May 13,2009

Sedgwick County Legislative Update

Overview
This report focuses on the final wrap up of the 2009 legislative session. Other legislation
of interest passed during the regular session was included in the early April report.

The 2009 Legislature adjourned on Saturday morning. They will return in early June for
the ceremonial last day. Resolution on the budget described below suggest there will be lots of
action before the 2010 legislative session that will require careful attention. The dire economic
situation may produce a special legislative session or more likely gubernatorial allotments or
reductions to state general fund expenditures based on miniscule revenue projections. Because
the ending balance is so low, the Governor will have a great deal of freedom and flexibility to
make downward adjustments to the budget during the coming year.

Budget
The Legislature approved Senate Substitute for House Bill 2373 which finalized the
budget process. The Senate passed the bill 21-17 and a majority of Democrats and Republicans
passed the bill in the House 64-60. The Omnibus veto session was in its eight day when the
budget bill was finally passed. The House had already failed in its first attempt to pass a budget
and they were scheduled to take up the next House budget bill later on 7th. The House bill that
was about to return to the floor contained larger reductions for K-12 and its passage was very
unlikely and prompted a number of Republicans to vote for the Senate bill.

The final budget bill is in addition to 10 percent budget reductions passed in the earlier
appropriations bills at the end of April. Now that the final budget bill is done, state agencies will
have to make determinations regarding the ways they will make budget reductions. They were
directed to make general reductions and will now have to determine how to make those
reductions.

• All State agencies (including K-12 and regents) will receive 2.75 percent reductions
o $ 154 million in cuts
o $122 million in revenue (Keep the M&E Slider payments, keep $50 million in
casino privilege fees, $18 million in fee funds, and others)
o $61 million in new revenues (see below)
• Lost revenue
o FY 2009 Machinery & Equipment second half payment of $25 million will not be
made
 o FY 2010 Machinery & Equipment payment of $44 million will not be made
• Other Sedgwick County-specific accomplishments
o $5 million protected for fair air fares program
o $5 million for the National Institute for Aviation Research at Wichita State
University
o $2.5 million for the National Center for Aviation Training
• One-half the amount requested
o Fully funded community corrections, adult residential centers
o $3.5 million to the Wichita Center for Graduate Medical Education plus $2.5
million in matching federal funds

Taxes
Both the House and Senate passed Senate Substitute for House Bill 2365. The bill was
an amended down version of the original bill that had up to $100 million in tax increases. The
tax bill was finalized after the budget bill was completed so that only enough revenue was
increased to get the state's ending balance above $0. Based on the budget bill and the tax bill,
the state will have $17,000 in an ending balance on June 30, 2010.
• $61 million in taxes
o Mainly tax amnesty
o Delayed or reduced tax credits
• No cuts to Liquor Tax (888) funds. Legislature rejected the Governor's recommendation
to eliminate the $27 million fund going to local units of government

Other Legislative Issues

Annexation
On the last night of the session, in the last bill passed, both the House and Senate passed
Senate Bill 51. The bill was the only annexation legislation passed this year.
• Senate Bill 51 summary from the League of Kansas Municipalities
o Could have been much stronger—does not include public vote requirement
o • Section 1. Requires a copy of the plan for extension of services to be sent by
certified copy to the board of county commissioners not less than 10 days prior to
the public hearing required by K.S.A. 12-520a.
o • Section 2. Amends K.S.A. 12-531 to require the county commission to hold a
hearing three years following an annexation or four years following the
conclusion of litigation relating to annexation to determine whether the city has
provided services in accordance with the submitted plan. Also gives the judge
discretion to award attorneys fees to the prevailing party if the county commission
refuses to hold the required hearing. D
o • Section 3. Allows land owners to petition for deannexation two years following
the conclusion of the hearing required by K.S.A. 12-531 or two years following
the conclusion of litigation relating to the hearing (current law allows
 deannexation petitions after 2 !/2 years). This section also increases the time
limitation from one year to four years before the city can attempt to annex the
area that has been deannexed and requires the city to pay for the recording with
the register of deeds. It also gives the judge the discretion to award attorneys fees
to the prevailing party if the board of county commissioners refuses to hold the
deannexation hearing. D
o • Section 4. This section defines the terms "municipal services" and "municipal
infrastructure." D
o • Section 5. Amends K.S.A. 12-521 to prohibit the annexation of any unplatted
tract of land devoted to agricultural use of more than 65 acres. This is a limitation
on county-approved annexations. D
o • Section 6. Amends K.S.A. 12-520 to prohibit any city from annexing a "narrow
corridor" to gain access to noncontinguous tracts of land. It further provides that
the "corridor of land" must have a "tangible value" and purpose other than for
enhancing future annexations. These terms are not defined and even apply to
annexations that are completely consensual in nature. D
o • Section 7. This portion of the bill requires that for one year from the date of
annexation, the city must spend all proceeds from ad valorem taxes levied against
the annexed property to provide municipal infrastructure and municipal services
in the area. D
o • Section 8. Requires notice to be given not less than 60 days before the effective
date of an annexation ordinance to any rural water district in the area. U
o • Section 9. Authorizes the city to contract with the rural water district to provide
water services to all or portions of the annexed area. D
o • Section 10. Provides that the rural water district continue as the water provider
unless the city gives appropriate notice and considers certain factors. D
o • Section 11. Amends K.S.A. 82a-612 to allow anyone who is charged a franchise
fee for water service provided by a rural water district to be considered a
"participating member" of the district. D
o • Section 12. Amends K.S.A. 82a-646 to require the board of a rural water district
to consider certain factors whenever lands are petitioned for release from the
district. D
o • Section 13. Makes sections 8-10 part of the Kansas rural water district act.

Unemployment Insurance
The South Central delegation gave strong support to passage of House Bill 2374 which
amended state unemployment insurance law to benefit local aircraft manufacturers to allow
employees to work three-day work week while also participating in the unemployment program
and retraining.
• House Bill 2374, a package of alterations to the state's unemployment laws that also
captured $70 million in unemployment money from federal stimulus funds
 • HB 2374 would allow employees to work part time to collect an unemployment check for
a calendar year instead of the current 26 weeks.
• Part-time status, for aviation workers, for example, would allow employees to benefit
from training while still working three days per week
• Sought by Spirit AeroSystems

Future
• Ending balance problems
o The minimal ending balance of $17,000 in the state budget suggests there will be
a great deal of attention to monthly revenue
• Allotments
o The Governor, when the state budget drops below $100 million in a projected
ending balance, and again when revenues are less than $0, has extensive unilateral
budget cutting authority called "allotments"
o The Governor will be able make targeted reductions to all budgets to address the
financial crisis
o The Governor, and the Joint Legislative Budget Committee, will monitor revenue
• How agencies will adjust
o It is very likely state agencies, and local units of government will have further
reduced budgets in the middle of the fiscal year due to the allotment procedures

Wrap Up
The Legislature will meet one last time for sine die on June 4, the ceremonial end of the
session. It is possible there could be a special session and there will be great attention given to
the status of the budget. Additionally, interim committees will begin meeting in June or July to
monitor a variety of issues.

If you have any questions, please let me know.

Stuart J. Little, Ph.D.

Little Government Relations, LLC
800 SW Jackson, Ste. 914
Topeka, Kansas 66612
785-235-8187 Office
785-845-7265 Mobile
785-435-3390 Fax
stuartj little@mac .corn