Capitol Comments 3-12-2003

Capitol Comments

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March 12, 2003

REVENUES BELOW PROJECTION

    At the request of Governor Sebelius, the Division of the Budget, the Department of Revenue, and consulting economists met last Friday afternoon to consider tax revenue projections for the State General Fund in FY 2003 and FY 2004. Given current information, FY 2003 tax revenue is expected to be $105.0 million below the last Consensus Revenue Estimate made on November 5, 2002, and FY 2004 revenue is expected to be $125.0 million below the November estimate.
    The tax sources that were reduced for the FY 2003 estimate include lowered projections for individual income taxes, corporate income taxes, sales taxes and estate and succession taxes.
    The key factors that were considered in revising the estimate downward included experience in revenue collections through February 2003, lingering uncertainty in both the national and state economies, an increase in savings rate, and lagging consumer confidence. Refinements to this updated forecast are expected to be made April 22, 2003, at the scheduled Consensus Revenue Estimate meeting.

STREAMLINE SALES TAX

The Streamline Sales Tax bill, key to eventual collection of sales taxes on internet transactions, passed the Senate 34-5. This measure makes a number of changes to state and local sales tax laws necessary to bring Kansas into compliance with the uniformity and simplification requirements set forth in the multistate Streamlines Sales and Use Tax Agreement. The Senate Tax Committee made one technical correction to the bill which removed the state and local sales tax on water.

INSURANCE CREDIT SCORING

A bill outlining the ways insurance companies doing business in Kansas may use a consumer's credit score to determine insurance premiums has been endorsed by the Senate. I believe the bill as passed is a step in the right direction to address an issue which has concerned many constituents. However, unless further action is taken either this year or in the future, consumers would not have the protection they deserve to dispute a rate increase. Under this bill, insurers could not base decisions on premiums, issuing a new policy, or renewals solely on a consumer's credit history. Also, companies would be barred from refusing or canceling coverage solely because an individual has no credit cards. This bill applies only to personal insurance individually underwritten for personal, family, or household purposes written to be effective or renewed on or after January 1, 2004. Insurance companies would be required to file the formula they use with credit scoring with the Kansas Insurance Department and that information would be treated as confidential trade secrets. The bill passed the Senate on a vote of 39-0 and now heads to the House Insurance Committee for consideration.

KANSAS INCOME TAX DECOUPLING

The Kansas Income Tax Decoupling bill would decouple the Kansas income tax from any future federal exclusion of dividend income. The Department of Revenue indicated that Kansas' individual income tax collections would be expected to be reduced by $51 million in the next year if the federal government were to enact the federal dividend exclusion currently under consideration. Enacting this bill would prevent Kansas from taking an additional hit to its revenues. If Congress does not enact the federal dividend exclusion, the bill does not affect Kansans in any way.

IN CONCLUSION

    I was especially pleased to have my grandson, Tyler Goodwin, and his friend, Nick Gutierrez, page for the Senate on March 5th. Tyler is a student at Winfield Middle School and Nick attends Trinity Lutheran School.
    I appreciate the many constituents who have contacted me by telephone, e-mail, or written letters with suggestions and concerns on many issues before us. Your input is very important to me. With my heavy committee work I am not always available to take your calls but Betty Manning, my office administrator, will get your messages to me.
    You can reach me via e-mail at ggoodwin@ink.org or Goodwin@senate.state.ks.us. My address is State Capitol, Room 403-N, Topeka, KS 66612; telephone (785) 296-7381 or 1-800-432-3924.