Senator Denning's Newsletter (Update)

February 2, 2014 (Update) - In This Issue:

January Tax Receipts

Technical Education

Rising Out of Pocket Health Insurance Costs

Mortgage Registration Tax Repeal Being Deliberated

Other News

Quickfacts

Kansas Unemployment Rate Continues to Decrease

U.S. GDP Rises to 3.2% in 4th Quarter

Businesses increasing their investments
Kansas economy expanding at steady clip

Federal Reserve Bank Continues to Wind Down its Quantitative Easing Policy, Trimming Monthly Bond Purchases

Feb - $65 Billion
Jan - $75 Billion
Dec - $85 Billion
CD and lending rates expected to slowly increase

Consumer Confidence

Moderately up
Hiring is improving

Keystone Pipeline

Kansas doesn't have a dog in the fight
No new build in Kansas; uses existing pipeline

January Tax Receipts

Seven Months Ending January 31, 2014

$21 Million (.6%) Above Estimates

The trends for Kansas tax receipts remain positive through the seven months ending January 31, 2014. The Kansas fiscal year runs from July 1, through June 30. For the seven month period YTD tax receipts are $21 million or .6% above budget estimates. The Kansas economy continues to grow and improve. The large Kansas personal income tax cuts effective January 1, 2013 are working to help grow the economy and jobs. The personal income tax cuts add over $23 million to Kansans paychecks, every payday. Unemployment is down and job creation is up. With the headwinds coming out of Washington finally subsiding we have Kansas in a good spot to grow jobs and reinvest in business for growth. It is noted that following the tax cuts in 2013, actual tax receipts are down 9.7% compared to same time last year. This is trending positive given the 20% personal income tax decrease. We are committed to funding state core services while spending within our means.

Technical Education

A Pathway to a Career

Johnson County Community College (JCCC) is fully engaged in building programs to provide high school students a pathway to a good paying job. JCCC is working with area high schools to give students the opportunity to gain college credits, and play a significant role in the development of a well-trained local workforce. Career and technical education (CTE) courses enable students to earn industry recognized credentials to move into high-demand and high wage occupations. The program pathways are designed to allow the students to enter the work force upon graduating high school or to continue on with the pursuit of higher education. This CTE initiative is part of Gov. Brownback's "Road Map," which includes increasing the number of high school graduates who are college and career-ready. CTE efforts are being supported with the passage of SB155. The CTE pathway to a career road map initiative has received national recognition as one of the "Top Ten Innovations to Watch" from the Brookings Institute.

Rising Out of Pocket Health Insurance Costs

The Need for Cost Transparency

Medical debt will remain a problem and will increase to catastrophic levels under ObamaCare. A major driver of unmanaged medical debt is the lack of health care cost transparency. We have all received the surprise medical bill thirty days after we have received medical services. High deductible plans and high co- insurance plans are now dominating both the private sector plans and the Obama Exchange Plans. The need for Health Care Transparency is the most important business issue for private practices, hospitals, and of course the patients.Senate Bill 251 addresses this issue head on.

Chairman of the Senate Insurance Committee, Rob Olson, formed a special sub committee to study SB251. The goal is to bring Industry and patients together to reach a compromise on the bill which will work for all parties. The special subcommittee will meet Thursday February 6th at 3:30pm. The Chairman understands the significance of SB251. It will affect 1/6 of the Kansas economy. We have to get it right. Senator Jeff Longbine is chairing the committee.

Health care cost transparency is long overdue. I mentioned Senate Bill 251 in last week's newsletter. SB 251 is known at the Real Time Explanation of Health Care Benefits bill, (Real Time-EOB). Click here for the full text of the bill. This bill would allow computers in doctor's office to query the payment database computers at the insurance company's office to get an accurate estimate of patients out of pocket costs in real time. The objective is to let patients know their estimated out of pocket costs for non-emergency services before they are consumed. This bill will allow patients to make informed decisions with their physicians about their health care and make educated decisions with reliable cost information in hand.

I presented testimony to the Senate Insurance Committee last week. The video below is my testimony and examples I used to explain the need and solution to achieving health care cost transparency in Kansas.

Senator Jim Denning Speaking on S.B. 251

Click here for a PDF on "Understanding Patient Out of Pocket Expenses" from an EOB.

This one bill will have a positive effect on 1/6 of the Kansas economy and give patients some certainty with their out of pocket costs.

The above example is a very typical scenario. Do note that the patient was responsible for 80% of the Allowable amount, or 4 times the amount the insurance company paid. It should also be noted that patients co-insurance percentage rage from 10% to 40%. Deductibles are now as high as $5,000.

You can help support this effort to improve health care cost transparency. Send your personal experience with getting a surprise health care bill or just let me know that your support the need for SB 251. Send your comments to jim@jimdenning4kansas.com and I will compile the results for the sub-committee.

Mortgage Registration Tax Repeal Being Deliberated

The Poor Man's Tax?

The Senate Assessment and Taxation Committee began hearings this week on Senate Bill 298, which would repeal the state-imposed mortgage registration tax that impacts borrowers in Kansas who obtain a mortgage to finance the purchase of their home or other property. Kansas is one of only nine (9) states that impose a mortgage registration tax on borrowers. The mortgage registration tax is paid at closing by consumers who have taken out a loan for a home or other personal or business property. The tax rate is 26 cents for every $100 borrowed. The purchaser of a $100,000 home in Kansas would be required to pay a tax of $260 for the mortgage registration tax and an additional $64 (based upon a 15-page mortgage document) in mortgage recording fees to the county. The average tax paid by Kansans that purchase property is $462. The tax can get into the thousands of dollars to commercial developers that utilize a mortgage to support their investment.

Two of the primary supporters of the repeal include the Kansas Bankers Association and the Kansas Association of Realtors who believe borrowers are being singled-out for unfair tax treatment because the mortgage registration tax generates far more dollars than are needed to process mortgages for property owners in Kansas. Click here to read the Realtors talking points. The Kansas Bankers Association also objects to the fact the tax is not applied uniformly to all borrowers in Kansas. For example, borrowers that utilize the federal government sponsored Farm Credit System are exempt from the mortgage registration tax. Thus, Kansas banks lose out to making large loans to Farm Credit banks who don't charge the tax. The primary opponent to SB298 includes the Kansas Association of Counties, which represents county commissioners across the state of Kansas. In 2013, the mortgage registration tax generated nearly $16 million in tax revenue to Johnson County.

To avoid a hardship on Johnson County government budget a compromise will try to be reached where the mortgage tax is phased out over 5 years starting in 2015. Preliminary projections indicate property values are projected to go up 3.1% in 2015. This means that more property taxes will be automatically collected from the escalating property values as the housing market continues to recover from the bust of 2008. This should take the pressure off of the county and mute the argument to raise property taxes if the tax is repealed.

Some refer to the mortgage registration tax as the poor man's tax. This slang came about from the fact that wealthier taxpayers pay cash for property or at least make significant down payments to avoid the tax. The majority of Kansans take out a mortgage and must pay the full tax at closing.

Other News

Last week I received an award for Legislative Excellence from the National Alliance on Mental Illness (NAMI). The award was presented by Rick Cagen, the Executive Director of NAMI. Tim DeWeese from Johnson County Mental Health was also in attendance. Mr Cagen noted my efforts in re appropriating funding for mental health crisis screening and the bold initiative and new service model at Rainbow Mental Health Hospital.

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