Senate Kills Gov’s Tax Bill; Then There’s Guns, Vouchers, and Efficiencies

Mar 8, 2017 by

Brownback’s Tax Bill Goes Down in Flames

The Senate yesterday debated Governor Brownback’s tax proposal (SB 175) which would simply raise alcohol and tobacco taxes and increase registration fees on businesses in a hopeless attempt to get out of the massive budget hole created by his reckless tax cuts.

The Senate clearly recognized this and killed the bill by passing an amendment to strike the enacting clause on a vote of 37 -1. The enacting clause indicates when the bill would become law and by removing the clause, the underlying bill can never become law. The motion is the equivalent of killing the bill.

One would think that this action would send a clear message to the Governor that the Senate, like the House, wants tax reform that brings Kansas back from the edge. Of course, the Governor is sticking to his failed policies like a pit bull on a rib bone.

This vote moves the Senate to consideration of a better tax reform bill and that’s the good news.


House Committee to Talk Guns on Campus Tomorrow

The House Federal and State Affairs Committee will be hearing HB 2220, a bill that would prohibit post-secondary institutions from adopting any policies governing concealed weapons on campus. This is the opposite of earlier attempts to allow those institutions to prohibit firearms on campus.

HB 2220 essentially makes college campuses wild west institutions where anyone can do whatever they want with firearms. Under this bill, no campus could restrict where guns were permitted or who could carry them. Campuses would be completely unregulated when it came to firearms.

KNEA opposes this bill and has called for the passage of legislation to allow colleges to make these decisions.


K-12 Budget Committee to Take Up Radical Expansion of Tuition Tax Credits (i.e. Vouchers)

On Friday, the K-12 Education Budget Committee will hold a hearing on HB 2374, a bill expanding the corporate tuition tax credit program. Under current law the state allows corporations to pay the tuition of at-risk children in Title 1 schools to attend a private school. The corporation gets a 90% tax credit for this. That means the state is giving away $10 million in taxpayer money to send a few kids to unaccountable private school.

We are always fascinated by legislators and lobbyists like Dave Trabert who continually demand more and more accountability and testing in public schools but are perfectly okay sending millions of dollars to unaccredited private schools that report no results to the state at all. But then, we’ve been here a long time and hypocrisy should not surprise us.

At a time when the Court has determined that our public schools are not adequately funded and that many in the legislature are still calling for cuts to public education; at a time when the state faces a two-year budget hole of over $800 million, it is irresponsible to continue to give away tax money for which there is no accountability whatsoever. The best thing for the legislature to do at this time is to simply repeal the program entirely and put that $10 million back in the budget where it belongs to serve all Kansans.


School District Purchasing, Health Care Consolidation Discussion

Last week Secretary of Administration Sarah Shipman called together education stakeholder groups to discuss two of the “efficiency” recommendations that were included as part of the Governor’s budget this year.

Brownback included a requirement that all school districts centralize purchasing through the Department of Administration. State agencies currently use this system and the Alvarez and Marsal efficiency study had suggested that there would be significant savings to the state if school districts joined.

He also included an A&M recommendation that school districts consolidate into one health insurance plan like the State Employees Health Plan.

Bills were filed that would accomplish both of these requirements.

The K-12 Education Budget Committee was skeptical about the potential savings and asked Secretary Shipman to bring people together to discuss both issues and come up with recommendations.

KNEA joined KASB, USA/Kansas, the Wichita schools, and Greenbush at the meeting. Also present was the anti-government Kansas Policy Institute.

Today Secretary Shipman reported on the results of the meeting to the committee. In short, the recommendation was that the negatives far outweighed the positives and that there was no way to deliver any savings in 2018 even if the bills were passed.

Committee Chairman Larry Campbell (R-Olathe) announced that he would not work the bills but instead let them lie until next year. He will also report to the Appropriations Committee that the bills would not have saved any revenue in 2018.

Representative Ed Trimmer (D-Winfield) also pointed out that neither bill would provide a penny of savings to the state unless the legislature reduced school funding by an amount equivalent to the savings instead of letting any savings be redirected to classroom programs.

 

 

read more

Your advocacy works! Support Evaporates for Senate Tax Plan and Ed Cuts

Feb 9, 2017 by

Post Highlights

  • The Senate convened at 8:00 this morning and almost immediately shut down when it became clear that there was no possibility of getting 21 votes to cut schools or pass an inadequate tax plan.
  • In pulling the bills (SB 27 and SB 147) and ending the discussion for the day, Senate President Susan Wagle announced that they would not consider anything else until budget and tax plans were resolved.
  • As the revenue crisis continues in Kansas, the state has earned yet another credit downgrade from Standard and Poor’s.
  • On Monday, the House K-12 Education Budget Committee will hear HB 2142 which would establish a consolidated health benefit program for schools.
  • On Tuesday, the House Education Committee will hear HB 2179, a bill restoring due process or fair dismissal protections to Kansas teachers.

Senate Tax and Cuts Plans Derailed

You and many other public education advocates answered the call last night, you contacted your Senators and enough of them listened.

The Senate convened at 8:00 this morning and almost immediately shut down when it became clear that there was no possibility of getting 21 votes to cut schools or pass an inadequate tax plan.

Senate Bill 27 would have cut K-12 and higher education by $154 million (a 5% cut to K-12 and 3% to the Regents) while Senate Bill 147 would have increased income tax rates, ended the income tax exemption for the poorest Kansans, and repealed retroactively the LLC loophole.

While the bills were supported by Senate leadership and did have enough committee votes to make it to the full Senate, the blowback from voters forced many to rethink whether or not they represented the best way out of Kansas’ current revenue crisis. Voters in August and November ousted most of Brownback’s most ardent legislative allies replacing them with moderate Republicans and Democrats who campaigned on no more cuts to our schools and reversing the Brownback tax disaster. Overnight Kansans from border to border blasted the bills on social media and in messages directly to Senators.

The bills before the Senate would have done nothing to stop the ongoing fiscal crisis. While the cuts to education and other state services might have helped patch the hole in FY 2017, the tax increase would have raised only about $280 million in FY 2018. Most analysts believe Kansas needs at least $580 million to get through next year. Additionally, while SB 147 did raise income tax rates and repeal the LLC loophole, it continued the Brownback glide path to zero income tax so that even if it did put some money in, it all would be for naught when the glide path kicked back in reducing revenue further.

In pulling the bills and ending the discussion for the day, Senate President Susan Wagle announced that they would not consider anything else until budget and tax plans were resolved.

Democrats have now reached across the aisle to try to work a bipartisan solution that would garner enough votes to override a potential gubernatorial veto. That would take 27 votes instead of the 21 votes needed for simple passage.


Yet Another State Credit Downgrade

As the revenue crisis continues in Kansas, the state has earned yet another credit downgrade from Standard and Poor’s. We believe this is the fourth credit downgrade under Brownback’s leadership.

S&P Global Ratings has now dropped the states AA minus stable rating to AA-minus negative. They specifically cited the move to securitize the tobacco settlement monies, liquidate capital reserves, and pension underfunding as problems.

Lower bond ratings negatively impact investment in Kansas as potential bond investors look to more secure places in which to invest.

S&P said that Kansas has a one in three chance of getting yet another downgrade in the next two years.

There is a solution, however. That is to stop relying on gimmicks and one-time transfers or shifts to balance budgets. Get off of Governor Brownback’s runaway train wreck by reworking the Kansas tax system. End the glide path to zero, repeal the LLC loophole, add another income tax bracket for higher income levels and stop selling off the state’s assets to fill holes.


Two Important Hearings Next Week

On Monday, the House K-12 Education Budget Committee will hear HB 2142 which would establish a consolidated health benefit program for schools.

The bill explicitly requires a high deductible insurance plan, prohibiting any that are not high deductible. This essentially guarantees that the savings will come out of employee’s pockets.

If all savings generated by the move to a consolidated plan were left in the school districts to be passed on to employees in higher salaries, it is conceivable that in some of those districts the higher salary might offset the higher costs to employees. Since the Governor’s budget proposal assumes any savings would be diverted into the state’s general fund, we can only assume that all savings would be clawed back by the state or result in reduced funding to school districts.

Employees then are left with fewer health benefits and no opportunity to offset the loss of benefits with an increase in salary. This plan truly represents a $25 million reduction in compensation for school employees across the state.

The LPA auditors examined the impact this consolidation would have on 101 of the state’s school districts. In 98 of those, employee benefits would be reduced by an average of 6% with some districts see a 14% drop in benefits. Only three districts in the study currently have lower benefits that the consolidation plan would have. But since the bill allows school districts not to join the plan, those district would more than likely stay with their less expensive low-benefit plans.

On Tuesday, the House Education Committee will hear HB 2179, a bill restoring due process or fair dismissal protections to Kansas teachers.

Due process was repealed in 2014 in a backdoor manner with no bill introduction and no public hearing. Many of our readers were with us in the statehouse at 4:00 am when the repeal happened after House members were locked in the chamber for hours until the 63rd vote could be secured.

This time the bill has 45 bipartisan co-sponsors. We look forward to the hearing and expect Chairman Aurand to work the bill and allow a committee vote.

 

read more

Due Process, Health Care and EDUCATION CUTS!

Feb 8, 2017 by

Hearing Set on Due Process Bill

Rep. Clay Aurand, Chair of the House Education Committee, has announced that a hearing has been scheduled for HB 2179 which would restore due process protections for Kansas teachers who have completed a probationary period. The bill re-enacts the law as it was prior to repeal in 2014.

Due process was repealed in 2014 without ever having been introduced as a bill and without any public announcement or hearing. The repeal was enacted after midnight as a floor amendment to a must-pass school funding bill. With it attached to the finance bill, the bill was unable to receive the needed 63 votes to pass until House leadership enacted a call of the House under which members are locked in the chamber indefinitely. Eventually – about 4:00 am as we recall – a 63rd vote was gained through pressure and exhaustion.

HB 2179 has 45 legislative co-sponsors from both parties. We look forward to a fair hearing and having a vote on the bill in committee next week.


LPA Study on Health Benefit Consolidation

The Division of Legislative Post Audit today released their study on the feasibility of consolidating school district health benefit plans into one mega-plan similar to the State Employee Health Plan (SEHP). The idea was raised as a possible cost saver in the Alvarez and Marsal efficiency study. They suggested a savings of about $80 million per year. Finding himself short of cash in setting a budget, Governor Brownback leapt on the idea and called for this to happen by January 1, 2018.

Unfortunately for the Governor, the LPA indicates that even if they decided to move forward, it could not be done so as to gain any savings in 2018.

Beyond that, the savings are lower in the LPA study. They suggest perhaps $38 million in efficiency savings and another $25 million by shifting costs onto employees. What they did was look at what happens if you put school employees in a plan modeled on the SEHP. Doing this would significantly reduce benefits for school employees by raising deductibles, increasing co-pays, and increasing the out-of-pocket maximum per year. The state would then “claw back” those savings leaving school districts with less budget authority. The savings garnered by reducing benefits would not go to the employees as pay raises but to the state general fund presumably to shore up Brownback’s reckless tax cut program.

Passage of a plan to make this consolidation happen is basically a cut to school employee compensation across Kansas by $25 million.

There will be a hearing on a bill to enact the consolidation on Monday. KNEA will be there to oppose the bill.

CLICK HERE to read the full LPA report.

CLICK HERE to read the healthcare report highlights.


Senate Voting Tomorrow to Cut Education, Pass Inadequate Tax plan

The full Senate will convene tomorrow to vote on two bills. Senate Bill 27 would cut education funding by $154 million – $128 million from K-12 and another $23 million from higher education.

Their tax bill, SB 147, would raise income tax rates for all Kansans, repeal the low-income tax exemption for those earning less than $12,000/year, and repeal the LLC loophole but does nothing to end the glide path to zero which is the root of future revenue declines. There is much debate about what it would raise – perhaps $280 million in 2018.

The problem with this bill is that it does not go nearly far enough in solving the revenue crisis facing Kansas. The budget holes Kansas now faces in 2017 and beyond are enormous. Most analysts believe the state will need to raise at least $580 million just to break even and not accounting for any pending decision in the Gannon school finance lawsuit.

Kansas NEA has released a statement along with USA/KS, KASB, KSSA, and others calling on the Senate to vote NO on SB 27 and to send SB 147 back to committee for more work.

CLICK HERE to email your Senator.

read more

Brownback’s Proposal and its Impact on KPERS *Spoiler Alert*: It’s not pretty.

Jan 23, 2017 by

Post Highlights

  • KPERS officials explain the “what ifs” of Brownback’s irresponsible budget.  Short version:  DISASTER for KPERS.
  • Brownback’s Budget proposal would reduce KPERS contributions by a total of $600 million, extend the time to pay down KPERS’ existing unfunded actuarial liability by 10 years, and add $6.5 billion to the State’s contributions over the long term to pay for it.
  • The full breakdown of the effects of Brownback’s proposal on KPERS is included in today’s Under the Dome.
  • Brownback’s plan mortgages the future to pay for the $350 million budget hole which remains through the end of this fiscal year.
  • There are solid and sensible solutions which take a comprehensive approach to dealing with the Governor’s failed experiment.
  • It is important that we all educate ourselves on the nature of the problem and the solutions so that we can encourage our legislators to take the bold steps necessary to achieve long-term results (those solutions are outlined in today’s under the dome and in more detail RIGHT HERE).
  • Governor recommends bills for health benefit consolidation.

KPERS explains the disaster in Brownback’s budget recommendation

The best explanation of the mess that would be created if Governor Brownback’s irresponsible budget recommendations on KPERS were to be enacted was presented to the House Pensions Committee today. We can’t explain it better so here is the document given to the committee this morning:

Governor’s Budget Proposal

$600 Million Shortfall Over Next 3 Years

With the start of the new legislative session, the Governor has announced his budget recommendation for Fiscal Year 17 (current revised), 18 and 19. In short, the proposal would reduce KPERS contributions by a total of $600 million, extend the time to pay down KPERS’ existing unfunded actuarial liability by 10 years, and add $6.5 billion to the State’s contributions over the long term to pay for it. What we don’t pay for now costs more later.

The Breakdown

  1. In FY 2016, the Sate delayed its fourth quarter payment for State/School employer contributions with a promise to pay it in FY2018 with interest.

Governor’s Recommendation: do not pay

  1. Governor’s Recommendation: freeze contributions in FY2017, 2018 and 2019 to the reduced amount paid in FY2016.
  2. Governor’s Recommendation: Pay off the existing unfunded actuarial liability over an additional 10 years.

The Result

  • 4 missing State quarterly payments and a total shortfall of $600 million
  • Eventual State/School employer contribution rate of 12% to 13% through FY 2045*
  • Long-term additional cost of $6.5 billion
  • Funded ration stays in the 60% “cautionary” range for an additional eight years or through 2030
  • Unfunded liability increases by about $1.3 billion, and it will take 20 years to get back to where we are now

*Doesn’t affect Local employer contribution rates.

Most Important

It’s most important to remember that this does not affect benefits for current retirees, or even for those thinking about retiring. KPERS has $17 billion in assets to pay benefits for many years. The funding shortfall is a long-term funding issue. However, underfunding continues to add to the unfunded liability and undermines KPERS’ long-term strength.

The State’s recent $1 billion pension obligation bond was a significant step in the right direction. But it’s consistent and full employer contributions over time that will make the most difference in having a sound and sustainable retirement system.

What’s Next?

We are at the beginning of the session. And budget legislation will wind its way through the usual process. The Governor’s proposal is a starting point for discussion.

We’ll keep you posted as things affecting KPERS develop in the months to come.

So far the Governor’s proposal is getting a cold reception under the dome. As we reported last week, the K-12 Education Budget Committee has recommended to the full Appropriations Committee that they reject the Governor’s KPERS proposal.

Mortgaging the Future; Cutting the Present; Solving the Problem

You might be wondering what the H-E-double hockey sticks is going on up here in Topeka. You know that there’s a big problem facing Kansas and that problem has been caused by the reckless and irresponsible tax policy proposed by Governor Sam Brownback and passed with great joy by his legislative allies.

That’s true. And here, after four years, Kansans learned the lessons of trickle down economics/tax policy and have thrown many of those responsible out of office, replacing them with new moderate Republicans and Democrats. So this should be the right time to put the brakes on the Brownback disaster and reverse course. It should be easy, you’re thinking.

Oh, that it were so simple!

Brownback issued his “balanced” budget and it’s a doozy! Essentially, Brownback achieves “balance” by mortgaging the future. He robs from the highway plan, he sells off our tobacco settlement money turning this long-term asset into long-term debt, and he steals from KPERS reversing all the hard work done by previous legislatures to stabilize and secure the system.

That’s one way to take care of the issue but let’s take a look at the deeper problem.

First, we are dealing wth three years. Problem one is to find about $350 million to fill the hole in the last six months of fiscal year 2017. The next problem is to solve the revenue decline so as to fix the holes in future budgets – notably fiscal years 2018 and 2019.

Then there is the problem of a Governor who continues to believe his plan is working despite all the evidence to the contrary.

Next, we have a legislature with an enormous number of freshmen, many of whom are just getting their feet on the ground and beginning to understand the process. Remember, we are only 10 days into the 2017 session!

And finally, we are faced with two separate and individual committees in each chamber tasked with the hard work – House Appropriations and Senate Ways and Means that craft budgets (spending) and House Taxation and Senate Assessment and Taxation that craft tax policy (revenue). Somehow, we need to get a revenue plan that corresponds with our budget or spending plan. Not so easily done!

So far – 10 days in – we have only ideas. Okay, we have one bill, HB 2023 that repeals the LLC tax exemption; but really, that’s it.

One idea is the Governor’s: Let’s just mortgage the future, increase the state’s debt, and click our heals while repeating “His tax plan will work, his tax plan will work.”

Another idea is to fix the revenue by reversing the Governor’s policies. The LLC repeal is part of that. The Rise Up plan is another way to do that.

And a third idea – if you don’t like mortgaging the future or reversing the tax cuts – is to cut spending. There is no bill out there proposing that we cut spending.

But things do need to be talked about. And some ideas can be floated to get people thinking about other ideas.

No legislator likes to cut spending or raise revenue (aka raise taxes). And right now there is little interest in mortgaging the future. In order to get people to think that raising revenue needs to be on the table, we have to get them to see what happens if we do not raise that revenue.

This is why leaders will ask what spending cuts look like. Legislators are always reluctant to raise taxes and you can be sure that those who support the Governor will all any reversal of his tax policies an increase. Understanding what the alternative looks like – ruined highways, compromised public safety, stripping seniors and those with disabilities of service, and even cutting public school funding – will help legislators understand the importance of passing a revenue plan that supports vital government functions.

So, it’s early. The new leaders in the House and Senate are not showing support for cutting services more. But the discussion is important. Unless all legislators understand the depth of the problem and the ramifications of taking one path or another, they won’t be ready to make the hard decisions that are yet to come.

Don’t panic yet. But do continue to communicate with your legislators. Let them know that you expect them to deal responsibly with the failed tax policy of Governor Brownback. Make sure all Kansans expect the legislature to reverse course on revenue and support quality state services across the board.

Health Benefit Consolidation, Procurement Bills Introduced

Two bills recommended by the Governor have been introduced. One would enact the consolidated health insurance plan for all school districts while the other would establish a centralized procurement program for school districts.

Both bills were introduced as committee bills in the House K-12 Budget Committee in order to have the discussion on these issues.

read more