Kansas Senate passes budget, ignores Supreme Court ruling for now

The Senate chamber of the Kansas Statehouse is pictured July 23, 2014 in Topeka.

? The Kansas Senate worked late into the night Thursday and passed a budget bill, despite the fact that the Kansas Supreme Court ruled earlier in the day that a major part of the budget, the system of funding public schools, was unconstitutional.

The Senate both debated the bill and passed it on final action, 23-16, the same night. Sens. Marci Francisco, D-Lawrence, and Tom Holland, D-Baldwin City, voted against the bill.

Republicans who control the Senate pushed aside efforts by Democrats to delay the entire budget discussion and send it back to committee to revise the school funding system, or to carve out the K-12 funding portion and deal with it separately.

“This is nothing more than an opportunity to politically grandstand on a hot topic,” said Ways and Means Committee Chairman Sen. Ty Masterson of Andover. “Today’s opinion is irrelevant to this particular discussion.”

Senate President Susan Wagle, R-Wichita, said after the debate that Senate leaders plan to get a private briefing early Friday and go over the decision with attorneys from the Legislature’s Revisor of Statutes office and Attorney General Derek Schmidt’s office.

“We’ll be contemplating and hearing what they think the impact of the decision is,” Wagle said.

But Sen. Laura Kelly, D-Topeka, the ranking Democrat on the Ways and Means Committee, said she believes Thursday’s Supreme Court ruling is more serious than Republicans think. She said it requires passage of a new school funding formula this year, not mere tweaking of the current block grant funding system, and failure to comply with the court’s order could have drastic consequences.

“It depends upon how we react,” she said. “If we do what we need to do, create a constitutionally sound funding formula and fund it, we’ll be okay. If we decide to buck the court and thumb our noses at them, no. We’ll be in a world of hurt. Our schools will be closed down.”

The Senate bill is similar in many respects to the House budget bill, which passed on a final vote earlier in the day, 68-56. It cuts about $70 million from the two-year budget lawmakers approved last year, leaving about $6.3 billion in total spending for each year and the state with tiny projected ending balances both years.

During floor debate, however, senators took one option off the table in the event revenues come up short and the state faces a potential negative ending balance. They approved an amendment that prohibits Gov. Sam Brownback from delaying payments into the Kansas Public Employees Retirement System as a way to reduce general fund spending.

But there was no mention during the Senate debate of a controversial proviso that would prohibit Kansas University from using state money or special revenue funds to make lease payments on the $350 million Central District project. The Ways and Means Committee inserted that language as a punitive response to KU’s decision to issue bonds for that project without seeking legislative approval.

KU officials and some lawmakers have said that they are working quietly behind the scenes to resolve that issue, and they hope to reach some sort of accord before the end of the session.

They also approved an amendment by Sen. Jim Denning, R-Overland Park, to prevent the Kansas Department of Commerce from approving any new “sales tax revenue,” or STAR bond districts through the end of the next fiscal year. Those are districts in which the new sales tax revenues generated by a development are used to pay for infrastructure and development costs of a new retail district.

Kansas first began using STAR bonds in 2005 as a way to help development of the Kansas Speedway NASCAR track and the adjoining Legends shopping district in Kansas City. But Denning said they have proliferated in recent years and are now being used to “cannibalize” retail development in other areas, forcing local governments to raise property taxes to make up the difference.

They also approved an amendment that prohibits the state from privatizing or outsourcing the functions of the Osawatomie and Larned state hospitals without legislative approval.

But they rejected an amendment by Sen. Tom Holland, D-Baldwin City, designed to block the three insurance companies that now manage the state’s privatized Medicaid program known as KanCare from making campaign contributions to any members of the Legislature’s joint KanCare oversight committee.

Senate Minority Leader Anthony Hensley, D-Topeka, decried the budget for relying too much on what he called “short-term” revenue and borrowing.

For the current fiscal year, he said, fund transfers and other short-term measures make up $433 million of the revenue the state will spend, or nearly 7 percent of total general fund expenditures.

For the fiscal year that starts July 1, he said, borrowing and short-term revenues will total nearly $367 million, or nearly 6 percent of total general fund spending.

Masterson, however, said the alternative was to raise taxes, an option he is not willing to consider.

The House and Senate are expected to negotiate their budget bills in a conference committee.