Community Bankers Association of Kansas January 6, 2017

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Community Bankers Association of Kansas January 6, 2017 Community Bankers Association of Kansas Legislative Update January 6, 2017 Overview The 2017 session begins on Monday, January 9th; the Governor’s State of the State will occur on Tuesday, January 10th, and the Governor’s budget recommendations will be presented sometime later that week. The session should begin quickly with a mid-session break scheduled for February 25-March 6 and the regular session concludes on April 7th. The veto session begins May 1. A 90-day session should conclude on May 14th. There is much work to be done and this session will likely be the longest and most difficult in memory. New Leadership House of Representative In the House of Representatives, Democrats increased their numbers by twelve seats and a fair number of more conservative Republicans lost in the primary and general elections. The chamber has again elected a more conservative Speaker but the other leadership positions are fairly balanced between conservatives and moderate Republicans The 2017 House will have 85 Republicans and 40 Democrats, a change from the 2016 division of 97-28. Republicans: • House Speaker: Ron Ryckman Jr., (R-Olathe). • House Majority Leader: Rep. Don Hineman, (R-Dighton) • Assistant Majority Leader: Rep. Scott Schwab, (R-Olathe). • Assistant Majority Leader: Rep. Tom Phillips, (R-Manhattan). Democrats • Minority Leader: Rep. Jim Ward, (D-Wichita). • Assistant Minority: Leader: Rep. Stan Frownfelter, (D- Kansas City). Senate The Senate partisan split will be 31-9, with the Republican majority. The Democrat gain of one seat actually under-represents the amount of change in the Senate because fourteen incumbent conservative Republicans either chose not to run or were defeated. Senate President Susan Wagle was re-elected with a new majority of more moderate Republicans. Republicans • President: Sen. Susan Wagle, (R-Wichita). • Vice President: Sen. Jeff Longbine, (R-Emporia). • Majority Leader: Sen. Jim Denning, (R-Overland Park). • Assistant Majority Leader: Sen. Vicki Schmidt, (R-Topeka). 1 Democrats • Minority Leader: Sen. Anthony Hensley, (D-Topeka). • Assistant Minority Leader: Sen. Laura Kelly, (D-Topeka). New Chairs and Committees The leadership elections impacted committee assignments. A full list of all committee assignments is included at the end of this report. In the House, Speaker Ryckman rewarded his more conservative supporters with Chair positions. Overall, however, the committee assignments demonstrate that in most committees there is a more moderate membership and the previous strong majority has been reduced. The Speaker’s majority is not as solid as the previous Speaker. In the Senate, the change is much more significant. With a few exceptions, the committee chair assignments are more moderate. Without the very strong conservative caucus, the more moderate Republicans have increased their power and gained control of some key issues. The House remains more conservative but much more divided than the last six years. It is not accurate to say the moderate Republicans and Democrats will govern by a coalition. There may be specific issues where coalitions will form but it will not become the norm. Finally, the greatest challenge to understand and predict committee action in 2017 will be the new legislators and chairs. Both chambers will have many new committee chairs and many new members. Everyone is trying to predict how votes will split in committees and what can pass and what cannot pass out of committees. It is clear many bills, if they can pass out of committees, have a good chance of passing the more divided and moderate chamber floors. We will need some experience with these new chairs and new members before we know. Big Picture Session Issues The issues facing the 2017 Legislature are immense. With many new members, new committee chairs, and new leadership in key positions in the House and Senate, the regular transitions to a new session usually would be hard. When one considers the scope and scale of the big-picture issues the Legislature (and the Governor) face, the normal challenges become even more difficult. Two factors are worth noting during the 2017 session. First, the Governor’s status has been diminished as a result of the continued failure of tax policy he supported and the 2012 and subsequent Legislatures implemented and sustained. Speculation regarding a potential departure to serve in the Trump administration further diminishes his influence. The 2016 primary and general elections significantly undercut the Governor’s political coalition. Second, the demands of statewide issues on the attention and energy of legislators, and finances of the state, will result in very few additional legislative issues reaching resolution. There is finite time and attention available to the Legislature and smaller issues will suffer. Taxes, budgets, and school finance overwhelm most other issues. After the last six years, there is tremendous pressure and desire to address legislation passed or blocked. The problem to watch are the big picture issues that overwhelm and drowned out much other action. Big picture 2017 factors include: • Reduced conservative legislative majorities and Governor with diminished legislative support. • Almost 40 percent new legislators. • $350 million revenue deficit in current year and $500 million in next fiscal year. 2 • Anticipated state budget reductions in the current and next fiscal years. • Awaiting Supreme Court decision on school finance in the Gannon case. • Debate regarding corrective tax policy beginning with the elimination of the LLC and others’ exemption. • Write a school finance formula—how will money flow out to schools? • Fund a school finance formula—how will the state and locals fund the formula? • Medicaid expansion debate. • Address any number of federal changes (Medicaid and expansion, regulations including environmental, and others) from the new Trump administration. Financial Institutions Issues During the 2017 session, we will be monitoring and keeping the CBAK updated on several key issues. Committees and Chairs: The significant changes in the Legislature membership have also changed the membership of the key committees with whom we work. • In the Senate, Jeff Longbine will continue as Chair of the Financial Institutions and Insurance Committee as well as serve as the newly elected Vice President of the Senate. o Financial Institutions and Insurance-Chair Jeff Longbine, R-Emporia, Vice Chair Rick Billinger, R-Goodland, Ranking Minority Lynn Rogers, D-Wichita. Members Bruce Givens, R-El Dorado, Anthony Hensley, D-Topeka, Rob Olson, R-Olathe, Dennis Pyle, R-Hiawatha, Gene Suellentrop, R-Wichita, and Rick Wilborn, R-McPherson. • Caryn Tyson (R-Parker) will move up from Vice Chair to Chair Senate Taxation Committee. o Assessment and Taxation-Chair Caryn Tyson, R-Parker, Vice Chair Dan Kerschen, R-Garden Plain, Ranking Minority Tom Holland, D-Baldwin City. Members Larry Alley, R-Winfield, Jim Denning, R-Overland Park, Marci Francisco, D-Lawrence, Dan Goddard, R-Parsons, Julia Lynn, R-Olathe, and Mike Petersen, R-Wichita. • In the House, financial institutions and insurance have been separated and the Speaker has created a new Financial Institutions and Pensions Committee o Financial Institutions and Pensions-Chair Jim Kelly, R-Independence, Vice Chair Randy Powell, R-Olathe, Ranking Minority Gail Finney, D-Wichita. Members: Doug Blex, R-Independence, Brenda Dietrich, R-Topeka, Willie Dove, R-Bonner Springs, Roger Elliott, R-Wichita, John Eplee, R-Atchison, Daniel Hawkins, R- Wichita, Tim Hodge, D-N. Newton, Russ Jennings, R-Lakin, Fred Patton, R- Topeka, Ed Trimmer, D-Winfield, Kent Thompson, R-Iola, Jene Vickrey, R- Louisburg, Virgil Weigel, D-Topeka, and Brandon Whipple, D-Wichita. • House Taxation has a new chair in Steven Johnson (R-Assaria). o Tax-Chair Steven Johnson, R-Assaria, Vice Chair Tom Phillips, R-Manhattan, Ranking Minority Tom Sawyer, D-Wichita. Members: John Alcala, D-Topeka, Tom Burroughs, D-Kansas City, Susan Concannon, R-Beloit, Ken Corbet, R- Topeka, Erin Davis, R-Olathe, John Eplee, R-Atchison, Shannon Francis, R- Liberal, Jim Gartner, D-Topeka, Dan Hawkins, R-Wichita, Jim Kelly, R- Independence, Les Mason, R-McPherson, KC Ohaebosim, D-Wichita, Richard Proehl, R-Parsons, Abraham Rafie, R-Overland Park, Ken Rahjes, R-Agra, Louis Ruiz, D-Kansas City, Adam Smith, R-Weskan, Jack Thimesch, R-Cunningham, Kristey Williams, R-Augusta, and Kathy Wolfe Moore, D-Kansas City. • The Office of the State Bank Commissioner has a new Director after Deryl Schuster retired on November 1, 2016. Judi Stork is serving as Acting Commissioner until the Senate confirms Governor Brownback’s nomination of Miki Bowman from Council 3 Grove. After two years re-codifying the state banking code, we do not anticipate much legislation or policy issues for the OSBC. • We will be monitoring tax policy as it has the potential to impact CBAK members as well as watching to determine if the Legislature again attempts to sweep regulatory agency fee funds to address the over $900 million revenue shortfall. • Most action is going to take place in Washington DC as the Trump Administration attempts to dismantle Dodd-Frank. Wrap Up Committee meetings will begin slowly after the session begins and we will provide regular updates as the session begins. Shawn P. Mitchell, President Stuart J. Little, Ph.D. Community Bankers Association of KS Little Government Relations, LLC 5897 SW 29th Street 800 SW Jackson, Ste. 1100 Topeka, KS 66614 Topeka, Kansas 66612 785-271-1404 Office
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