- 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Senate Bill 147 would have increased income tax rates, ended the income tax exemption for the poorest Kansans, and repealed retroactively the LLC loophole.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.