Budget issues, school finance loom as Legislature enters final week
The Kansas House and Senate will face a veritable mountain of bills that are up for debate and final action as they try to wind down the 2016 regular session. But almost none of them deal directly with the two biggest issues confronting the state: a budget crisis that is only growing worse by the day, and a Supreme Court ruling on school finance that threatens to shut down the state’s public school system on July 1 if lawmakers fail to act appropriately.
Rep. Tom Sloan, R-Lawrence, alluded to the continuing budget problems during remarks Saturday at a breakfast hosted by The Chamber of Lawrence. Even after revenue estimates were revised downward in November, actual tax collections on a month-to-month basis have consistently fallen short of the revised estimates. And it’s already looking like March will be no different.
“What I hear too is that March revenues are not coming close to projections,” he said. “If that’s the case, the current fiscal budget also is going to be impacted.”
It is for that reason that there is considerable hall talk around the Statehouse about the possible need for a special session this summer — not to deal with the school finance crisis, which is what has been foremost on most people’s minds lately, but to deal with a potentially devastating budget crisis.
Monthly revenue figures are typically released on the first business day of the following month, so we’re expecting the official March figures the afternoon of Friday, April 1. But the Kansas Department of Labor probably gave a sneak preview of what those numbers will look like when it released its monthly jobs report on Friday, showing that the Kansas economy shed 1,700 private-sector non-farm jobs in February, bringing the total for the last year to a negative 3,900 jobs.
And that came from a governor’s administration that vowed during the 2014 re-election campaign to create 100,000 new jobs during its second term.
Besides the impact on the people and families who lost those jobs, the February job losses are almost sure to have an impact on payroll withholdings in March, which will drag down individual income tax collections. And without those payrolls flowing into people’s pocketbooks, it’s unlikely that sales tax revenues will come in as projected either.
But that may not be the worst of the story. Budget and tax analysts in the Legislature’s nonpartisan Research Department have been saying all year that the months to worry about are yet to come: April, May and June, which make up the last quarter of the fiscal year.
In last year’s tax bill, Kansas lawmakers made a number of changes to the tax code. And without getting too far into the weeds of it, much of the anticipated new revenue they expected to generate through those changes won’t show up until that final quarter, when people who earn certain kinds of personal income make their quarterly estimated payments.
If that money doesn’t come through as expected, analysts have said, Kansas could face a profound fiscal crisis in the current fiscal year, which ends June 30. But by that time, lawmakers already will have adjourned the 2016 session, leaving the governor alone to deal with the problem. And depending on how serious the problem is on July 1, the governor’s first option may just be to call lawmakers back into special session.
Meanwhile, there is still the school finance issue to worry about.
Recall that in February, the Kansas Supreme Court issued a not-so-subtle threat to close the schoolhouse doors on July 1 if lawmakers do not address the equity issues in the current school funding plan the court said were unconstitutional.
As the Journal-World has been reporting, two bills emerged in the Legislature last week — one in each chamber — that would have restored, and fully funded, the old formula for providing “equalization aid” to local school districts. That was one of the options the court gave the Legislature to resolve the issue.
Bear in mind, this involves only about $38 million out of a $4 billion K-12 education budget. And none of that is actual new spending for schools. Rather, it’s property tax relief for those districts, including Lawrence, that the court said were being unfairly over-taxed after the changes to school finance that lawmakers enacted last year.
But there is so much animosity among conservative Republican lawmakers that the House bill died in the Appropriations Committee. The Senate Ways and Means Committee had more luck getting its bill out and sending it to the full Senate for consideration. But it takes the $38 million price tag directly out of base state aid for school districts, effectively cutting every district’s spending authority by about 1.5 percent.
Even if that bill were to pass the full Senate, which cannot be assumed, it would still face an uphill battle in the House because a) it cuts overall spending authority for districts, which is certain to be unpopular among constituents during an election year; and b) it’s still predicated on restoring the old equalization formula that GOP conservatives say they don’t like.
With all that in the background, lawmakers will plow through their pile of bills, mostly on other subjects, this week, with the hope of adjourning the regular session by Thursday. That would enable them to get home in time for the Christian celebration of Good Friday and the rest of the Easter weekend.
From there, they will be out of session for about a month, during which time a group known as the Consensus Revenue Estimating Group will meet and update their projections for state revenues through the end of the next fiscal year. Then lawmakers will return in late April for the final wrap-up session of 2016.
Lawmakers are still hoping for a short wrap-up session so they can begin their reelection campaigns. That’s partly because under state law, they are not allowed to accept campaign contributions from lobbyists until after the final “sine die” ceremonial end of the session. But how long the wrap-up may last is still anybody’s guess, as are the prospects of a special session after that point.

