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Kansas Senate rejects Democrats’ attempt to pull three bills stuck in committee to the floor

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Kansas Senate rejects Democrats’ attempt to pull three bills stuck in committee to the floor

Feb 20, 2024 | 7:31 pm ET
By Tim Carpenter
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Kansas Democrats maneuver to pull tax, conflict of interest and banking bills onto Senate floor
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Sen. Tom Holland, D-Baldwin City, made a motion to bring to the full Senate a bill he introduced in 2023 requiring an audit of a company granted a Kansas charter to operate, but has been mired in allegations of financial misconduct and has grappled with a stock-price collapse. In this image, Holland explained his concern about the business. during a news conference at the Capitol. (Sherman Smith/Kansas Reflector)

TOPEKA — The Kansas Senate rejected motions Wednesday offered by a Democrat to force bills on conflict of interest in state government hiring and state regulation of alternative financial institutions to be withdrawn from committees and placed on the chamber’s calendar for possible action.

On voice votes, the GOP-led Senate declined to support Sen. Tom Holland’s appeal to bring the conflict of interest and financial institution regulation bills to the floor. The Senate dispatched Tuesday the proposal from Senate Minority Leader Dinah Sykes to advance out of committee Gov. Laura Kelly’s plan for reducing state taxes.

Holland, a Baldwin City Democrat, requested withdrawal of Senate Bill 328 that would prohibit the 165 members of the Legislature from being employed in the executive branch, with the exception of educational institutions under direction of the Kansas Board of Regents. His bill also would forbid someone working in the state’s executive branch to hold a job as the top official of a state agency.

Holland said the bill was tied to Salina Republican Sen. J.R. Claeys’ decision last year to accept a job in the office of Attorney General Kris Kobach. It also involved the governor’s appointment of David Toland, secretary of the Kansas Department of Commerce, to the post of lieutenant governor in 2020.

“I have significant concerns about the appearance of conflict of interest regarding two state employees,” Holland said. “When the lieutenant governor is simultaneously negotiating, awarding and administering economic development projects as the secretary of commerce, who is he representing? Kansas taxpayers? Political interests of the governor’s office? The financial interests of developers?”

In terms of Claeys, Holland said it wasn’t clear whether the senator was representing his Senate district’s constituents or interests of the attorney general when working on policy and budget legislation at the Capitol.

“I strongly believe both employees currently serving in their dual roles make the legislative process less transparent to Kansas citizens,” Holland said.

Holland introduced the conflict-of-interest bill in January and the Senate Federal and State Affairs Committee hadn’t schedule a hearing on the legislation.

Sen. Caryn Tyson, the Parker Republican, said after Holland and Sykes spoke that she didn’t appreciate their implication some members of the Senate were dishonest.

“The decorum on this floor has been diminishing a little bit,” Tyson said. “We have such a good working rapport with all of our colleagues in the chamber.”

 

Tax cut alternative

Sykes, a Democrat from Lenexa, submitted the motion to withdraw from committee a bill containing Kelly’s plan to cut state taxes by $1 billion over three years. Senate Bill 373 was introduced by Sen. Pat Pettey, D-Kansas City, in January, but it was placed on idle by the Senate Assessment and Taxation Committee.

Kelly’s bill didn’t include the shift to a 5.25% single-rate state income tax favored by Senate President Ty Masterson and most of his GOP colleagues, but her plan offered a residential property tax exemption, an income tax credit for child care and an exemption from state tax for Social Security income. Kelly also recommended raising the standard deduction on state income taxes, eliminating the state sales tax on groceries, exempting diaper’s and feminine hygiene products from the state sales tax and creating an annual sales tax holiday or back-to-school purchases.

Sykes’ motion came after the Kansas House failed to override Kelly’s veto of a Republican tax bill containing the single rate income tax, but incorporating several elements of the version backed by the governor.

“This body deserves the ability to vote on tax relief that doesn’t include the flat tax,” Sykes said. “That is the piece that is preventing us from providing tax relief to our constituents.”

Before the Senate adjourned Tuesday, Hiawatha independent Sen. Dennis Pyle made a separate motion to suspend the rules so the Senate could proceed with a vote on whether to draw the governor’s tax bill out of committee. Pyle’s motion was defeated 13-24. Olathe Republican Sen. Rob Olson, who joined Pyle in publicly endorsing the governor’s tax bill, said the House’s defeat Tuesday of an attempt to override the governor’s veto of the GOP’s flat-tax bill was a sign the Legislature should study other options.

 

Holland’s second bite

Holland proposed Senate Bill 302 be withdrawn from the Senate Financial Institutions and Insurance Committee. It was introduced by Holland in March 2023, but didn’t receive a committee hearing.

The legislation would trigger an audit of Dallas-based Beneficient Company Group, which was authorized by Kansas to offer financial services under a unique charter. The state banking director has complained about an inability to inspect operations of Beneficient, which has been accused in U.S. Bankruptcy Court in Houston of misleading investors in GWG Holdings and engaging in inside deals to siphon cash from GWG.

Holland said Beneficient’s future was in doubt. He said Beneficient’s 52-week high on Nasdaq was $16.50 per share, but last week it traded at less than 30 cents per share.

Beneficient interests donated about $150,000 to Republicans and Democrats in Kansas as it went about securing a state charter. It wasn’t viewed as a traditional bank or a trust, but was a technology-enabled fiduciary financial institution, or TEFFI, that handled assets lacking liquidity.

Holland said the Senate bill would require hiring of an independent audit firm to conduct a forensic review of Beneficient. Scope of the audit would include $1 million in fees paid by Beneficient to the state as well as campaign contributions made by the TEFFI or its directors or officers to Kansas politicians or parties.