The Kansas Legislature adjourned on April 5th for their spring recess and will return on May 1st for the Veto Session. Significant issues remain for the Legislature to address when they return, including a general budget and needed tax legislation responding to changes at the Federal level.
KAR has had a busy session, but has seen forward progress on priority issues for the 2019 Session.
Protecting Itemized Deductions
KAR is advocating to changes in the Kansas tax code which would allow Kansans to itemize regardless of whether they take the increased Federal standard deduction. Current Kansas law only allows taxpayers to take the state-level itemized deductions (mortgage interest, property taxes, charitable contributions and medical expenses) if they itemize on their Federal return.
Most Kansans who have historically taken these deductions will no longer be able to do so because they have taken the higher Federal standard deduction rather than itemizing. The result is a higher state income tax liability.
Middle class homeowners are likely most affected because they will lack the amount of Federal itemized deductions. If the Legislature does not decouple this requirement, the result over three years is a $170 million hidden income tax increase on these taxpayers.
Changes that would prevent this income tax increase were in Senate Bill 22. SB 22 was a large tax bill that included business income tax provisions, internet sales tax provisions, and a sales tax rate decrease on food. While SB 22 passed the Legislature, it was ultimately vetoed by Governor Kelly. The Legislature did not attempt a veto override before going on recess.
During the Veto Session, KAR will be pursuing another tax bill containing the needed changes. For more information go to www.protectthededuction.com.
Home Inspector Regulation
This year, KAR has been pursuing legislation that would reenact a statutory framework for regulating home inspectors. KAR supported Senate Bill 168, arguing that as the number of consumers taking advantage of home inspections in the home-buying process continues to increase, it is increasingly important that consumers receive home inspection services from a qualified professional who will adequately identify defects and problems.
The intent of SB 168 is not to enact overly burdensome regulations on the home inspection industry or unfairly restrict actions in the private marketplace. Instead, it is to create a minimum level of regulation that ensures consumers receive at least a basic level of service in the home inspection setting.
KAR provided testimony at a hearing before the Senate Commerce Committee. The Kansas Association of Real Estate Inspectors joined with KAR in supporting SB 168. However, there were other home inspectors and professional engineers that opposed the legislation.
While we had productive discussions with all of the stakeholders, we simply ran out of time during this session. SB 168 will be held over until next session. In the interim, KAR plans to work out areas of disagreement with the various stakeholders.
Rural Housing Incentive Districts
KAR is working to advance legislation enhancing an existing tool used for rural housing development known as the Rural Housing Incentive District Act. The Rural Housing Incentive District Act provides cities and counties with a tool to encourage developers to build housing in rural communities by assisting in the financing of infrastructure.
Currently the financing of these projects are limited to 15 years. By extending the time period for financing to 25 years, we believe more housing projects will be viable in rural communities and housing within the district will be more affordable.
This legislation passed the Kansas House in HB 2147 on a vote of 123-0 earlier in the Session and 37-0 in the Conference Committee Report on HB 2223 last week. The House will need to vote on the CCR on HB 2223 when they return from recess in May and we expect it to pass the Legislature.
Broker Experience Requirements
This Session KAR is supporting legislation that increases the number of credit hours for pre- broker educational requirements in order to enhance the competency of the industry.
SB 60 would require an applicant for broker’s license to complete a Kansas real estate fundamentals course of not less than 30 hours and a real estate management course of not less than 30 hours. Essentially, this increases the number of hours for a broker’s license from 24 to a minimum of 60.
Furthermore, SB 60 would require that a licensee be actively engaged in real estate during 2 out of the previous 3 years (instead of 2 out of 5). This change puts an emphasis on recent real estate experience.
SB 60 has passed the Kansas Senate 40-0 earlier in the Session and has passed the Kansas House last week on a vote of 107-17. The legislation is awaiting action by Governor Kelly.
Currently, KAR is actively tracking more than 100 bills introduced during the 2019 Session and has testified 25 times before committees of the Legislature. As stated in our 2019 Legislation Policy Statements, we are committed to the free enterprise system, the protection of private property rights and the promotion of a high quality of life for the citizens of the state of Kansas. We look forward to continuing our advocacy efforts during the Veto Session.
