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Archive for Tuesday, January 15, 2002

State of the State

January 15, 2002

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Prepared text of Gov. Bill Graves' State of the State address delivered Monday night to the Kansas Legislature:

Mr. Speaker, Mr. President, Madam Chief Justice, Members of the Legislature, and Fellow Kansans:

Good evening.

It is an honor to join you for my eighth State of the State message. Appearing for the final time evokes mixed emotions: pride in what we have achieved; concern for the challenges ahead; gratitude for the overwhelming support of the people of Kansas; humility for the opportunity to serve this great state; sadness that my opportunity to serve has nearly run its course; optimism that new capable leadership stands ready to serve. In my 1995 Inaugural address, I quoted Dwight D. Eisenhower when he stated, "I come from the very heart of America to those people I am proud to belong. "Like Eisenhower, I come from the heart of America. It is with great pride I have the honor of being Governor, and to the people of Kansas I am proud to belong.

Our memories of 2001 are shaped by events at both the state and national level. It was a year in which we lost two outstanding Kansas Governors. Governor Robert Bennett and Governor Joan Finney loved Kansas and served us well. Their capacity to serve was enhanced by strong partners their spouses Olivia Bennett and Spencer Finney. They too served Kansas well. Unfortunately Spencer Finney can not be with us tonight, but would you join me in acknowledging in the east gallery Olivia Bennett.

September 11th changed our lives in countless ways. One of the most important lessons we learned is how far too often we take for granted the service of our public safety officials. When we talk about homeland security, these men and women serve on the front line.

Joining us this evening are men and women who represent thousands of Kansans who are committed to the protection of our lives and the preservation of our freedoms. Following their introductions, I will ask you to join me in recognizing them. Cherryvale Chief of Police Tommy Wilson, Finney County Deputy Sheriff Tracy Romero, Lawrence Paramedic Lyle Schwartz, Topeka Firefighter Chris Herrera, Kansas Trooper Amber Harrington, Air Guardsman Staff Sergeant Jose Salcido, and Army Guardsman Sergeant Mike Barber. Please join me in honoring them.

On January 11, 1995, I came before you for the first time to present the State of the State address. There have been countless and often dramatic changes since that day, but one concept that remains unchanged were the words I quoted from Kansan Carl Becker as he wrote in 1910. "Idealism must always prevail on the frontier, for the frontier whether geographical or intellectual, offers little hope to those who see things as they are. To venture into the wilderness, one must see it not as it is, but as it will be. "

Our decisions in the next few months are not about today. They are about what will shape tomorrow. We must rise above the challenge of what is, and set the course for what this state can and should be. I believe Kansas should be a state that provides opportunity for all its citizens. I believe Kansas should be a state where people are treated with compassion, decency, and dignity. I believe Kansans know their future is in the hearts and minds of their children. I believe in a state that knows past greatness can be a prologue to the future.

Last month, I announced a budget that would require cuts of more than $400 million from the state general fund. A budget that meets the demands of state law, but does not meet the demands of our future. A budget balanced in numbers, but out of balance as it touches the lives of Kansans. A budget that does more than simply cut dollars, it cuts critical resources to our highest priorities, including our children, our seniors and our citizens with mental and physical challenges. That is why I said then, and I say now, it is not a budget I can or will accept.

Tonight I present a budget I believe meets the requirements of fiscal responsibility, as well as the requirements of providing Kansans the services and the future they deserve. In addressing a financial shortfall, there are three ways budgeting can be approached. One is simply to cut spending to balance the budget, regardless of the consequences. The second is to simply raise revenues, without taking the fiscally responsible step of carefully reviewing and reducing non-critical programs and services. The third would be a balanced approach, to cut those programs that can be cut without endangering critical services, while adding revenues so vital programs can be maintained and essential programs enhanced. It is this balanced approach I present to you.

There is a $426 million shortfall if we are to replicate this year's budget and meet our statutory obligations. An additional $52 million is needed to address minimal targeted enhancements to essential services and programs. To address this $478 million shortfall, I am proposing a balanced approach of budget cuts and adjustments and a revenue enhancement package of $228 million.

The following are my recommendations:

I recommend $91 million be restored to maintain current K-12 funding levels. We are asking more and more of our schools, and their role in our children's future is becoming more and more critical. We cannot retreat from a commitment to give children the opportunity to learn. Much has been made of the post-audit study on non-teaching personnel. Regardless of your view of that study, it is not a document that provides justification for the reduction of our obligation to Kansas education. The anecdotal reasons for not funding K-12 education are absolutely inadequate when faced with the facts. Results clearly demonstrate that Kansas schools perform well, rank high on national standards and improve each year. It is time to stand up and be proud of Kansas schools.

I recommend $27 million in restoration for the Board of Regents' budget to return it to current funding levels. Our universities, our community colleges, and our vocational schools have distinguished themselves nationally. Our retention of Kansas' graduates is one of the highest in the nation. We must not retreat from a commitment to those young Kansans and to those schools who prepare them so well.

In spite of funding $54 million for additional caseloads and protecting the programs at SRS that touch the lives of our most vulnerable citizens, the budget still falls short. I recommend a restoration of $3 million to mental health grants, $1.5 million for grants for developmentally disabled, an additional $2 million to meet the growing demand for family preservation services, and restoration of the funeral assistance program. Each of these programs stands on its own merits, with proven results. To deny funding to the mentally and developmentally disabled is to deny some of Kansas' most deserving citizens. We hear a great deal of rhetoric about family. Rhetoric is not enough. That is why I advocate additional funding for family preservation. And while the half a million dollars for funeral assistance does not seem like a great deal of money, I believe it is a significant measure of what kind of a society we are. We have an obligation to Kansans to ensure their dignity even at their deaths.

I am recommending $4.4 million to restore Senior Care Act funding that provides the opportunity for elderly citizens to remain at home and preserves the financial and personal dignity of these Kansans.

The Corrections facilities at Labette County, Toronto, Osawatomie and Stockton have proven themselves to be quality and effective institutions. While we can meet current needs by their closure it would only be a short-term solution. Savings will be realized by closure, but the near-term negative impact of minimum security beds lost and communities affected makes this an unwise decision. I recommend $5.5 million be restored so these facilities will continue to keep our neighborhoods and communities safe.

We have been good partners with local government, and in a time of difficult budget decisions we should do all we can to continue that partnership. Therefore, I recommend $3.6 million be restored to counties and cities. Doing so reduces the pressure on local governments to reduce services or increase taxes.

Every day in a very quiet way, in communities of every size, there is a wonderful, educational, and cultural resource called the library. I recommend the restoration of $200,000 in local public library aid so they can continue serving their communities and Kansas.

Restoration of these programs and services is good public policy. I urge you to join me in doing what is right by restoring funding to these levels. But restoration isn't enough for those areas that are priorities for this state, and therefore I recommend the following enhancements:

I recommend an additional $20 to the base budget per pupil at a cost of $12 million. This is woefully inadequate, but in relationship to the resources we have for fiscal year 2003 it does provide minimal additional assistance to our schools.

Our state employees provide Kansans quality and vital services. To solve our fiscal problems by denying these men and women and their families any salary enhancement is wrong. I am recommending $12 million to fund a 2 percent salary plan. To provide salary options for Regents Institutions, I recommend a $7 million enhancement. Furthermore, any attempt to reduce current salaries is unacceptable.

I believe we should do more for student financial aid. I recommend a $1 million enhancement, bringing the total to $15 million for student financial aid provided by the Board of Regents. This will enable us to serve an additional 750 students. We must do what we can to ensure the door to a higher education is not locked for talented Kansans simply because of their economic status.

SRS serves the most vulnerable Kansans. I am recommending a $10 million enhancement: $5 million to reduce waiting lists and $5 million to increase Medicaid rates. Our rates are among the lowest in the country, and for the professionals who provide those services, we should pay a more adequate rate.

Our judiciary, including local district courts, is strained and limited by the resources we have been providing. I recommend an enhancement of $4.1 million to provide full funding for the judiciary, both in fiscal year 2002 and fiscal year 2003. Justice that cannot be accessed is justice denied.

The events of September 11th have changed this nation. While it has served to rally Americans and unite us, it also served to remind us of our vulnerabilities to terrorist attacks. The security of our citizens is a national and state priority. Therefore, I'm recommending $2 million to support programs that will enhance, increase, and improve the security of Kansas and Kansans. The $2 million I am proposing will create an additional Level 3 Laboratory, provide grants for terrorist response training, create disaster response medical teams, and support other recommendations of the Special Committee on Kansas Security.

The reason for our budget difficulties is the national recession and the resulting downturn in the Kansas economy. While the Federal government debates an economic stimulus plan, I urge this legislature to consider a Kansas economic action plan and recommend the following:I ask that you enact legislation that will double, for one year, the tax credits of the Enterprise Zone and High Performance Incentive Program. This credit would be for projects certified for calendar year 2002. By enacting this law we encourage Kansas companies, and those considering locating in Kansas, to initiate projects to stimulate both short term and long term economic growth.

Our significant and growing tourism industry has been impacted by the economic downturn. I am recommending an additional $500,000 for tourism advertising, and a $150,000 grant program to assist communities in attracting conventions and events of national or regional importance.

I am deeply concerned about our small rural counties. In almost every economic category they dramatically lag the rest of Kansas. One of the most exciting new concepts to address this problem is the Enterprise Facilitation Program. This program builds the economy from the grass roots by creating partnerships and mobilizing leadership in multiple counties and communities. Its success nationally has been dramatic and I am recommending $1 million to support this program. In addition, I recommend tax credits, equal to that of basic industry and manufacturing, for retail development in counties with populations under 25,000.

Value added agriculture is critical in rebuilding rural Kansas. I am recommending $750,000 for a pilot program to determine the effectiveness of a tax credit incentive for value added agriculture.

I also recommend providing railroad tax credits for restoring and rebuilding our rural railroad infrastructure. The rhetoric of a declining rural Kansas has gone on long enough. The reality is stark. We can and must provide rural Kansas the tools to rebuild.

Communities large and small, urban and rural understand the value of a trained and skilled workforce. "Expansion Management" magazine ranks Kansas 10th in the nation for workforce training. The Training Equipment Grant program is part of our success and brings together educational institutions, businesses, and Kansans in an effective partnership. To enhance this partnership I recommend $500,000.

We must not retreat from programs and policies that build our economic strength. In November of last year "Demographic Daily" reported job growth in Kansas ranks sixth in the nation, yielding 21,000 new jobs in the past 12 months. We are producing outstanding results with our economic development programs and incentives. Now more than ever we need to build on that success.

Here comes the hard part. We're either going to invest in the future or we're going to deny vital services, critical programs and economic opportunity to Kansans. It's just that simple. A soundbite solution, like "Government living within its means," translates to "Thousands of Kansans unable to live within theirs." "Tightening the belt" means tightening the noose around the economic future of rural Kansas. To simply "cut government" means deep cuts in the ability of our schools to carry out their mission of serving our children. To just be "tougher" means a tougher life for those with mental and physical challenges. If we are to restore and enhance these essential services, we must have new revenue. I propose the following:

The last time cigarette taxes were increased in Kansas was 1986. As a result of that increase, Kansas ranked 10th in the nation for cigarette taxes. Sixteen years later, we rank 35th. I propose a tax increase of 65-cent per-pack which will rank us 7th in the nation and generate $111 million per year. A significant advantage to this proposal is that national studies show increasing cigarette taxes reduces smoking by minors.

I recommend a one-quarter cent increase in sales tax to generate $95 million per year. The Kansas median household income is $40,000 a year. This proposal amounts to approximately 12 cents per day per household or the equivalent of 1 liter of soda per week. The Kansans I know are prepared to provide these resources in support of their neighbors, friends, and family who will benefit from these restorations and enhancements.

Let me address the Comprehensive Transportation Plan. Some would choose to pit the transportation plan against our education and social services needs. I view all of these programs as important to the future of Kansas. This legislature, by an overwhelming vote, committed to the people of Kansas, as did I, an essential transportation program. A commitment was made to provide highways that were effective, efficient, and safe. A commitment was made to enhance railroad infrastructure, and for the first time in Kansas history, to enhance rural airports. These are commitments I believe we should honor. I recommend restoration of the comprehensive transportation projects eliminated in the fiscal year 2003 budget.

To do so, I propose a 1-cent increase in the motor fuel tax and a 3 percent increase in car and truck registration fees. For the individual car owner, this is a 75-cent annual registration fee increase. This revenue package of $22 million will restore $154 million over the life of the Comprehensive Transportation Plan. However, there will continue to be long term fiscal problems with the plan that must be addressed.

I have not included expanded gaming as a source of new revenue. I know many of you will consider additional gaming as an appropriate form of revenue to address our fiscal situation. I am not opposed to expanded gaming on a limited basis. I am willing to consider adding slot machines at the parimutuel racetracks but the more you expand the number of facilities and gaming locations, the less supportive I will become.

Without a doubt there are those who will disapprove of my tax proposals. However, I would remind you of the following:

This administration asked for elimination of the sales tax on services in new construction and on utilities consumed in production. I asked three times for a moratorium on unemployment taxes. I proposed the reduction of personal property taxes on motor vehicles, the elimination of the premium tax on annuities, an income tax credit on machinery and equipment, an income tax credit on adoptions, expansion of the homestead property tax rebate, expansion of the sales tax on food rebate, repeal of the sales tax on remodeling, reduction of the uniform school finance mill levy, elimination of the disparity that unfairly penalized single tax payers, increasing the standard deduction and the personal exemption for income taxes, elimination of the inheritance tax, elimination of sales taxes for many not-for-profits, and earned income tax credits for the lowest earning Kansans. These are all proposals presented in State of the State speeches. They are all proposals that have been passed and signed and have provided the people of Kansas with the greatest tax relief in history. Therefore, to ask the people of Kansas to share a small portion of that relief to ensure that critical services are not lost, does not define either myself or this legislature as fiscally irresponsible. A reasonable perspective of the last seven years compared to what is being presented tonight clearly demonstrates that the balance sheet of tax relief, even with these modest proposals, weighs heavily in favor of the citizens and businesses of Kansas.

Some of you have said there is no sentiment in your district for a tax increase. I would ask: Is there sentiment in your district for breaking promises to our schools resulting in fewer teachers, larger class sizes and reduced services for special education? Is there sentiment in your district to break the promise of better and safer highways, airports and railroads? Is there sentiment in your district for turning our backs on your most vulnerable neighbors- the elderly and disabled who want dignity and independence? Your constituents want us to do what is right. I know, because your constituents are my constituents.

While we have a shortage of funds, I have no doubt there will be no shortage of critics of my proposal. I welcome that discussion, but only if those who want cuts tell us specifically what services and programs they will cut, how deeply and the consequences; if those who want to use the ending balance will tell us how it will impact the state's cash management and bond rating, how and when is the balance restored, and how is the one time money replaced; if those who seek other sources of funds will tell us if they are "robbing Peter to pay Paul" or worse yet "robbing Paul to pay Paul" and jeopardizing future budgets with over-reliance on one time money. The critic without an alternative solution brings little value to this debate. Debating the past will do little to find a solution to what should be our future.

What I propose is the right thing to do. It is fiscally responsible and more importantly it is right for Kansans.

A review of the past several years reveals the right things we have done actions supported by the people of Kansas and this legislature.

Together we provided the greatest tax relief in Kansas history that over the past seven years has saved Kansans nearly $4. 8 billion.

After completing on time and on budget the previous plan, we enacted a new Comprehensive Transportation Plan, guaranteeing Kansans world class infrastructure.

We began a program for the physically disabled to provide home and community-based services, now serving nearly 4000 Kansans each year.

Changes in the food sales tax rebate and the enactment of the Earned Income Tax Credit increased the payments to our lowest earning citizens from $2 million in 1995 to $50 million today.

We doubled mental health spending and increased resources for the developmentally disabled by more than 160 percent. As a result, more than 33,000 Kansans and their families are being served.

State programs and incentives were directly involved in the creation of over 36,000 new jobs, $1 billion in new payroll, and $2 billion of capital investment.

We funded $10 million of state park improvements, the largest in Kansas history.

After years of unsuccessful attempts, we enacted a historic reorganization of the governance of higher education.

Family Preservation programs, previously available in only 44 counties, are now in all 105 counties, twenty-four hours a day, seven days a week.

Our "crumbling classrooms" initiative invested $181 million in restoring unsafe and outdated state university classrooms to state of the art facilities.

We strengthened our ethics laws, and made them some of the toughest in the nation.

Our programs to conserve and clean our waters, including the "buffer strip initiatives," have enhanced our water quality.

We partnered with communities throughout Kansas in times of disaster. Whether it was flood, tornado, or gas explosions, we were there with people and resources to assist in recovery.

What I'm most proud of is how we've touched the future by dramatically touching the lives of our children.

Funding for at risk children has been doubled and now serves 115,000 students.

We were the first state to expand the use of federal funds designated for needy families to support and expand early childhood development through Head Start programs.

State funding for childcare has doubled since 1996.

We created Health Wave and now provide dental and physician health care coverage for more than 51,000 children who were previously uninsured.

We have significantly increased funding for the Parents as Teachers program and the Infants and Toddlers program.

We initiated funding for the 4-year-old at risk program.

We have dramatically increased the adoption rate of children in foster care to historic levels.

Nearly 1,100 severely and emotionally disturbed children will receive treatment because of funding we initiated.

And, to better address the needs of our troubled youth, we completely restructured our juvenile justice system.

We should take pride in the fact that never before in our state's history have so manychildren been served by so many programs so well.

There are countless more examples of success. We've done what's right, and working together we've done it well. Yet there is more to be done. Even though our resources are limited our vision should not be. The people of Kansas sent us here to ensure government serves them well, not to obstruct or disrespect government.

The people of Kansas sent us here to validate their trust, not to sow seeds of distrust.

The people of Kansas sent us here to enact good public policy, not to engage in petty politics.

Let us address the serious issues before us in such a way that the institution of state government is respected, is trusted, and provides public policy that enhances and enriches the lives of all Kansans. Even in these challenging times, we can build a better Kansas.

Thank you and good night.

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