Kansas 2015 Legislative Wrap-Up
June 12, 2015 marked the last day of the Kansas legislative session. It lasted a record-breaking 113 days, the last few weeks of which were spent attempting to balance the state budget, containing an $800 million deficit. After eliminating or transferring nearly $400 million in state spending by various government agencies, the legislature still faced a budget shortfall of another $400 million. In response, legislators created a broad tax package composed of two bills, HB 2109 and SB 270, of which the main provisions are outlined below. However, Governor Brownback must cut another $50 million this fall before the budget is completely balanced
FY 2016 Budget Provisions (Estimated $384 million value)
- Sales tax increased from 6.1% to 6.5% (Note: Certain construction contracts exempted)
- Cigarette tax increased by 50 cents per pack
- Tax of guaranteed payments for LLCs/Partnerships
- Elimination of most itemized deductions
- Mortgage interest and property tax deductions reduced to 50%
- Future income tax cuts frozen
- Tax amnesty program
- Local property tax lid
- Low-income tax exclusion
Kansas also enacted legislation designed to punish bad faith patent assertions this session, commonly referred to as “patent trolling.” Patent trolls do not manufacture anything, but instead focus on suing companies for alleged patent infringement, causing those companies to spend millions of dollars on legal fees. Senate Bill 38 makes Kansas the 26th state since 2013 to make patent trolling an “unconscionable act” subject to strict penalties.
Senate Bill 154 marked the final major change in the Unemployment Insurance program in Kansas to a more “experience-based” system. The bill institutes a maximum weekly benefit cap of either $474, or 55 percent of the average weekly wages paid to employees in insured work during the previous calendar year, whichever is greater. The bill also more closely aligns company UI rates to personal usage of the trust fund. Generally speaking it will benefit those companies who have a positive balance (those who have paid more in unemployment taxes than their employees have utilized in benefits) and will have a negative impact on those with negative experience ratings (those with frequent or large layoffs of employees).
Under Senate Bill 21, commercial vehicles that operate solely in Kansas and weigh between 10,001-26,000 pounds will be exempt from the safety and economic regulations through KCC with a few exceptions. Those vehicles must still comply with 1) Load securement; 2) annual vehicle inspection; and 3) coupling device requirements. More information can be found here.