Topeka — Last week's revenue projections by state fiscal officials showed little change in Kansas' revenue forecast. But budgetary storm clouds are right over the horizon.
The new numbers highlighted that next year state revenue will drop precipitously as the income tax cuts signed into law last year by Gov. Sam Brownback kick in.
The state will receive $6.2 billion in revenue during the current fiscal year that ends June 30. For the fiscal year 2014, which starts July 1, revenue drops to $5.45 billion, a 12 percent or $750 million decrease.
Brownback has stated that income tax cuts will boost the economy.
But House Democratic Leader Paul Davis of Lawrence said the revenue figures show the income tax cuts approved by Republicans aren't working.
"It shifts the tax burden almost entirely to the middle class and requires cuts to the public services that help the middle class thrive. The Brownback tax plan isn't working, and these negative projections are further evidence that it is not going to work in the future," Davis said.
The income tax cuts will reduce revenue to the state by $450 million in fiscal year 2014, which is a 15.8 percent decrease. The state sales tax, which is scheduled to fall from 6.3 percent to 5.7 percent on July 1, will produce $270 million less than the current year, which is a 12.3 percent decrease. Brownback has proposed keeping the sales tax rate at 6.3 percent.
Topeka — Gov. Sam Brownback continues to try to build his case for making the 6.3 percent state sales tax permanent, instead of letting it fall to 5.7 percent.
On Friday, Brownback said the state may need revenue from the higher levy in case of a ruling against the state from the Kansas Supreme Court on funding of public schools.link text
"We've got a lawsuit pending against the state right now that we have lost at the lower court on K-12 funding, and we don't know when the Supreme Court is going to rule — it's under mediation now — but I think you have got to also be also looking at that in the overall picture," Brownback said.
In 2010, facing a revenue crisis, the Legislature approved a temporary, three-year increase in the state sales tax to 6.3 percent from 5.3 percent, and then decreasing it to 5.7 percent on July 1.
Brownback wants to keep the rate at 6.3 percent, saying the revenue is needed to balance the budget. He has said in recent days that the higher sales tax is required to prevent cuts proposed by the House and Senate to higher education.
Democrats oppose extending the higher rate because they say current budget problems are the result of Brownback signing into law last year income tax cuts, which they say benefit mostly the wealthy. link text In addition, they said that Brownback wants to use future sales tax revenue to cut income taxes even more. Conservative Republicans in the House have also voiced opposition to the higher sales tax rate, saying the budget should be cut more.
But on Friday, Brownback added the issue of school funding to the mix.
In January, a three-judge panel ruled that legislators must increase spending on schools by at least $440 million. The issue is pending before the state Supreme Court.
Brownback said legislators have to consider the impact that a possible final ruling against the state would have on the budget and how the state would come up with additional revenue for schools.
"You could get yourself where you'd be in a crisis position, and I don't think that's prudent," Brownback said.
It's amazing how much of the political fighting in Kansas is wrapped up in one penny that most Kansans pay every day without a fuss. Of course, the penny adds up to approximately $300 million a year, and is key to state budget and tax policy.
During the Great Recession, Kansas saw historic drops in tax revenue that resulted in cuts to higher education, Medicaid and public schools.
In 2010, to avoid even deeper cuts, a slim majority of Democrats and moderate Republicans in the Legislature approved a temporary one-cent sales tax increase to shore up the state budget.
Under the plan, the state sales tax went from 5.3 cents per dollar to 6.3 cents per dollar, and on July 1, 2013, the sales tax rate would then decrease to 5.7 cents per dollar with 0.4 cents going to transportation.
The Kansas Chamber of Commerce had vehemently opposed the tax increase, and after the Legislature approved it the chamber worked hard during the campaign season to defeat those who voted for it.
When the smoke cleared after the November 2010 elections, conservative Republican Sam Brownback was elected governor by a large margin and the moderate coalition in the House was crushed.
As the 2011 legislative session started, many conservative Republicans said they wanted to repeal the increased sales tax. But Brownback didn't; the state budget was still struggling and he needed the revenue.
And the Kansas Chamber of Commerce adopted a new strategy, arguing against repeal by saying the revenue from the increase should be used to offset the loss of revenue from what it wanted: elimination of the state corporate income tax.
In 2012, Brownback called for making the increased sales tax permanent to help pay for income tax cuts. He later signed into law cuts in income tax rates, elimination of income taxes for the owners of nearly 200,000 businesses, and removal of tax credits for the poor. But nothing was done on the sales tax issue.
In 2013, the Legislature is still arguing about the temporary sales tax increase, which is scheduled to decrease in a little over two months.
Again, Brownback wants to make the 6.3 percent rate permanent, saying it is necessary to balance the budget and avoid cuts to higher education. Democrats want to protect funding for education, but say Brownback really wants to keep the sales tax higher to cover deficits created by his income tax cuts and to help pay for more income tax cuts in the future to benefit the wealthy. Meanwhile, conservatives in the House also said they want the sales tax to decrease and that the budget can be cut more. Conservatives in the Senate have gone along with Brownback's plan on the sales tax issue, saying it is key to start drawing down the income tax. In fact, many of those Senate conservatives who voted against the temporary sales increase, recently voted to make it permanent.
So, the penny has come full circle. It started as a temporary Band-Aid approved by a moderate coalition to avoid drastic budget cuts.
Now, it is being pushed by a conservative governor, who wants to make it permanent to be used for either propping up the budget that was undercut by large income tax cuts, or to pay for future income tax cuts, or both.
When the Legislature returns, the fight over one penny will be front and center again.
Topeka — Gov. Sam Brownback on Tuesday said he wants the Legislature to conduct an in-depth study of public higher education in Kansas.
Brownback's comments came as he lobbies fellow Republicans to keep higher education funding at current levels and reject proposed cuts. The GOP-dominated Legislature has proposed a 4 percent budget cut in the House and 2 percent in the Senate.
Brownback said he would like legislative leaders to initiate a study on higher education after the current legislative session is over.
"What I hope we do is a big interim study on higher ed funding," Brownback said.
He said the cause of rising tuition, how funds are allocated and administrative costs are "all legitimate questions." But, he said, resolving those issues is difficult in an 80-day legislative session.
Brownback will start a tour next week of various higher education institutions to push for his budget plan. He said universities, community colleges and technical schools need stable funding after having been cut during the recession.
He said the way to provide stable funding would be making the 6.3 percent state sales tax permanent. Under current law, it will decrease to 5.7 percent on July 1.
Democrats say Brownback plans to use revenue from the higher sales tax to further reduce income tax rates. When asked about that, Brownback said of the Democrats, "If they've got another place to come up with the resources, I'd love to see it. I would hope that they would vote for it too."
The tax changes approved last year with only Republican support and signed into law by Gov. Sam Brownback are being called the worst tax measures passed by a state in the last two years.
That's according to an article in Governing magazine link textthat quotes right- and left-leaning financial experts.
Exempting from taxes pass-through income for business owners provides "an incentive to game the tax system without doing anything productive for the economy," said Joseph Henchman with the Tax Foundation.
Nick Johnson with the Center on Budget and Policy Priorities said the tax package "fails both vertical and horizontal equity tests." And he said the size of the cut was so "jaw-dropping" it will prevent the state from making investments in education and infrastructure.
Topeka - Not a good day weather-wise to showcase the Kansas River, but Gov. Sam Brownback and an enthusiastic group of supporters of the Kaw braved chilly winds Thursday to launch an effort to increase recreational use along the 173-mile river.
"The Kaw is a tremendous asset," Brownback said during a new conference announcing the formation of the Kansas River Development Committee.
Advocates of the Kansas River are hoping to get more people canoeing and kayaking, camping on sandbars, fishing and watching wildlife along the river.
"This is just another step in something great that is happening," said Brian Leaders, landscape architect with the National Park Service.
Last year, the National Park Service designated the river as a National Water Trail.
Kansas Department of Wildlife, Parks and Tourism Secretary Robin Jennison said there are 18 boat ramps in 15 communities along the river. Jennison said he would like to see at least two more ramps along the 30 or so miles between Belvue and Topeka. Thursday's news conference was held at Kaw River State Park.
Here is a promo that Brownback and then-Interior Secretary Ken Salazar did last year about the Kansas River.
Two years ago, Gov. Sam Brownback signed into law a bill that prohibits private insurance companies from offering coverage for abortions in their general plans except when a woman's life is in danger.
Under the law, Kansas residents or employers who want abortion coverage must buy supplemental policies, known as riders.
But Sen. Marci Francisco, D-Lawrence, said she tried to purchase such an optional rider under the state health insurance plan, but it was not available.
The Kansas Department of Health and Environment confirmed that the state health insurance plan does not offer that coverage as an optional rider.
Francisco, a supporter of abortion rights, said, "I was going to encourage women to do it because the more women of my age who sign up, the cheaper it is going to be for everybody, so then you just make it something that people can afford." Francisco is 62.
The American Civil Liberties Union had challenged that law, saying that women's medical needs should be covered in their insurance policies. Supporters of the law said people who oppose abortion shouldn't be forced to pay for such coverage in general health plan.
The ACLU dropped its lawsuit earlier this year after a federal judge had ruled that the group had failed to prove that the Legislature's motivation in passing the law was to make it more difficult to get abortions.
Topeka — House and Senate budget writers on Tuesday remained at an impasse over funding of higher education.
The House has approved a 4 percent reduction to higher education while the Senate has proposed a 2 percent cut.
In addition, the House has proposed other cuts from job vacancies, salary caps and other changes for a grand total of $63.35 million in reductions, compared with the Senate's cut of $21.25 million.
On Monday, Kansas University Chancellor Bernadette Gray-Little met with House Speaker Ray Merrick, R-Stilwell, and other House leaders to talk about higher education funding.
Higher ed officials pointed out that a recent national report noted that recent cuts in higher education have led to steep tuition increases.
States are spending $2,353 or 28 percent less per student on higher education in the current fiscal year than they did in 2008, when the recession hit, according to the Center on Budget and Policy Priorities.
During that period, tuition has increased $1,850, or 27 percent, the study said.
"Reversing these trends and reinvesting in higher education should be a high priority for state policymakers. A large and growing share of future jobs will require college-educated workers," the study said.
Gov. Sam Brownback has proposed keeping higher education funding at its current level.
Topeka — In Kansas, Gov. Sam Brownback and his conservative Republican colleagues in the Legislature seem to be following the no-way, no-how lead of Texas Gov. Rick Perry on whether to expand Medicaid under the federal Affordable Care Act.
But this story link text in the San Antonio Express-News shows that not all is as it appears in Texas.
While Perry, whom Brownback backed for the Republican nomination for president, is taking a tough-guy stand against Medicaid expansion, key legislators in the Lone Star State are working behind the scenes for a "Texas solution."
And there may be more acceptance in conservative Republican circles for a proposal by Arkansas that has apparently gotten the green light form Health and Human Services Secretary Kathleen Sebelius, a former Kansas governor. This bloglink text reports that Sebelius has said OK to the plan to use Medicaid dollars to buy private insurance.
So far, Brownback says he is undecided on whether to opt in to expanding Medicaid in Kansas, although whenever asked he says he worries about the costs and notes the state's budget problems — problems caused by income tax cuts he signed into law last year.
And conservative Republicans in the Legislature are pushing a resolution opposing the expansion of Medicaid. Hospitals and health care groups oppose the resolution. In addition, a statewide poll conducted on behalf of the Kansas Hospital Association found that 60 percent of Kansans support expanding Medicaid.
Under the Affordable Care Act, the federal government would pay the entire cost of the expansion for three years, and then that share would fall down to 90 percent after that.
Currently, Medicaid provides health care coverage to about 380,000 Kansans. The largest portion of them, about 230,000, are children. The rest are mostly lower-income, pregnant women, people with disabilities and elderly people. The $2.8 billion program is funded with federal and state dollars.
Medicaid in Kansas doesn’t cover low-income adults who don’t have children. And a nondisabled adult with children is eligible only if his or her income is below 32 percent of the poverty level, which is approximately $5,000 per year. That is about the most difficult eligibility level in the country.
But starting in 2014, the ACA creates an eligibility level of 138 percent of the federal poverty level, which is $15,415 per year for an individual and $26,344 per year for a family of three.
Estimates are that expansion would cover upwards of 150,000 more Kansans.
The effort by Gov. Sam Brownback and several other Republican governors to eliminate personal state income taxes is based on an economic theory that is "extremely flawed," a new report by a non-partisan research group says.
Brownback has depended on the claims of supply-side economist Arthur Laffer that states without personal income taxes are outperforming those with state income taxes. Last year, Brownback hired Laffer for $75,000 to help draw up the governor's tax proposal.
But the Institute on Taxation and Economic Policy says income tax cuts don't appear to actually stoke state economies.
"In reality, states that levy personal income taxes, including the states with the highest top rates, have seen more economic growth per capita and less decline in their median income level over the last 10 years than the nine states that do not tax income," the ITEP report states. "Unemployment rates have been nearly identical across states with and without income taxes."
Laffer's claims are based on growth in Gross State Product, which is related to population trends, and he asserts that tax policy is behind the migration of people into low-tax states.
But ITEP says population growth in states isn't determined by tax policy. The report says the growth is more attributable to low housing prices, warm weather and high birth rates in those states.
The ITEP study looks at median family income, which shows that while income has declined in most states over the past decade, the declines have been smaller in states with income taxes. Five of the nine states without income taxes are doing worse than average in median income growth.
And ITEP says that Laffer's theory fails to take into account that some states don't choose to levy an income tax because they have an unusual economic resource, such as oil, coal or tourism.