system from flexibly responding to community needs, updated best practices, and federal requirements.

Wasting Tax Dollars on Duplicating Oversight over SNAP/TANF “Fraud” Investigations

Nearly a month ago, the Senate Committee on Public Health and Welfare heard SB 488, which would expand the scope of the Office of the Medicaid Inspector General (OMIG), housed within the Office of the Attorney General, to investigate food and cash assistance programs for possible fraud cases. Currently, OMIG only carries out such investigations within the Medicaid program. KAC and partners opposed the bill because the Department for Children and Families already carries out investigations and disciplinary actions related to fraud within the food and cash assistance programs, and we are concerned that this expansion of OMIG’s authority would waste state funds.

Unfortunately, the Committee worked the bill, but added three amendments surprisingly improving the bill. These included a cap on the number of full-time employees that can be added to OMIG; sunsetting the bill’s provisions in July 2028 (giving the Legislature the chance to review the policies’ outcomes); and reinstating some restrictions on OMIG’s access to health data, which the original bill removed. This move to protect data privacy was specific to those covered by the state employee health plan.

KAC still opposes the bill and holds the same concerns as before, but we are glad to be working with a less substantial expansion of the OMIG’s authority.

K-12 Funding Separated by House Committee as Senate Tackles $25.1 Billion Base Budget

This action-packed week in the Capitol was full of budget discussions. The K-12 Budget Committee worked the stand-alone school funding package (excluded from the base budget bill), while the full Senate passed its version of the state budget (which included school funding). Read on for more details.

K-12 Budget Committee Action on School Funding and Special Education

Early this week, the House Committee on K-12 Education Budget worked the education budget, now hosted in House Sub. for SB 387. As this Committee has been known to do in the past, they combined their budget bill with other policy provisions. The content of seven different bills is now included in the total package.

While the Committee increased special education funding beyond the Governor’s recommendation for FY 2025 from $74.9 million to $77.5 million, they did so by adding other contingencies like modifying the SPED excess costs formula. The increase in funding has limited utility, since they also removed the compounding increases through FY 2029 needed to get special education funding to the constitutionally required 92% funding level.

The Committee also removed the $30.0 million in the Governor’s budget for child care accelerator grants. The accelerator grants are an effort to curb the child care crisis by supporting early childhood providers that create additional high-quality child care slots in their communities through new building construction.

The Committee amended the bill with an attempt to curb gun violence in schools by requiring funds for school safety and security grants be used for a pilot program that enlists AI on school cameras to identify firearms before they enter school buildings.

Senate Passes Its Version of the Budget; House Expected to Act on Theirs Next Week

On Wednesday, the Senate held a six-hour debate over their version of the state’s total budget (amounting to $25.1 billion for FY 2025). The debate included unsuccessful attempts to redirect funding from what Kansas is planning to spend for the upcoming World Cup, retire debt early, and prevent the new legislative pay increase. The Senate’s budget bill did not include the Governor’s enhancement of an additional $74.9 million for special education funding to meet the statutorily defined minimum funding level of 92%.

There was an attempt on the Senate floor to add back $15.0 million of the funding removed by the Senate Committee on Education for child care accelerator grants. It was unsuccessful, with a vote of 13-23. We’ll will be watching to see if an opportunity arises to re-add this money during next week's House budget debate.

While the Senate’s budget bill does not contain funding to expand Medicaid, it does include modest efforts to improve the current Medicaid system, such as increasing physician provider rates and pediatric primary care services rates, adding basic adult dental benefits, and increasing funding for safety net clinics. The Senate version also increases the slots for I/DD and PD waivers by 250 each. This is a step forward, but nowhere close to the slots needed to reduce the lengthy waiting lists.

The House is set to debate and vote on its base budget bill this coming Tuesday so the two chambers can negotiate their budget differences the following week. The most notable difference, right now, is the Senate keeping school funding within the main budget bill while the House has extracted it out and will treat it as separate legislation.

What to Expect in Week 11

As the Legislature enters the last three weeks before a major legislative deadline (and April break), the Statehouse will be abuzz with quick turnarounds and lengthy floor action. We’re expecting the House’s budget debate, House Commerce working on a child care bill (that could tie some regulation changes in law to the Office of Early Childhood), and hearings on Medicaid expansion.

Next week is the last week that non-exempt* committees can meet this session, too. We’re planning on testifying on three bills:

On Tuesday in the Senate Committee on Ways and Means, we’ll submit neutral testimony on SB 542, which would provide $40 million in one-time state-matching funding for emergency shelters for people experiencing homelessness. We support increasing funding and policies that address homelessness and its root causes, but are concerned with a provision of the bill that requires recipient municipalities to enforce “camping and vagrancy ordinances.”
- The House Committee on Welfare Reform plans to work their version (HB 2723) of this policy on Tuesday. We will follow this bill closely in the hopes that its final version does not end up doing more harm than good.
On Tuesday in the Senate Committee on Education, we’ll submit proponent testimony on HB 2669, which would permanently establish a school mental health program that has changed and saved lives during its many years as a successful pilot project.
On Wednesday, we’ll submit proponent testimony to both committees finally holding hearings on Medicaid expansion.
- An informational briefing will be held by the Senate Committees on Ways and Means and Public Health and Welfare.
- The House Committee on Health and Human Services will hold a hearing on HB 2556.

*Exempt committees include budget, tax, and federal and state affairs; all others are non-exempt.