Governor Laura Kelly’s budget released

Governor Kelly’s budget was unveiled before a joint meeting of the House Appropriations and Senate Ways and Means Committees, and, true to her word in the State of the State Address this week, she has focused on maintaining core state services and delivering a fiscally responsible package.

When it comes to education, Kelly’s proposal fully funds the school finance formula found to be constitutional by the Kansas Supreme Court in the Gannon case. Kelly said in her speech our children’s education is a core service of the state and she is committed to following through on promises to fund our schools at a constitutional level.

During the height of the pandemic economic crisis over the summer, Kelly had asked agencies to submit a budget with a 10% reduction. Now, in light of a slowly recovering economy, she was able to restore some of those cuts. This is true in higher education funding where she restores most of the 10% funding reductions and all of the reductions to student financial aid. Nearly 80% of the reduction to community and tech colleges was restored.

The budget also reflects her commitment to end transfers from the state highway fund to the general fund. For fiscal year 2021, she cuts the transfer by 50% and eliminates it entirely in fiscal year 2022.

In her search for resources to balance the budget, Governor Kelly proposes application of the sales tax to digital products (streaming services, digital music, e-books) and requiring online market facilitators to collect and remit sales taxes on purchases made on those platforms.

Once again, Kelly has proposed re-amortization of KPERS. This had been a long-time Republican proposal until Kelly proposed it two years ago; now Republicans oppose it. The advantage to re-amortization is that it reduces the immediate cost to the state and provides money to support the budget without a tax increase. The downside is that it stretches out the time it will take for the system to meet “equilibrium” in dealing with the unfunded actuarial liability. It’s essentially like refinancing your house – you get money to pay for an addition or to send kids to college but you pay on the mortgage for a longer time.

Retiree benefits are not impacted by re-amortization; the system is safe. There are other things to wonder about in this proposal. There will be complaints about stretching out the timeline and whether that costs the state more in the long run. On the other hand, the lower payments make it less likely that the legislature might refuse to fund KPERS when times are tough.

This proposal has been rejected by the legislature in the 2019 and 2020 legislative sessions.

Senate Taxation Committee running full speed ahead on tax cuts, limits

Kansas Senator Caryn Tyson (R-Parker), chair of the Senate Assessment and Taxation Committee wasted no time, holding a hearing on a so-called “transparency” bill that would make it far more difficult for municipalities to benefit from increased property revenue due to valuation changes. The bill would repeal a legislatively-enacted property tax lid on cities and counties with a requirement that property tax changes would have to be “revenue neutral” from year to year. In essence, municipalities could not benefit from changes in valuation.

Should a municipality need additional funds to maintain or expand services to residents, the governing body would have to publish data showing what one’s property taxes would be under the revenue neutral requirement compared to what the municipality is seeking. There would then be a mandated public hearing on the proposal followed by a vote by the governing body to adopt or reject the proposal.

This bill passed last year, but was bundled with other tax measures and subsequently vetoed by Governor Laura Kelly.

Still in hurry-up mode, the Assessment and Taxation Committee will take up SB 22, the Kansas Chamber’s corporate tax cut and federal tax decoupling bill, which failed in the last two sessions, on Thursday. Tyson plans to work the bills on Thursday as well.

Senators get mad when challenged on transparency

There’s been a lot of talk about “transparency” in the Kansas Statehouse the last few years which has included efforts to get legislators to put their names on the bills they propose, be clear on posting notifications of meetings and actions, and attempts to do away with “gut and go” procedures that allow bills to skirt the committee process entirely.

In two Senate committees on Wednesday – Assessment and Taxation and Judiciary – a “citizen lobbyist” (aka volunteer) from the Kansas chapter of the Sierra Club spoke to the discussions in those committees that were not properly noticed for the public. The committee chairs were having none of it with Senator Tyson being particularly forceful in pushing back. Both Tyson and Judiciary chair Kellie Warren (R-Leawood) shot back, declaring they had properly provided notice of the hearings/discussions and met the requirements of the law.

To be fair, they had. But to also be fair, they did not do so in the most transparent manner. Paid lobbyists and Statehouse regulars know how to find things that might not be in the printed calendars but members of the general public depend on that calendar. Every day, a calendar for the next day with all scheduled committee meetings and the business of those committees is listed. Tyson said her hearing was published on the Legislative Research web page while Warren said her committee work was posted in an agenda published under the committee on the website.

We don’t say that any notice laws were violated but asserting that this is “transparent” to the general public is pushing credibility. As lobbyists, one would expect us to know where to look for additional information or who to ask. The general public – John and Jane Q. Citizen – should be able to depend on the legislative calendar.

K-12 Budget Committee revisits 2020

The first meeting of the K-12 budget committee was quick; just some bill introductions and introductions of the members and staff. The veterans, however, immediately brought up controversial legislation from the past with Rep. Brenda Landwehr’s (R-Wichita) re-introduction of last year’s HB 2465, and expansion of the state’s current tax credit/voucher program. Rep. Kyle Hoffman (R-Coldwater) reintroduced SB 353, a reporting bill regarding district allocation of resources.

They’ll be meeting next week for informational briefings; no voting.