Gov.’s Council on Tax Reform discusses legislation, federal recovery funds

TOPEKA, Kan. (WIBW) – Governor Kelly’s Council on Tax Reform has discussed current legislation and federal recovery funds and how they relate to Gov. Kelly’s proposed budget plan for the 2022 fiscal year.

Governor Laura Kelly says on March 5, her Council on Tax Reform discussed fiscal implications of tax legislation that is being debated in the Statehouse and recommended caution regarding federal COVID-19 recovery funds and how they are spent.

“As we continue to recover from the pandemic, the last thing Kansas needs is another fiscally irresponsible tax experiment,” said Governor Laura Kelly. “My administration continues to prioritize pragmatic, strategic solutions to reinvest in our state’s foundation and strengthen our economy statewide.”

According to Gov. Kelly, a Division of Budget presentation showed that her proposed Fiscal Year 2022 Budget featured a positive ending balance of $600 million. She said requested legislative research showed what the current position of the Senate would do to that ending balance. She said the profile includes the significant negative impact of SB 22 as it passed the Senate on Feb. 9. She said it also includes no enactment of her recommendations of closing sales-tax loopholes or the reamortization of the Kansas Public Employee Retirement System. Even without the spending that has been added to the recommendation, Gov. Kelly said SB 22 and other policies would put the state in the red by over $100 million by 2022. She said that type of structurally unbalanced budget is similar to what lawmakers tacked during the 2012-2017 legislative sessions.

Gov. Kelly said the Council unanimously voted to urge her and the legislature to consider a more prudent long-term financial strategy than what has emerged from the Kansas Senate. She said a motion was adopted that notes stability and consistency in the budgetary process leaves policymakers with the opportunity to not have to consider a feast of unattractive choices that include budget cuts, back-filling tax hikes and additional options that rob from the future.

According to Gov. Kelly, the Council also adopted several recommendations made by the property tax subcommittee which includes encouraging local governments to use federal aid under the American Rescue Plan for capital improvements, infrastructure investments or for debt reduction; supporting the House Taxation Committee version of SB 13 on property tax transparency; amending SB 23 to give tax relief for storm-damaged properties through a refundable income tax credit and opposing SB 72 which makes it unnecessary changes to education requirements and qualifications for becoming a county appraiser.

Gov. Kelly said the Council also adopted a motion that regards the usage of one-time federal funds from the American Rescue Plan which come directly to the state. She said it suggested that the funds received not be built into agency budgets or give permanent ongoing tax cuts, except in relatively small amounts (around $46 million) that would be targeted for residential property tax relief by increasing the homestead exemption from $20,000 to $40,000. She said the current exemption of $20,000 was adopted in 1997.

The Kansas Governor said her proposal to use revenue from a controlled medical marijuana program to fund the state’s portion of Medicaid Expansion also was outlined at the meeting. She said at the direction of the Co-Chairs, the Council will get additional information at its next meeting about how Medicaid Expansion can prevent more rural facilities from closing and reduce long-term social costs. She said the Council also plans to get more information about the American Rescue Plan and potential long-term budget impacts of pandemic era funding and policies.

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