Pub. 8 2019 Issue 3

May/June 2019 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 I n the early morning hours on Sunday, May 5th, the Kansas legislature adjourned on the 77th Legislative Day of the year — 13 days ahead of the 90-day scheduled session which is an uncommon occurrence compared to recent sessions. The verdict is still out on who won and lost, but one thing is for sure, the KBA’s work has already begun for 2020. The legislative session started off exactly how everyone thought it would — legislators focused on addressing the Supreme Court’s order to adequately fund schools and the Federal Tax Cuts and Jobs Act of 2017’s impact on Kansas taxpayers. The first was accomplished by approving legislation that puts roughly $90 million more a year into schools each year from 2020 to 2023. This is in addition to the $522 million increase over the next 5 years that the legislature had previously approved. Governor Kelly thanked the legislature for its work and said the bill, which she introduced in January, is a “true victory for Kansas.” Unfortunately, the latter major issue of tax reform was not accomplished for the second year in a row. Governor Kelly vetoed both tax reform packages that addressed the federal tax changes this session. This lack of reaction to the federal changes will produce a tax increase on individual Kansans and businesses operating in the state. There is hope that a compromise can be struck next session on the issue to decouple from the federal tax code, including the ability for all financial institutions to fully deduct the cost of their FDIC premiums and the ability for individuals to choose to itemize on their state returns even if they take the federal standard deduction. The KBA was successful this session on two pieces of legislation that we introduced: Senate Bill (SB) 82 and SB 90. Both were approved by Governor Kelly and will become law on July 1, 2019. SB 82 clarified provisions within the Kansas Banking Code regarding Certificates of Existence, voting rights in savings and loan conversions as well as allowing for required notices to be delivered electronically or through certified mail in addition to the traditional and more costly registered mail. SB 90 amends the Entrepreneurship Tax Credit to allow financial institutions the opportunity to utilize up to $100,000 a year in tax credits through the program - something banks and savings and loans have not been able to do since the enactment of the tax credit in 2004. The entrepreneurship tax credit was implemented to help in providing seed capital to entrepreneurs and small business owners through a program facilitated by NetWork Kansas, and represents a collaborative effort among education, research, and outreach services — as well as public sector organizations — to better serve potential and existing entrepreneurs statewide. While we were successful in both initiatives this year, we have a tough road ahead of us on major reform in 2020. The Fight for Tax Equity Begins Late in the session at the direction of the KBA State Affairs Committee and with approval from the KBA Board of Directors, we introduced two pieces of legislation to address the state’s inequitable tax policy which results in banks and savings and loans paying the privilege tax while other competing financial institutions do not. SB 238 would remove the Kansas privilege tax on interest income earned from business loans for all banks and savings and loan associations operating in Kansas. “Business” includes all commercial and agricultural lending. SB 239 would impose the Kansas privilege tax on interest income earned from business loans for state-chartered credit unions with total assets of $100,000,000 or greater. It is intended as an either/or approach with the bottom line being that all financial institutions that provide the same services should be treated the same where tax policy is concerned. The bills have been referred to the Senate Committee on Financial Institutions and Insurance. The KBA Government Relations team is currently working with legislative leaders to request an interim hearing this fall to fully research both bills and expose the current inequity of the state’s tax policy in preparation for legislative action in 2020. To be successful we will need every single person in the bank, from teller to CEO, to be engaged on this issue because we know the opposition will be prepared and organized. We are asking EVERY bank employee to be engaged in the legislative process as that is critical to our success. The banking industry’s strength lies in our numbers and the involvement of bank professionals like you. By joining with your fellow bankers who are committed to supporting strong bank policy, we will make the voice of the banking industry in Kansas even stronger! We hope we can count on your support on this very important and critical initiative. If you have any questions or want to know how you can help, please do hesitate to contact me at aorel@ksbankers.com or call me at the KBA office at (785) 232-3444. Alex Orel, SVP Government Relations KANSAS LEGISLATURE ADJOURNS - KANSAS BANKERS GEARING UP FOR 2020

RkJQdWJsaXNoZXIy OTM0Njg2