Pub. 6 2017 Issue 1

January 2017 9 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s Balancing State Revenues and Expenditures Looms Large The dramatic reduction in state revenues, forecasted by the state’s Consensus Revenue Estimating Group (CREG) back on December 1st, makes balancing the current and upcoming year state budgets the most significant challenge facing state lawmakers in 2017. A lagging U.S. economy combined with ongoing economic headwinds for the agriculture and oil/ gas sectors in Kansas triggered a $345.9 million reduction in projected state revenues for the current (FY-2017) fiscal year and an even more daunting $443.7 million drop in projected state revenues for FY-2018. This unwelcomed scenario will essentially force the newly elected mix of state lawmakers to consider spending cuts to address short-term state budget issues. While it appears the current makeup of the State Legislature will be more willing to consider revenue enhancements (tax increases) to address ongoing revenue shortfalls, any effort to raise taxes won’t generate funds in time to address the FY-2017 budget issues. Governor Brownback’s state of the state address scheduled for January 10th will also shed light on the Governor’s preferences for balancing the state budget. Never a fan of raising taxes, there appears to be a recognition by the Governor’s office – that both spending cuts and revenue adjustments will be part of long-term budget deliberations considered in 2017. However, don’t be surprised if the Governor dusts off his seldom used “veto pen” if state lawmakers push too far on the reinstatement of small business and individual income tax cuts adopted in 2012 and 2014. Banking Issues and a New State Bank Commissioner KBA will be extremely vigilant in the coming months to ensure deliberations surrounding the state budget don’t negatively impact tax-paying Kansas banks. While the privilege tax has not been mentioned as a possible source for additional revenues, several lawmakers have indicated that all funding sources should be considered to spread the burden of possible tax increases. Miki Bowman, State Bank Commissioner Appointee One of the early priorities of the Senate Financial Institutions and Insurance Committee will be holding confirmation hearings for Governor Brownback’s nomination of Miki Bowman to serve as next Kansas State Bank Commissioner. Bowman is currently a Vice President with Farmers and Drovers Bank in Council Grove, Kansas. She is a bank director, compliance, and trust officer for the bank. Following the committee’s review and approval, the final step in the process is a confirmation vote by the entire 40-member Kansas Senate. If confirmed, Bowman will become the first woman in Kansas history to serve as the Governor- appointed State Bank Commissioner. KBA will be sponsoring legislation to address two important issues that will directly benefit the banking industry. With support from KBA’s Trust Division, KBA will press for adoption of the Uniform Digital Assets Act, which authorizes fiduciaries to manage digital property including computer files, web domains, and virtual currency. KBA will also spearhead legislation, reaffirming the ability of Kansas lenders that take possession of alcoholic liquors pledged as collateral for a loan, to sell the collateral (alcohol) to a distributor or licensee approved by the Department of Alcohol and Beverage Control (ABC). Recent interpretations from the ABC have limited banks options for selling alcoholic liquors (repossessed as collateral) to a sheriff’s sale. Stay tuned for the latest developments on these and other KBA-monitored issues in KBA’s weekly Legislative Bulletin. Small business owner Ron Ryckman, Jr. has been selected by his Republican peers to take the helm as Speaker of the House of Representatives. Ryckman is a native of western Kansas (Meade), but has spent the past 25 years in Johnson County, where he currently serves as the CEO of ZeroPitch Roofing. The balance of the new House Republican leadership team includes House Majority Leader Don Hineman (R-Dighton) and House Speaker Pro Tem Scott Schwab (R-Olathe). Hineman owns and operates a farming and cow-calf enterprise near Dighton and is a past Board President of the Kansas Livestock Association. Schwab works in the Healthcare Sales arena and most recently served as Chairman of the House Financial Institutions and Insurance Committee. Probably the biggest surprise of the leadership makeover in the Kansas Legislature, was Rep. Jim Ward (D-Wichita) upsetting current House Minority Leader Tom Burroughs (D-Kansas City) on a razor-thin vote of 21 for Ward and 19 for Burroughs among House Democrats. Ward, a practicing attorney, was first elected to the Kansas House in 2003. Ryckman Hineman Schwab Ward