Kansas Senate advances budget plan, backs off commitment to full KPERS funding

J.G. Scott, center, the chief fiscal analyst for the Kansas Legislature's research staff, confers with Scott Abbott, left, an attorney on lawmakers' bill-drafting staff, and state Sen. Ty Masterson, right, R-Andover, during a Senate debate on budget legislation, Wednesday, March 29, 2017, at the Statehouse in Topeka, Kan. Lawmakers are considering raising income taxes to close projected budget shortfalls (AP Photo/John Hanna)

? The Kansas Senate advanced a preliminary two-year budget plan Wednesday, but only after making a major change that adds uncertainty to whether the state will fully fund its pension system. A final vote is expected Thursday morning.

Sen. Carolyn McGinn, R-Sedgwick, who chairs the Ways and Means Committee, which wrote the budget, offered the pension-related amendment herself, even though earlier she had boasted about the commitment to fully fund the Kansas Public Employees Retirement System.

Her amendment means that the Senate will wait until May, after lawmakers receive updated revenue estimates, to decide whether they can afford to add roughly $136 million to make a final quarterly payment into KPERS in 2018 and another $194 million at the end of fiscal year 2019.

McGinn said afterward that she believes “there is a strong desire to deal with KPERS and to pay it.” But when asked why it was necessary to remove the money from the bill, she said it was “primarily because we haven’t passed a revenue plan and it just seemed this would be something to help members of the Senate body be comfortable with as we move forward in making those decisions that they don’t feel so boxed in.”

The state delayed making the fourth quarterly payment into KPERS last year, and Gov. Sam Brownback proposed making only three quarterly payments for the next two years as part of his plan to balance the budget, a proposal that many lawmakers, and even many in the public, sharply criticized.

Even without the KPERS payments, though, the budget would still require a significant tax increase in order to be fully funded — at least $268 million in the first fiscal year that begins July 1; and another $276 million the year after that.

And that does not include any additional funding for K-12 education, which is being handled through separate bills in both the House and Senate.

McGinn said the budget was originally written around the only tax plan that so far has passed both chambers, the one Gov. Sam Brownback vetoed that would have raised a little more than $1 billion in income tax revenues over the next two years.

Although the House voted to override the veto, the Senate fell short of the two-thirds majority needed. Two of the key votes against the override were from Senate President Susan Wagle, R-Wichita, and Majority Leader Jim Denning, R-Overland Park, both of whom said they opposed the fact that it would have raised income tax rates retroactively to Jan. 1, 2017.

Both have indicated they could vote for a tax increase that is not retroactive, but that would reduce significantly the amount of money it would produce for the upcoming fiscal year.

“I think everyone’s aware that when we have a tax policy, I’m going to be one of the folks that vote for it,” Denning said. “I said that early on, and I’m not shy or bashful about saying that. I don’t like retroactivity. Never say never, but I can’t see myself supporting a bill with retroactivity.”

As it currently stands, the proposed budget does include additional funding for the University of Kansas and Kansas State University to partially restore the disproportionate cuts those schools received in 2016. It also includes funding for a 2 percent pay raise for state employees, who haven’t seen an across-the-board increase in 10 years.

It also includes funding for pay increases for people who provide home- and community-based services for elderly and disabled Medicaid patients. Those workers, who are employed by outside agencies that contract with the state, have not seen a pay increase since 2002, McGinn said.

Meanwhile, the bill also rejects many of Brownback’s budget proposals, such as selling off the state’s future tobacco settlement payments in exchange for a lump sum to shore up the state general fund, and consolidating all K-12 school employees into a single state-run health plan.

“As much as anything else, in my opinion, the budget we have before us today is a reflection of the committee’s basic dissatisfaction with the governor’s recommendations,” Senate Democratic Leader Anthony Hensley, of Topeka, said.

Wagle, however, said the bill still leaves the Senate with a significant amount of work to do for the remainder of the session.

“I just want to say we’re not anywhere near the end of the session,” she said. “We need a tax plan, and we need a school finance formula. Clearly that’s going to require a tremendous flexibility by every member of the Senate.”

Sen. Ty Masterson, R-Andover, tried unsuccessfully to pare the budget back even further by removing all funding increases in the bill and delaying consideration of those items until lawmakers return in May and write the final budget bill, commonly known as the “omnibus budget.”

That proposal was shot down by a vote of 15-25.

That same 15-25 split has shown up repeatedly in roll call votes in the Senate this year. It is the exact same margin by which a Medicaid expansion bill passed on Tuesday.