Old, New, Borrowed and Blue: A Recap of the 2019 Legislative Session
An Ignite Blog By: Marlee Carpenter, J.D., Owner, Bright & Carpenter Consulting, Inc.
KSCPA Governmental Affairs Consultant
Published June 14, 2019
As flowers emerge to show us their beauty, warm breezes fill the air, and birds delight us with their charming melodies, there’s no mistaking it; it’s finally summer!
The signs of summer are hard to miss and it goes without saying that one of the most exciting times of year for young couples is summer, aka wedding season! It’s a time of celebration, grandeur, and new beginnings for those ready to start their journey through life together.
As invites fill mailboxes and ‘Wedding this Way!’ signs appear around town to point family and friends in the right direction, I’m reminded of the preparation, anticipation, and frenzy associated with big days such as these. Different, but not entirely unlike the pomp and circumstance, planning, and preparation we experience during each legislative session.
The First Legislative Session for a Democrat (Blue) Governor
The 2019 Legislative Session proved to be one of controversy and compromise. Governor Laura Kelly, a Democrat, in her first year as governor sought to work with a conservative Republican House and Senate. Her priorities for her first term included funding state government agencies, expanding Medicaid, satisfying the Kansas Supreme Court on education finance and ensuring any tax plan would not erode the state’s budget.
Something Old, A Closer Look at the 2019 Session
The conservative House and Senate’s priorities contrasted with Governor Kelly’s and included passage of a tax bill that would allow the Federal Tax Reforms to flow down to Kansas citizens and corporations. In addition, House and Senate Leadership pledged to stop Medicaid expansion. Ultimately, a more robust budget passed as well as additional education funding, leaving Medicaid expansion and tax reforms on the table for next year.
Governor Kelly’s proposed budget went largely unchanged as it made its way through the legislative process. The House and Senate added money back in for KPERS payments and higher education, but increases were seen in key areas such as corrections and foster care. The education finance bill that passed included amounts similar to what the Governor has proposed. The $80 million per year for three years measure has gone before the Kansas Supreme Court for oral argument and will be decided sometime late summer or early fall.
Medicaid expansion passed the House but did not receive a vote in the Senate. On a procedural motion, the House was able to take the contents out of a bill and inserted Medicaid expansion into it. Despite many protests and acts of defiance by advocates, the Senate held off votes this session but agreed to take the bill up early in the 2020 Legislative Session. This compromise allowed for passage of the budget and brought an end to the 2019 Session.
Senate President Susan Wagle’s top priority in 2019, was passage of a tax bill that would decouple tax statutes from federal tax law and allow tax cuts to flow to Kansas. Without a bill, the State of Kansas will receive an additional $136 million per year in unanticipated tax revenue. Senate President Wagle appointed a new tax committee to look at federal tax issues. Two tax bills were passed by the House and Senate and both bills were ultimately vetoed by the Governor. The tax bills included repatriation and GILTI provisions as well as decoupling from the standard deductions. Under these bills, a taxpayer would be able to claim an itemized deduction at the state level even if they claimed a standard deduction at the federal level. The bills also included sales tax provisions that broadened the definition of nexus and reduced the sales tax on food. The vetoes were sustained when the House and Senate could not gain the 2/3 majority vote to override the veto. This issue will be back during the 2020 Legislative Session.
What tax issues did pass? Not many. HB 2140 gained approval and provides for a sales tax exemption for the sale of coins and bullion. The bill also provides local sales tax authority for several Kansas counties. In addition, HB 2223 authorizes LPA to conduct a review, analysis, and evaluation of each “economic development incentive program,” every three years. The bill also requires the Kansas Department of Commerce to establish a database to disclose information on many state and local economic development incentive programs.
Something New, Tossing the Bouquet to 2020
What tax issues will be considered next year? Sales tax exemptions will be at the top of the list. This session a measure passed the Senate that required the elimination of a sales tax exemption each time a new sales tax exemption is enacted. This provision was discussed up until the adjournment resolution was passed. There were alternative proposals that would require a 5-year sunset for each new sales tax exemption. In the end, nothing in regarding sales tax exemptions passed. We anticipate a Blue-Ribbon Panel to be appointed by the Governor this summer to examine all sales tax exemption, tax exemptions and tax credits. Findings from this panel will be forwarded to the 2020 Legislature. Finally, the Taxpayer Protection Act will be considered again next year. This act was proposed by HR Block and would require all tax preparers to insert a PTIN number on Kansas tax forms. Current law allows for an exemption for CPAs and the bill includes an exemption for their employees.
Next session, we anticipate action on Medicaid expansion and enactment of a new transportation program. We hope that the education lawsuit will be settled, but the courts retain jurisdiction over the case to monitor the appropriation of money. On the tax front, that the House and Senate will work again to decouple from the federal tax law, expand the sales tax nexus provisions and sales tax discussions—from the reduction of sales tax on food to the broader discussion of sales tax exemptions.
Following the 2020 Legislative Session, all 165 House and Senate members will stand for election. Some House members will run for the Senate and some Senators will run for Congress and US Senate. Election years bring out the best and sometimes the worst in policy and politics. The KSCPA’s will be there to monitor and report on aspects of the Kansas Legislature and elections.
Borrowing Your Time for an Important Cause: Advocacy Vows that Stand the Test of Time
KSCPA has the privilege of having some very active professionals engaged in our legislative efforts, both at the state and national level. In May, three advocates for the profession went the extra mile (to Washington, D.C.) to participate in grassroots efforts on behalf of the society. Read more in the full press release.
Here’s what they had to say about their political involvement, it’s importance, and what it means to them to be involved:
Jay Langley, CPA, CGMA (Summers, Spencer & Company, P.A.).
“I feel very fortunate to have been part of the KSCPA team that visited our U.S. Legislators in May. We visited every one of Kansas Legislators or a member of their staff. It amazed me how they listened to our concerns and or recommendations. It reminded me that the profession of being a Certified Public Accountant is one that has earned respect around the world. In my work with Kansas and National Legislators I have always felt that they valued and appreciated our opinions and knowledge. We all can have an impact on our government if we get involved on a local, state or national level.”
Amber Goering, CPA, CGMA (Goering and Granatino, P.A.)
“Staying engaged in our profession is vital to its’ success and through the KSCPA we have many opportunities to do so. However, the most valuable and impactful opportunity is serving as an advocate for our profession. I recently had the opportunity to represent the KSCPAs in DC. It is always a privilege to meet other professionals from all over the country and learn about the issues they are confronting. It also is incredibly important for us to share our expertise with lawmakers. If you have never engaged as an advocate for our profession I urge you to seek out an opportunity. You will benefit greatly from the experience, but so will our CPA profession.”
Joe Ronnebaum, CPA (PricewaterhouseCoopers, LLP)
“I was honored to serve the KSCPA at the recent AICPA conference and Capitol Hill visits. I was inspired by the strategic discussion of the accounting profession and the tremendous opportunities available to CPAs. Additionally, meeting with our Kansas senators and representatives to discuss issues impacting CPAs and our clients was incredibly valuable to our brand as a trusted business advisor.”
Pictured above (left to right) in at the AICPA Council Meeting in Washington, D.C.: Joe Ronnebaum, CPA (PricewaterhouseCoopers, LLP), Amber Goering, CPA, CGMA (Goering and Granatino, P.A.), and Jay Langley, CPA, CGMA (Summers, Spencer & Company, P.A.).
Pictured above (left to right) in Washington, D.C.: Jay Langley, CPA, CGMA (Summers, Spencer & Company, P.A.), Congressman Dr. Roger Marshall, Joe Ronnebaum, CPA (PricewaterhouseCoopers, LLP), and Amber Goering, CPA, CGMA (Goering and Granatino, P.A.)
Join the Wedding (Advocacy) Party, Well Wishes for the Longevity and Prosperity of the Accounting Profession
It’s a culmination of effort and we can’t do it without you! Here’s how to get involved:
Stay Knowledge-Empowered. Tune into KSCPA’s weekly legislative updates and podcasts during the 2020 Legislative Session. Just five minutes each week will keep you in-the-know!
Grassroots Efforts. Get to know your legislators on a first-name basis. Make an appointment to meet with them to position yourself as a trusted resource should they encounter any questions. Learn more about your representatives here: https://openstates.org/
Join the KSCPA Advocate Task Force. Make a difference by offering your expertise to protect and advance the accounting profession in Kansas by joining KSCPA’s task force of CPA advisors that legislators often call upon for practical implications of policies. The time commitment is minimal, yet the rewards of contributing and the resulting impact create a sweeping ripple effect. Learn more by emailing firstname.lastname@example.org.
The Ignite blog is an official publication of the Kansas Society of CPAs. Copyright 2019.