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KANSAS LEGISLATURE REACHES “TURN AROUND” POINT

The Kansas Legislature has reached its first milestone, “Turn Around”. This is the point at which a bill must pass its house of origin or it remains in committee to be discussed next year. The exceptions to this rule are bills that are referred to the Appropriations, Tax, Judiciary and Federal and State Affairs committees. I have been impressed with the bi-partisan cooperation that has taken place between House Democrats and Republicans. As a result, we have approved more legislation by this point in the session than at the same time during the previous four years. This legislation includes a new tax plan, a budget for the remainder of 2017, a bill to expand Medicaid and a bill to provide due process for public school educators along with over two hundred other bills and resolutions. It is amazing what can be done when people work together.

Legislation of Local Interest:

Identical bills were introduced in the House and Senate to give Sumner County an at- large member on the Cowley College Board of Trustees. I introduced the House bill and it was passed during the third week of February and sent to the Senate.

At the request of a constituent, I also introduced a bill that would require insurance coverage for amino-acid based formula for children who have a variety of serious eating disorders. While the bill was not passed, it was scheduled for a yearlong study, which actually moves the bill closer to passage next year.

Anita Judd-Jenkins, Representative from Arkansas City, introduced a bill into the House Committee on Taxation. It would qualify Cowley County to be a Rural Opportunity Zone (ROZ), which would give the county a multitude of economic development tools to increase business activity, employment, and educational opportunity. Kerri Falletti, the Cowley County Economic Development Director, Virgil Watson, the Director of the South Central Medical Center, and numerous stakeholders, including myself, provided testimony. The bill had a hearing and may still be worked since it is currently in the Tax Committee.

Education Funding:

The K-12 Budget Committee, of which I am the ranking minority member, has been hearing a wide range of school funding proposals. After the “Turn Around” break, we will begin building a new formula from these ideas. It appears that many of us on the committee, would like to maintain the pre-block grant formula that has already been ruled constitutional by the Kansas Supreme Court. There may be a need for a few changes to help schools avoid a significant loss in revenue from enrollment declines.

Teacher Due Process:

The House amended a teacher due-process bill into another worker due process bill and made it the primary focus. Many of the opponents kept calling the issue teacher tenure and said it made it harder to fire a bad teacher. Those of us, who favor the idea, believe that it will protect good teachers from unfair dismissal and encourage schools document that a teacher is not preforming well, if that truly is the case. In the past, due process reduced the number of lawsuits for wrongful termination because a well-documented dismissal usually deters teachers from suing a school district. The law will still keep the three-year probationary period for new teachers, which can be extended to five years, at the administration’s request. A probationary teacher is not eligible for due process. It was necessary to advance due process as an amendment because conservative leadership would not allow it to be worked in committee.

Budget and Taxes

The State budget is currently $350 million in the red, and if nothing is done, the debt will be $1billion by 2019. The Governor has proposed not making Kansas Public Employees Retirement System (KPERS) payments, borrowing from the highway fund, raising taxes on tobacco products, borrowing money from the pooled money investment fund and securitizing the tobacco settlement fund. This last proposal would sell $680 million in future funds, used for early childhood health care and education, for $400 immediately. All these efforts would be used to pay for deficits in 2017, 2018 and 2019, but the problem with the Governor’s plan is that after he leaves office, we would still be $1billion in debt because these are not long-term solutions.

In contrast House budget addressed only the 2017 deficit and used about $320 million from the pooled money investment fund with a seven-year payback schedule. It delayed only half of one quarter of the KPERS payment for 2017, only. It also created a $99 million ending balance, half of which would be paid back to KPERS unless there was an unforeseen drop in revenues. While I do not support cuts to the KPERS payments, the bill was a better option than the Governor’s, which would cut an entire year of KPERS payments over the next three years with no mechanism for payback. I supported this proposal because it also avoided cuts to public and higher education.

To provide a long-term solution, the House passed a tax plan that would eliminate the tax exemption for business owners of LLC’s, subchapter S corporations, and sole proprietorships because most House members felt it was unfair for business owners to be exempt from taxes while their employees were not. The tax plan adds back medical deductions and a 3rd income bracket. It would adjust income taxes after deductions as follows:
Single Joint 2012 Rates 2016 rates House Bill
0-15K 30K 3.5% 2.7% 2.7%
15-30K 30-60K 6.25% 4.6% 5.25%
30-60K 50-100K 6.45% 4.6% 5.25%
Over 100K 6.45% 4.6% 5.45%
This bill passed the House and Senate, but the Governor vetoed it. He used the argument that the plan was retroactive to Jan 1, 2017 and would be unfair. It is interesting that the Governor’s tax plan of 2012 was retroactive. His elimination of deductions for medical expenses, home mortgage interest exemptions, removal of the homestead exemption for elderly poor people who rent, and property tax classification changes were all retroactive. Cuts to government programs and public schools have also been retroactive.
If the Governor had signed the House tax plan, only two months of the first quarter would have been retroactive to January 1, 2017. If we wait until 2018 to implement the plan, we will be $800 million more in debt before we see any new revenue and that would mean even more cuts to important programs.

The Governor also argued that, if we change the tax structure, it would hurt the Kanas economy. Because of Governor Brownback’s tax plan of 2012, the state has lost more than $1billion a year in revenue. Since then, we have had a lower job growth rate than almost all other states and had a net loss of jobs last year (4,100). The total number of businesses in the state is not growing significantly compared to other states. Our bond rating has been lowered three times, and our economy is one of the very worst in the nation. The Governor’s veto was also seen as a negative by Moody’s, a bond rating agency, and could lead yet another downgrade.

The House overrode the Governor’s veto, but the Senate failed by three votes. It appears there are sixteen members of the Senate still loyal to Governor Brownback and his failed economic policy. The question now is whether the Senate can create a long-term strategy for solving the economic chaos in Topeka and whether the Governor will veto that, too. Without increased revenue any solution will involve massive cuts to important programs, including education, public safety, veterans, seniors, the disabled, and transportation. During this year, these cuts would be retroactive to July 1, 2016 after much of their budget has already been spent.

Medicaid Expansion:

Because conservative leadership blocked a bill to expand Medicaid in committee, it too was amended into a bill on the floor of the House, where it passed by a very large margin. I was one of the “Yes” votes. The bill would provide health care coverage for more than 150,000 working Kansans who make too much money to qualify for current coverage, but to little to qualify for the Affordable Health Care Act. The federal government will pay for 94% of the cost and savings from providers should make the program revenue neutral. The bill does have a clause that if the federal government’s contribution falls below 90%, the state could pull out of the program. The bill was supported by almost, if not all, sectors of the medical profession including the Hospital Association, the Managed Care facilities, Pharmacists, Dentists, Nurses, and many others

Governor:

The Governor has already vetoed the House tax plan and it is likely he will veto teacher due process, Medicaid expansion, and the House budget for the remainder of 2017, if these issues pass the Senate. The question for the rest of the session is whether less than half of the members of the Senate will continue to assist the Governor in his hyper-partisan efforts to block bi-partisan progress. Democrats and Republicans are finally working together to provide some long-term solutions. At this point, it is too bad the Governor and his minority supporters in the House and Senate are unwilling to do the same.