Battle over what to do with state’s 34 million windfall set to begin; other budget talks also ramping up
House and Senate budget committees will be back at the Statehouse on Wednesday, one day ahead of the start of a nine-day wrap-up session, to begin work on crafting a final, “omnibus” budget bill that will determine how the state spends the additional $534 million it now expects to receive between now and the end of the next fiscal year.
Their work will begin around 10:30 a.m. Wednesday when both committees will receive a detailed joint briefing about where, exactly, that money is coming from.
The new, rosier revenue forecast was contained in a report released Friday, which offered only scant information about the underlying assumptions of the Kansas economy that formed the basis of the forecast.
What the committees hope to receive Wednesday is what’s often referred to in the Statehouse as “the long memo,” with more detailed information about what economists expect to see over the next year in terms of job growth, unemployment, personal income, and conditions in the agriculture and energy industries.
After that briefing, the two committees will meet separately to begin work on the final budget bill. And in those meetings, there will be strong competition among various interests over how to spend that money.
On the Senate side, there is already a significant push underway to give much of the money back to taxpayers.
On the final day of the regular session April 7, the Senate passed a bill, Substitute for House Bill 2228, that would provide significant tax cuts to most Kansans, although supporters of the bill don’t like to call it a tax cut.
“This is not a tax cut. It was stopping a tax increase,” Sen. Caryn Tyson, R-Parker, who chairs the Senate tax committee, said in an interview Tuesday. “Because that money was never intended to come to the Kansas state government. It was intended to go to the Kansas taxpayer.”
Tyson was referring to the anticipated windfall that the state expects to receive as a result of recently-enacted changes in federal tax law, although the size of that windfall is a matter of considerable debate. Still, the bill is designed to prevent the state from reaping any windfall by essentially “de-coupling” portions of the state tax code from the federal code, so that people could itemize deductions on their state form, even if they take the standard deduction on their federal form.
But Tyson also conceded that part of the bill, raising the state’s standard deduction by 25 percent, does amount to a general “tax cut” across the board.
So far, though, there is no official estimate of how much revenue the state would forego if the bill were passed into law. The Kansas Department of Revenue, which normally would make such estimates, has so far declined to do so for the Senate tax bill, according to legislative staff.
“I’ve heard anywhere from $137 million to $300 million,” Tyson said of the per-year cost of the bill.
The bill passed the Senate, 27-14, in the final hours of the regular session, and the House is expected to take up the issue sometime during the wrap-up session. But the House also has other tax bills it may consider that would actually increase revenue to the state, such as one that would enable the state to collect more retail sales taxes from internet sales.
Meanwhile, there is strong opposition among House Democrats about offering any kind of tax cut in a year when the state is under pressure from the Kansas Supreme Court to increase funding for public education, and when other state programs — particularly social services and higher education — are seeking to restore funding cuts they’ve taken in recent years.
“There’s no reasonable person who thinks that when we just finished doing income tax reform that hasn’t even been in effect for a year yet, that the next thing we should do is start making tax cuts without having a good feel for what this federal law is going to do to Kansas,” House Democratic Leader Jim Ward, of Wichita, said in a separate interview.
Ward was referring to the tax bill lawmakers passed in 2017, overriding then-Gov. Sam Brownback’s veto, that reversed course on many of the income tax cuts he had championed in 2012. Ward said he believes one reason why revenues are now coming in above projections is that officials had underestimated how many people were taking advantage of those tax cuts, particularly the complete tax exemption for income derived from certain kinds of business activities.
So far this year, both chambers have already passed, and Gov. Jeff Colyer has signed into law, a bill that phases in over five years roughly $534 million a year in additional spending on K-12 education, although lawmakers will have to revisit that bill during the wrap-up session to correct a drafting error that cuts that amount by roughly $80 million.
In addition, Colyer and the Department for Children and Families plan to ask lawmakers to add $24.3 million to that agency’s budget over three years for IT enhancements and increased child protection services.
And the Kansas Board of Regents is still hoping to restore roughly $24 million that former Gov. Sam Brownback cut from the higher education budget in 2016 as part of a package of allotment cuts he ordered that year to balance the fiscal year 2017 budget.
The competition between tax cuts, education, child welfare services and restoring cuts to other services will play out over the next several days against the backdrop of a myriad of political considerations.
Ward, for example, is also vying for the Democratic nomination for governor in the upcoming August primaries, while Tyson is vying for the Republican nomination for the 2nd District congressional seat.
In fact, there are a number of legislators in both chambers this year who will be staking out positions on budget and tax policies while also trying to position themselves for higher political office.
Among them are Rep. Steve Fitzgerald, R-Leavenworth, and Rep. Kevin Jones, R-Wellsville, who are also candidates in the 2nd District congressional race; and Sen. Laura Kelly, D-Topeka, who is competing with Ward in the Democratic primary for governor.
In addition, Sen. Marci Francisco, R-Lawrence, is running for secretary of state, as are Republican Reps. Keith Esau and Scott Schwab, both of Olathe. And Sen. Vicki Schmidt, R-Topeka, is running for insurance commissioner.
The full Legislature returns to the Statehouse Thursday, April 26, for the start of a nine-day wrap-up session. Lawmakers have already set Friday, May 4, as the date for the final “sine die” adjournment of the session, meaning no more legislative business can be conducted this year unless they are called back for a special session.