July 27th, 2018 Newsletter
This regular newsletter keeps you in touch with news and developments in the Kansas legislature. In this and all newsletters, I shall be reporting decisions and discussions taking place in the legislature that impact my constituents, and all Kansans. As your Kansas Senator, I encourage you to reach out to me and share your concerns and questions. You can reach me at Jim.Denning@Senate.KS.Gov or call my office at 785-296-2497.
In This Issue
  • Johnson County Participating in Robust National Economy *
  • Unemployment Rates *
  • Housing Market is Brisk *
  • DMV - Driver's License Offices
  • Individual and LLC Income Tax Analysis for Fiscal Year 2018
  • Other News
* Source for Data: CERI
Johnson County Participating in Robust National Economy
Pickup Started in April 2017

Like a light switch coming on, Johnson County and Kansas started reporting increased economic growth in April of 2017. Beginning in January 2018 Johnson County economy shifted into high gear.
 
As seen in the chart below, Johnson County 2018 sales tax growth is averaging 9.2% over 2017, and is outpacing the state of Kansas overall growth of 2.9%.



Johnson County retail sales averages $1.2 billion per month. This represents about 27% of all retail sales in Kansas.
Unemployment Rates
Approaching Full Employment Levels

Johnson County like the rest of Kansas and the United States is experiencing low unemployment rates. Many workers who left the job search market are now returning and starting to find employment. The chart below shows the improvement in employment in 2018 compared to same time last year.



There are currently 324,000 residents employed in Johnson County. An all-time high and growing at 1.3% annual rate. Employers are starting to feel the effects of wage pressure from the tight job market. Good for employees however inflation will need to be monitored by the Federal Reserve. Inflation is expected to increase to 2.6% in 2018, up from 2.1% in 2017.
Housing Market is Brisk
Both New and Re-sales

Over 900 homes are sold monthly in Johnson County. Well over 1,000 when for sale by owner are counted. New homes sold are averaging about 120 per month. New homes sales are up 15%.
 
The average price of houses sold is also rising. The graph below shows escalating home prices over the last couple of years.                  


The average selling price of a home in 2018 is $328,000, up from $292,000 in 2017.
DMV - Driver's License Offices
Long Line and Customers being Turned Away

The Olathe and Mission Driver's License Offices (DMV) are overwhelmed with demand from Johnson County citizens. Mid-June the Johnson County legislative delegation starting hearing complaints from our constituents of long lines, online text scheduling technology not working, and customers being turned away. After quick due diligence there was immediate realization that the entire process was overwhelmed by customer demand for service. Summers already being the busiest times of the year, the Kansas Department of Revenue (KDOR) did not adequately plan for the demand Johnson County residents require. Johnson County residents are now approaching 30% of all transactions in Kansas.

Customers renewing and/or applying for new licenses are now going ahead and getting their Real ID license, a federal change that becomes effective October 1st, 2020. ( https://ksrevenue.org/dovrealid.html ). This Real ID process added 100% to the staff's workload and was a perfect storm for an operational nightmare overwhelming Johnson County DMV staff.

The delegation started working with KDOR to bring some relief to the DMV offices. The demand is still so high that the incremental improvements are just beginning to help. Short-term goals requested by the delegation have already been accomplished including:
  • Both Mission and Olathe offices will have Monday hours for the remaining summer starting Monday July 23rd. 580 customers were processed on the first Monday the offices were open.
  • KDOR have hired 4 new permanent processing staffers
  • The texting queuing program is being modified to integrate better
  • KDOR is bringing in experienced staff from Topeka and other counties to help with the demand.
While these short-term improvements have been helpful there is still a need for some long-term solutions. The delegation has requested the following:
  • Johnson County will have a permanent 3rd office in 2019. - (This has been agreed to)
  • Johnson County offices will have Monday hours next summer and/or extended hours until 7pm with adequate staffing to process transactions to closing time. - (Monday summer hours have been agreed to. The extended evening hours are still under consideration)
  • Hire and train additional staff to accommodate the demand during the summer time frame. - (This has been agreed to)
  • Implement proven technology to allow customers to process as many transactions as possible remotely. - (This has been agreed to)
We have asked KDOR to provide analytics to measure the progress of transactions being completed on a weekly basis, allowing us to be updated and to identify if we are making progress, treading water, or sinking further. We know Johnson County citizens deserve better.

The DMV staffers are going as fast as they can. KDOR is looking for additional employees to supplement the current staffing levels and to get prepared for next year with the 3rd office coming on line. If you know of anyone who wants to apply please contact Deann Williams at KDOR, Deann.Williams@KS.Gov.
Individual and LLC Income Tax Analysis for Fiscal Year 2018
$400 Million More Collected over Original Projections

The State just closed out its Fiscal Year for 2018, (FY-18). FY-18 ended on June 30, 2018. Original tax estimators projected that Kansas would bring in $600 million more in Individual and LLC-Pass through corporation taxes.  


Denning Assumptions

As can be seen in the chart above, Kansas collected $1.071 billion in Individual and LLC-Pass through corporation taxes.   $471 million more than the original projections. The breakdown appears to be as follows; $84 million more in individual, $235 million more in LLC non-wage income, and $152 million in capital gains. The LLC non-wage income is the biggest outlier, being under projected by 100%. The legislature has made major tax and budget decisions working under the assumption the LLC non-wage income was in the $230 million range when it appears to be in the $465 million range. Capital gains are the direct result of a 25% return in the stock market in 2017. Those capital gain taxes were paid in 2018. It is doubtful the capital gains will repeat in the future. However, a large portion of the LLC Non-Wage income should, less any over payment of quarterly estimates.
 
It will not really be known until June of 2019 what collections will be for FY-19. The estimators will have difficult task in November of 2018 and April of 2019 when they produce official forecasts for the legislators to use in budgeting.
Other News

Ethan Patterson has joined my office as Chief of Staff. Patterson worked in U.S. Congressman Kevin Yoder's District Office since 2011 focusing on DHS initiatives and community outreach. His knowledge of the Kansas political process and statehouse will be an asset for the Majority Leader's office and the Kansas Senate. Ethan, welcome aboard.
Capitol Office
300 S. W. 10th Street, Room 330-E
Topeka, KS 66612
785.296.2497
jim.denning@senate.ks.gov
Overland Park
8416 W. 115th Street
Overland Park, KS 66210
913.345.9416


Paid for by Jim Denning for Kansas Senate - Kathy Vance, Treasurer
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