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March 8, 2016 - In This Issue:
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| Johnson County Leading Kansas and the Nation
- In Economic and Population Growth
- Ranks 27th out of 343 largest counties in the U.S. on wage growth
- Ratings compiled by U.S. Bureau of Labor Statistics
New Home Sales
- 1,262 sold YTD through December 2015
- 14.3% increase over last year
Total Home Sales
- 10,933 sold YTD through October 2015
- 9.7% increase over last year
Retail Sales
- Exceeding $1 billion per month
- 20th consecutive month
Residents Employed
- 310,000 average in 2015
- .4% increase over last year
Unemployment Rate
- JoCo - 2.9%
- KCMO - 3.8%
- Kansas - 3.6%
- U.S. - 4.8%
Source: CERI
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HOUSE BILL 2444 TO GET A HEARING ON TUESDAY, MARCH 15
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This bill could close the pass through tax loop hole
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A day does not go by without a constituent demanding that we close the "Pass Through Tax Loophole". The loophole was created back in 2012 when we passed income tax reform. The intention of income tax reform was to lower Kansas' high personal income tax rates for everyone. The Kansas tax rate brackets were reduced 23% and 29%, respectively. A well-deserved reduction to Kansans on their Kansas Individual Income Tax.
The following table represents the new lower tax rates put in place effective 1-1-2013.
The loophole came about from a section in the tax bill which was thought to allow working capital in a business to pass through tax free so the money could be reinvested back into the business. The now famous tag line "Eliminating individual income tax on Non-Wage business income as reported by LLC's, S-Corps, and Sole Proprietorships on lines 12, 17, and 18 of the federal form 1040 individual income tax return" created the loophole language. These thirty one (31) words created the unintended pass through tax loop hole that allows 333,792 business owners, sole proprietors, S-Corps, and farmers to treat their personal income as "non-wage" income and pay zero personal income taxes. All other tax payers, approximately 1.8 million, pay an effective tax rate of about 2.93% on their personal incomes. 1.8 million Tax Filers pay reduced Kansas State Income Tax Rates on brackets of 2.7% and 4.6% consistent with the 2012 tax reduction legislation - and 333,792 tax filers are 100% tax exempt - they pay a ZERO income taxes on their personal Income. Everyone uses State services so everyone should pay state income taxes. The 333,792 loophole filers should not be singled out to pay zero state taxes.
The loophole grows bigger every year. In 2012 it was 191,000. By 2015 it had already grown to 333,792 and will get bigger each year if not repealed. Every time the number grows it means another tax filer is coming off the tax rolls and paying zero taxes. The loophole has caused at least a $250 million annual loss to the state Treasury and continues to make the budget unstable. We had the votes to close the loophole last year. However, the governor threatened to veto any attempt to close the loophole. With an additional amendment to HB 2444 we could repeal this section of the Kansas tax code (31 words) and close the loophole this year. Given the rapid deterioration of the budget it is believed we again have the votes to close the loophole and this time send the bill to the Governor.
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The committee will have a hearing on HB 2444 on Tuesday March 15 at 3:30 pm. The room number is 582-N. This is our only chance to close the loophole and stabilize the budget. Please consider coming to Topeka to testify. It is very powerful when regular citizens come to a committee to testify. It is a game changer. We normally only hear from the special interest groups lobbyists. If you want to testify in person let the Tax Committee Secretary know. If you want to at least submit written testimony in support of closing the loophole you need to let the Tax Committee Secretary know as well and send your letter to:
Tax Committee Secretary
Representative Marvin Kleeb, Chair
House Taxation Committee
300 SW 10th Ave., 185-N
Topeka, KS 66612
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SUPREME COURT RULING ON SCHOOL FINANCE
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This could mean the loss of millions of dollars to Johnson County Schools
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We are just finishing our first year of the two year block grant formula. We switched to a block grant approach to give us time to create a new K-12 school finance formula to account for the changing demographics, agriculture and urban property tax policies, non-classroom spending trends, and to modernize the funding formula in general. In February, the Supreme Court issued an unfavorable ruling to Johnson County Schools in regards to how equalization was being handled in the Block Grant Vs the old formula. The Court ruled that the old Supplemental State Aid approach, known as the 81.2% average value per pupil (AVPP) approach was more equitable than the Block Grants five (5) quintiles approach of calculating Supplemental State Aid. The majority of the equalization money from the approach the Supreme Court is forcing on the legislature will result in property tax recalculation and not much more money going into the classrooms. Clearly, the Supreme Court does not completely understand the mechanics of the old formula either.
The table below shows the effect the court ruling will have on Johnson County schools in my district.
The Block Grant was supported by the majority of the Johnson County Delegation. Here is how the vote broke down.
- 8 Senators voted YES
- 19 House Reps voted YES
- 6 House Reps voted NO
Johnson County schools stand to lose funds because the state is responding to the court order. Johnson County legislators make up the largest delegation in the state. We will do whatever we can to soften the blow. We have to stand together and vote as a block to protect our schools.
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Cities and Counties will be required to have a public vote before raising property taxes by more than the inflation rate
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Another piece of legislation to be worked on this session is requiring a public vote before cities and counties can increase property tax revenues by more than the inflation rate. Referring to the public vote requirement as the "property tax lid" is probably inaccurate. The public vote requirement does not put a hard cap or lid on property tax increases by cities or counties. Instead, the public vote requirement simply gives voters the right to vote on property tax increases that exceed inflation.
- Since 2005 Overland Park has increased property taxes an average of 6.4% each year.
- Since 2005 Johnson County has increased property taxes an average of 4.6% each year.
- Since 2005 inflation has increased on average 2.42%.
- Since 2005 your take-home pay has not kept up with the property tax increases passed on by Overland Park and Johnson County.
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Driver's license offices are now open on Saturday mornings
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The Driver's License offices in Olathe and Mission are now open to serve the public on Saturday mornings. The new hours of operation are 7am - 5pm Tuesday through Friday and 7:30am - 11:30am Saturday at these locations.
Johnson County has full-service offices in Mission and Olathe.
Mission Office
Office Location:
6507 Johnson Drive, Mission
Phone Number: 913-432-2266
Days and Hours of Operation: 7 a.m. to 4:45 pm, Tuesday through Friday, 7:30 a.m. to 11:15 a.m., Saturday (effective 2/6/16)
Written tests: 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
Drive tests: 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
CDL written tests: 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
Special information: Text Mission DL to 641-243-8006 to get in line through our QLess system.
The Mission office offers full driver's license and ID card services and administers written commercial driver's license tests.
Olathe Office
Office Location:13507 S Mur-Len Road #137
Phone Number: 913-829-2501
Days and Hours of Operation: 7 a.m. to4:45 pm, Tuesday through Friday, 7:30 a.m. to 11:15 a.m., Saturday (effective 2/6/16)
Written tests: 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
Drive tests (non-cdl): 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
CDL written tests: 7 a.m. to 4 p.m., Tuesday through Friday, 7:30 a.m. to 10:30 a.m., Saturday (effective 2/6/16)
CDL driver tests: available by appointment, Tuesday through Friday.
Special Information: CDL office. Text Olathe DL to 641-243-8006 to get in line through our QLess system.
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