Big Issues! Tax cuts, KanCare expansion, & School finance

Mar 7, 2019 by

Big Issues! Tax cuts, KanCare expansion, & School finance

It’s big-time under the dome these days (although the light committee schedule would appear to say otherwise).

We’ve spent much time reporting on Senate Bill 22, the budget-busting tax cut bill that passed the Kansas Senate on February 7. As it passed the Senate, the bill would cut taxes by about $190 million putting a budget out of reach that would fund schools, help the foster care system, fix the crisis in Kansas prisons, and restore highway funding. The Senate version would provide about $140 million in tax cuts for multi-national corporations and lets about 9% of Kansas individual taxpayers itemize their state income on taxes even if they can’t on their federal return at a cost of another $50 million.

The Kansas House Tax Committee added a one-cent reduction in the food sales tax, costing the state about $60 million and then inserted a change in the way internet sales taxes are collected and remitted which would increase taxes to the state by about $41 million. So the House version would cost the treasury about $210 million.

After a long debate during which the House rejected all but one amendment to the bill, it was advanced to final action on a vote of 80 to 42. The only amendment that was adopted was one by Rep. Ken Corbet (R-Topeka) defining foods subject to the lower sales tax as those items that can be purchased with food stamps. Amendments by Representatives Jim Ward (D-Wichita) and Tim Hodge (D-Newton) aimed at removing the corporate tax breaks and maintaining those that benefit working Kansans were all rejected on identical party-line votes of 40 to 89.

The bill is now subject to a final action vote which will take place either Friday or Monday.

A “Round-table Discussion” on KanCare expansion

Representative Brenda Landwehr (R-Wichita), chair of the House Health and Human Services Committee, held a days-long round-table discussion on KanCare expansion this week. KanCare is the Kansas version of Medicaid so this amounts to a discussion on the expansion of Medicaid under the Affordable Care Act.

Expansion was approved by both the House and Senate in 2016, only to be vetoed by then-Governor Sam Brownback. The House voted to override the Governor’s veto but the override fell short in the Senate.

Medicaid or KanCare expansion is needed for a number of reasons:

  • Our rural hospitals are in financial trouble and expansion would dramatically improve their chances of staying open. Some hospitals have already had to close. The first to shutter was in Independence and just last month, the hospital in Horton indicated that it may be closed. Employees were working without pay. Hospitals in Fort Scott and Oswego have also closed.
  • KanCare expansion will encourage work and job advancement among low-income parents. In Kansas, a parent makes too much to qualify for KanCare if she earns more $7,896 per year for a family of three. If she works a minimum wage job just more than half-time, she would make too much to qualify. If she gets a better job, a raise, or more hours, she would fall into the coverage gap – her income is too high for KanCare and too low to qualify for assistance to purchase private insurance. If Kansas were to expand KanCare, low-income parents could earn more without losing their health coverage.
  • Expansion would provide coverage to between 130,000 and 150,000 working Kansans who cannot afford coverage now.
  • While Kansas would be required to pay a portion of the costs (about $47 million), the bulk of the cost would come from the federal government. In 2020, 90% of the cost would come from the federal government. Kansas has already forfeited more than $3 billion in federal aid from taxes that Kansans are paying!

While both the House and Senate have voted before in favor of expansion and both would likely do so again now, the leadership in both chambers remains opposed and have worked tirelessly to block all efforts to force a vote on expansion. Rep. Dan Hawkins (R-Wichita) is now the House Majority Leader and has led the efforts to block expansion. Rep. Landwehr who now holds the chair of the Health and Human Services Committee is also a strong opponent of expansion.

During the first day of the round-table, Republicans Jim Kelly (Independence) and John Eplee (Atchison) spoke in support of expansion and raised their personal experiences – Kelly with the harm to his community caused by the closing of the hospital and Eplee to his experience as a physician with the harm to Kansans who can’t get the care they need.

Read about the first day of the round-table in the Capital-Journal by clicking here.

Find out more about KanCare expansion at the website of the Alliance for a Healthy Kansas by clicking here. KNEA is a member of the Alliance.

School finance moving

We reported that the first school finance bill – SB 142 – moved out of committee on Wednesday and will go to the full Senate for debate probably next week. This bill contains only the proposed inflation fix to school finance required by the Gannon decision.

It is important to understand that not everyone agrees that this bill will be approved by the Court. There are two interpretations of what the Court was requiring. This bill puts in one inflation increase and then maintains that through the following years. Schools for Fair Funding (SFFF) believes the Court wants to see an inflation increase each year along with the spending increases passed last year. KNEA’s interpretation has been the same as that of SFFF.

We would anticipate at this time that what is likely to pass is this bill along with SB 147 which is the rest of the education budget. When combined, these bills are the same as SB 44, the Governor’s school finance bill introduced at the start of the session.

We are expecting a Senate floor debate on SB 142 next week.

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School Finance Bill to Senate Floor

Mar 6, 2019 by

The Senate Select Committee on School Finance held a hearing and then worked Senate Bill 142, a school finance bill to address the Gannon inflation fix.

The Governor’s school finance bill, SB 44, was split into two bills – SB 142 and SB 147 – with SB 142 referred to the Senate Select Committee on School Finance and SB 147 to the Ways and Means Committee. Together, these two bills match exactly what was in SB 44.

Complicating the discussion this week was the discovery by Schools for Fair Funding (SFFF) that both SB 44 and SB 142 were not written in a way that reflected the plaintiff districts’ interpretation of the Gannon decision. Their interprertation is that the state needed to provide an additional inflation factor above any new money in the out-years of the prior passed law. KNEA has held the same interpretation.

The State Board of Education, however, adopted a position that the requirement was to provide the inflation factor one time and then simply carry it forward. There is a large difference in funding between these two positions.

Today, SFFF presented testimony in opposition to SB 142 while KASB testified in favor saying they supported the State Board. Also in opposition was the Kansas Policy Institute essentially because they believe the Court can’t tell the legislature what to do.

KNEA testified as neutral, telling the committee that we had the same interpretation of the Gannon decision as SFFF and noting that there were two interpretations in the room. The only ones to say what the actual meaning in the Court’s decision are the justices of the Kansas Supreme Court. We noted that, under our interpretation, this bill will not end the litigation.

Said KNEA lobbyist Mark Desetti, “If you send this over to the Court, SFFF will argue against it while the AG will defend it. In the end the Court will decide if this is enough or not.”

KNEA put our position this way:

We ask that the Legislature do two things.

First, leave the finance formula alone. It has been determined to meet constitutionality in terms of equity. Any alterations to the formula, any efforts to have additional funds directed in new or specific ways will simply raise the possibility of once again harming equity. The best thing to do is to put new money on base aid as this not only helps students generally but impacts other aspects of the formula such as at-risk and bilingual funding.

Secondly, provide the inflation fix in each of the out years in a way that gets us to the Montoy “harbor” accounting for inflation.

We firmly believe that if you do these two things, you will resolve the Gannon case and end this cycle of litigation.


After the hearing, the bill was brought to the table for discussion and passed out of committee favorable for passage by the full Senate. It will now go to the Senate for debate and possible action.

In the meantime, we await a hearing in the Ways and Means Committee on SB 147, the rest of the education budget.

Big tax bill – SB 22 – up on the House floor tomorrow!

This year’s big tax cut bill is up for a vote tomorrow on the House floor. The bill includes a huge cut in taxes on multi-national corporations, permission for a few higher-income Kansans to continue itemization on state income taxes, a one cent reduction in the food sales tax, and a new provision allowing for collection of state and local sales tax on internet purchases.

KNEA opposes this bill as it strips over $200 million out of the state treasury before the budget has been passed and before school finance is resolved. The state is still digging out of the Brownback tax disaster; to start cutting taxes of this magnitude at this time is irresponsible.

We urge you to contact you Representative using the link below. Say, “PLEASE VOTE NO ON SB 22!”

Stop a Dangerous New Tax Plan

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Wasn’t that a mighty storm?

Feb 8, 2019 by

One storm was on the Senate floor

Senate President, Susan Wagle

The tax debate storm hit the Senate floor Wednesday night as the ice was moving in on most of the rest of Kansas. And frankly, some of the exchanges in the debate were a tad icy as well!

Senate President and self-appointed chair of the Senate Select Committee on Federal Tax Code Implementation Susan Wagle (R-Wichita) brought her pet project, Senate Bill 22, to the floor for debate. While Wagle has tried to portray her bill as real help for working Kansans, it is in reality a large corporate tax giveaway with little benefit for individual tax filers and no relief to working families.

We’ve been reporting on this bill as it was discussed in Committee but just to review, here are the facts in a nutshell:

  • It decouples the Kansas income tax code from the federal income tax code,
  • It stops retroactively the collection of Kansas income taxes on overseas earnings by multi-national corporations through the repatriation of overseas earnings,
  • It protects multi-national corporations from paying additional Kansas income taxes under the GILTI tax provisions,
  • It allows individual tax filers who will not longer itemize on their federal taxes due to the increase in the standard deduction to continue to itemize on their Kansas income tax forms

The bill has an estimated fiscal note of $192 million with $137 million of the benefit going to the multi-national corporations. $54 million would go to Kansas individual taxpayers who cannot itemize on federal taxes but would benefit by doing so on state taxes.

In the debate Sen. Wagle noted that 9% of Kansas tax filers can continue to itemize under the federal law and see a tax decrease under the Trump tax cut. Those 9%, the wealthiest Kansans, get no benefit from SB 22.

Another 9% of Kansans will see a tax benefit by no longer itemizing on their federal taxes and will see a modest tax increase in Kansas as a result. This 9% of Kansas tax filers will get a small benefit from SB 22.

The other 82% of Kansas tax filers – those working families and low income workers – get no benefit at all. Talking about this bill as tax relief for working Kansans is just not right. It really only benefits the wealthiest individuals and multi-national corporations.

What the bill will do, especially coupled with Senate Bill 9, is to drain much of the state treasury before a budget can be adopted making it much harder for Governor Kelly to address school finance, the failing foster care system, highway maintenance, health care, and the mess in our prison system. This bill is essentially a cynical political attempt to hamstring the Governor.

The only amendment considered last night was offered by Senator Dennis Pyle (R-Hiawatha). The Pyle amendment would have exempted social security income from state income taxes. Pyle asserted that retirees are fleeing Kansas seeking homes in those states that don’t tax social security. Pyle also admitted he had no research or data to prove his point. His amendment received only five votes. Pyle had asked for a roll call vote but failed to get five senators to support him on that.

Senator Tom Holland (D-Baldwin City) moved to send the bill back to committee with the intent of splitting the corporate and individual tax provisions and considering alternatives to simply decoupling from the federal code. His motion failed on a vote of 12 – 28 with Senator Mary Jo Taylor (R-Stafford) joining the Democrats in supporting the motion.

In the end the bill was advanced to final action on a voice vote.

Overnight storm closes almost everything…but not the Statehouse

While most of Northeast Kansas was closed due to a nasty ice storm and a dusting of snow on top of slick roads, Wagle announced that the Legislature would open so she could get her bill voted on final action.

In explanations of vote, Senator Bollier (D-Mission Hills) noted that the bill was fiscally irresponsible, that the fiscal note was speculative, and that the budget should be settled before considering tax changes. Senator Hensley said, “Kansans made it clear they don’t want more irresponsible policy when they elected Laura Kelly.”

“For the cost of this bill,” said Hensley, “the food sales tax could be cut in half.”

Republican Senator Mary Jo Taylor voted NO and suggested that the Legislature should first address their responsibilities before considering this bill.

In the end the bill was adopted on final action on a vote of 26 to 14. Senators John Doll (I-Garden City), John Skubal (R-Overland Park), and Mary Jo Taylor (R-Stafford) joined all 11 Democrats in voting no. The bill must now go through hearings and votes in the House before it can go to the Governor for signature or veto.

Governor’s school finance plan hearings in Senate Ed Finance Committee

Senate Bill 44 is currently in the Senate Select Committee on Education Finance. The hearing on the bill began yesterday and will continue on Tuesday next week.

This week many superintendents from around Kansas testified in favor of the bill, as one might expect. But the most notable testimony came from Schools for Fair Funding (SFFF), representing the Gannon lawsuit districts.

SFFF told the committee that should the Legislature pass SB 44 without amendment and with no changes to the school finance formula, they would stipulate to the Court that the solution met the funding needs of schools providing the Court retained jurisdiction in order to ensure that future Legislatures do not renege on the promises made in this legislation.

Senator Denning (R-Overland Park) pressed SFFF repeatedly on this issue to make it clear that the bill would be acceptable despite the fact that the inflation factor used in the bill – and recommended by the Kansas State Board of Education – is somewhat lower than the actual CPI.

We will see if this information has an impact. If adopted as is with no changes to the formula, SB 44 could actually end the Gannon school finance lawsuit.

This hearing will continue next week when KASB, KNEA, Game on for Kansas Schools, and the PTA will testify in favor. The only opponent will be the Kansas Policy Institute who consistently asserts that schools have more than enough funding right now and are failing.

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Quiet Day One of Wrap-up Session

Apr 26, 2018 by

Day one of the 2018 legislative wrap-up session was a quiet one. A number of conference committee reports were adopted and some new bills were introduced. The House was done shortly after noon today and the Senate later in the afternoon. Neither chamber planned to work into the night as this is the day of annual Legislative Shrimp Peel, an event to raise money for Kansas Special Olympics.

School Finance Measures

Of the bills introduced in the House, several were addressing the error in SB 423, the school finance bill. We don’t have the numbers yet and they won’t be available online until later but here’s what we understand about three of them:

HB 2796 – This would repeal the mandatory LOB provision that caused the error, restore other LOB provisions that had been changed, and adjust BASE aid accordingly.

HB 2797 – This would somehow amend the mandatory LOB provision so that the lost $80 million would be restored but we believe would keep the mandatory 15% LOB levy.

HB 2798 – This would strike provisions requiring school districts to adopt a minimum local option budget and transfer funds from the supplemental general fund to certain categorical funds; restore certain provisions relating to local option budgets and adjust the BASE aid accordingly.

There was another bill read in – probably HB 2799 – that would do what HB 2798 does and increase BASE aid by adjusting how the cost of living index was applied. It would also increase special education aid to the statutory 92% reimbursement and repeal a cap on bond and interest payments.

There is also a bill in the Senate (we do not have a number yet) that we understand is the same as HB 2796.

We will be keeping an eye on these bills as the session continues.

The KPERS Repayment

Yesterday we reported on a Governor’s Budget Amendment (GBA) that would prepay $82 million in money owed to KPERS. KNEA supported the GBA. The House Appropriations Committee not only supported it, they augmented it by increasing the payment to $192 million before passing their budget bill out of committee.

In response to good revenue projections, the budget committees now have the ability to not just afford the school finance costs in SB 423 but to do good work in other areas as well. These revenue projections are why there is a move to increase the funding in the school finance plan which would, in turn, raise the chances of the plan being constitutionally adequate thus keeping our schools open and ending the need for a special session.

But after adding the increased spending to the budget bill, the committee adopted an amendment by Rep. Brenda Landwehr (R-Wichita) that would lapse all the new spending if the Supreme Court did not accept the school finance plan. House Minority Leader Jim Ward (D-Wichita) said the Landwehr amendment was cruel in that it “dangles money” in front of constituents only to pull it back based on the Court ruling. 

The Landwehr amendment was adopted after an 11 to 11 tie vote with Committee Chair Troy Waymaster (R-Bunker Hill) breaking the tie with his YES vote.

In other words, don’t count on the KPERS restoration just yet.

The House will debate the budget bill tomorrow.

House Doesn’t Take the Senate’s Massive Tax Cut

The House did take action today on Sub for HB 2228, the Brownbackian tax cut bill passed by the Senate on April 7. Because the Senate put the plan in a House bill, the House could not amend it, only vote to concur or non-concur in the changes.

Tax Committee Chairman Steven Johnson (R-Assaria) made a motion to non-concur in the Senate changes and send the bill to a conference committee. That motion was passed on a voice vote. What this action means is the chances of the House adopting the Senate tax cuts is remote but what tax cut bill might emerge from conference is anyone’s guess.

KNEA continues to believe that Kansas would be best served if legislators would resist the urge to cut taxes while we are only 10 months into recovery from the disastrous Brownback tax experiment.

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Are We Ready for Tomorrow?

Apr 25, 2018 by

The Legislature is set to return on Thursday, April 26 and at the top of everyone’s list of questions is “What about the school finance error?”

Maybe not everyone’s, but it’s on the top of our list!

We’re working on rumors and some good intelligence gathering to try and figure out how things will go down come Thursday.

First, we know there is a planned fix for the error which is tied to Rep. Clay Aurand’s (R-Belleville) effort to mandate a certain level of LOB effort and label it as part of BASE aid. The error can be fixed simply by repealing that provision and we are hopeful that will be the first order of business.

Of course, in the meantime, the state has received more good news about revenue collections and that has spurred a lot of talk about what to do with this “extra” money.

Rumor has it that the some in the House will again try to add to the school finance bill perhaps by pursuing either an amendment offered earlier by Ed Trimmer (D-Winfield) to change how the CPI was calculated in determining  a funding level or one by Jeff Pittman (D-Leavenworth) that would boost the reimbursement of special education funding to the statutory 92%. Both amendments were considered in floor debate on SB 423 earlier and were not adopted, having received only 41 and 43 votes respectively.

If SB 423 is amended to fix the LOB issue and restore the $80 million, we believe there is a chance that the Court will still believe the bill falls short of constitutional adequacy either for the overall increase or for the five-year phase in. Such a Court decision could result in a special legislative session this summer. There is also a chance the Court could call this bill a “good faith effort” and give the Legislature another year to augment the future-years in the plan. We’ll just have to wait and see.

If either the Trimmer or Pittman amendments were to be added, it increases the chances that the Court will approve the plan but it may also create a greater challenge getting the bill through the Senate – we are confident Senate President Wagle (R-Wichita) and Majority Leader Denning (R-Overland Park) will oppose such increases. We just can’t predict what might happen to the 21 votes in the Senate if the bill gets costlier.

KNEA supports the Trimmer and Pittman amendments because both align with our Legislative Agenda and priorities. But we also believe that, should they be offered and fail, that is not a reason to vote NO on the $80 million fix. To allow SB 423 with the error to stand as the proposed solution to Gannon would be irresponsible, to say the least. And it would guarantee a negative reception in the Court, a special summer Legislative Session, and the possibility that our schools will be closed come August.

Now throw into this the Senate’s massive, “Brownbackian” tax cut bill, HB 2228. This bill, which now goes to the House, gives away more than $500 million in new tax cuts and tax adjustments. Coincidentally, the new school finance bill with the fix costs more than $500 million. Passage of HB 2228 cancels out the revenue needed for SB 423!

The Court has been very clear that they want a school finance plan that has the money in it. They have essentially said, “show us the money.” To pass a $500 million finance plan concurrent with a $500 million tax cut would be a disaster. Remember that in the early stages of Gannon, the State argued that there was no revenue for increased school funding and the Court responded that the money was there but the Legislature gave it away in the 2012 Brownback tax cuts. Deja Vu all over again!

Our hopes for the next nine days?

Fix the mistake. Repeal the Aurand LOB amendment. That will restore the bill to the level of funding that was intended on April 7 and take care of new equity challenges.

If the votes are there to increase the funding, do so. We support full funding of special education – we always have and always will. If such amendments are not adopted, pass the underlying bill that fixes the error. Do not use a desire to do more as an excuse to not fix the underlying problem.

Resist the temptation to cut taxes again. Kansas is still in recovery from the Brownback disaster. Things are looking good but this is not the time to cut taxes. We still have to meet school funding adequacy and we also need to address the mess in our foster care system, the challenges faced in public safety, the restoration of funds taken from the highway program and KPERS, and many other vital services. Tax cuts can wait. Remember that voters in 2016 sent many new legislators to Topeka specifically to restore our revenue system. It’s only been 10 months since that happened.

Good Revenue News Means We Can Have Necessary Things Again

We, like all Kansans, are happy to see continuing good news about revenue collections. We’ve repeatedly exceeded estimates thanks to the work of a bipartisan group willing to vote to repeal Brownback’s income tax changes and then vote to override his veto of their action. It looks like the state is on a path to stability once again. We’re not out of the woods but, as Sam would have said, “The sun is shining in Kansas.”

The revenue news means different things to different legislators. Some, as we noted earlier, want to go back to handing out tax cuts as if we had already satisfied the Court school finance ruling, restored the highway plan, paid KPERS back, found the 70 missing children in DCF, and so much more.

In truth, the news means that while we can have some necessary things, we still have a lot to do to get back to our beautiful Kansas.

For the first time in a long time, the legislature is looking at budget profiles with ending balances above zero. In fact today the budget committees are looking at reports that show the state meeting the required 7.5% ending balance. HB 2228, the tax cut bill would wipe that out of course but in the meantime, they can look at other things to fix.

Governor Colyer has submitted a Governor’s Budget Amendment (GBA) that would take funds above the 7.5% ending balance and make an early payment to KPERS. The Legislature is supposed to be making back payments to KPERS by 2020 and this GBA would bring a portion of that payment up now. KNEA supports this GBA. It is critical that KPERS be paid back and the sooner, the better.

This one opportunity and action should be enough to convince responsible lawmakers to step back from the temptation to return immediately to the tax policy decisions that led Kansas to the brink of disaster. We don’t need another radical tax cut – that’s how the Legislature created the problems we are facing today. Now that things are turning around, we hope the Legislature will focus on restoration of services and programs that have made Kansas a great place to live, work, and raise a family.

Join with Our Partners and Urge Your Legislators to Reject Irresponsible Tax Cuts

KNEA is working with other organizations to make sure that our state has ample time to recover from the Brownback experiment before considering any reductions in taxes. As they return to Topeka, it’s important for them to hear that voters want them to act responsibly to ensure our economic and budget recovery. Please take the time to email your Legislators.

Click here to send a message to your Legislators.

 

 

 

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