State Veto Session Begins
by Paul Johnson
The Kansas Legislative veto session that began April 25 will be historic for Kansas. Tough decisions will have to be reached whether to restore critical budget cuts to public education, social services and public safety. Revenues to the state have increased, but the legislature will decide whether to implement tax policy to reduce revenue thus having substantial budgetary implications for the future.
In addition, the largest health program in Kansas-- Medicaid-- is destined to be privatized and turned over to three managed care services. Legislative and Congressional districts in Kansas must be redrawn reflecting the movement of persons from rural to urban areas amidst a battle over protecting moderate versus conservative interests. All of these decisions will have significant impact on future quality of life in the state.
The budget picture is starting to take shape, but there are many key differences to be settled. Will additional funds be provided for public education to increase base student aid per pupil (BSAPP)? (Note: BSAPP in 2009 was $4,400 - in 2012 it is $3,780) State hospitals are severely understaffed and at risk of losing their accreditation. Will additional funds be provided for hiring more staff and increasing salaries to attract more workers?
The tobacco settlement payment of $56 million has now been received. This money is used for several children programs but the Governor's budget assumed only $40 million. Will the full $56 million now be used for the children programs?
With an increase of revenue to Kansas of $252 million over the next 18 months, the Governor's budget now has an ending balance of $673 million. With that extra revenue in the ending balance, the tax battle will be more spirited than ever. Is there an easier sell in an election year than to enact more tax cuts without a plan for funding basic programs in the future?
With the extra revenue, it will be possible to enact tax reductions for 2013 and take that from the ending balance without doing further damage to existing governmental services. (Note: if the extra revenues go for income tax cuts, there will be far fewer dollars for restoring existing budget cuts or providing local governments meaningful property tax relief.)
Beyond 2013, revenues start to decline exponentially. The Senate tax bill income tax reduction jumps from $250 million in 2013 to $847 million in 2014 and the total 5-year reduction is $3.8 Billion. The House tax bill does not decrease income taxes nearly as fast as the Senate's tax bill but the House has a 3% growth lid on state spending. If there is further growth in tax revenues to the State beyond the 3%, than income tax rates are decreased even faster. (For the record, the Consensus Revenue experts on April 13 projected for 2013 a 5.6% growth in individual income taxes and a 5% growth in sales tax.)
This is truly a faith-based tax policy believing that just cutting or eliminating income taxes will automatically generate far more economic development and significant increases in sales tax. Once the income tax is reduced or eliminated, there is little chance to restore these cuts. Kansas appears well on the road to reduced quality of life if the Governor’s gamble for increased economic development does not pan out. Paul Johnson monitors the Kansas State Legislature for KRC.