The Kansas Legislature adjourned the Veto Session on May 5th and will return on May 29th for Sine Die – the official last day of the 2019 Legislative Session.
Before adjourning, the Legislature took action on the remaining major pieces of legislation including an omnibus budget bill with a $17.2 billion budget for the current fiscal year and $18.4 billion for FY 2020. Furthermore, the Legislature passed HB 2033, which was a compromise tax package that included preservation of historic tax benefits for homeowner that KAR has strongly advocated for.
Both the budget and tax bill await action by Governor Kelly.
Protecting Itemized Deductions – HB 2033
Since the Tax Cuts and Jobs Act was passed in late 2017, KAR has advocated for 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, estimated to be $156.7 million over three years.
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.
Rather than attempting a Veto override, KAR worked with legislative leaders and other stakeholders on a compromise tax bill during the Veto Session. The product of the compromise was HB 2033. As it relates to the itemized deductions, the only concession was to not make the legislation retroactive for the 2018 tax year. Most of the reductions in the fiscal note were found on the business income tax and sales tax side of the bill. While SB 22 has a fiscal note to the state of $209 million, HB 2033 reduced the fiscal impact to $85.8 million.
Legislators passed this compromise measure on a vote of 27-13 in the Senate and 83-41 in the House. Both vote counts are the highest margin this Session on this tax legislation.
KAR is urging Governor Kelly to take favorable action on HB 2033. To learn more and take action urging Governor Kelly to enact HB 2033 visit www.protectthededuction.com.
Rural Housing Incentive Districts – HB 2223
This Session, KAR worked to advance legislation enhancing an existing tool used for rural housing development known as the Rural Housing Incentive District Act. This law 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 property tax increment financing of these projects is 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 Senate 37-0 before the April legislative recess. Before adjourning, the Kansas House took final action on HB 2223 with a vote of 123-0, sending the legislation to the Governor.
Broker Experience Requirements
This Session KAR supported legislation that increased the number of credit hours for pre- broker educational requirements in order to enhance the competency of the industry.
SB 60 requires 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 requires 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 and has the Kansas House 107-17. Governor Kelly signed the bill into law on April 10th, 2019 and the legislation will be effective July 1, 2019.
