Kansas Senate passes spending plan without food sales tax cut

photo by: Nick Krug

Kansas Statehouse in Topeka, February 2014.

Topeka — The Kansas Senate passed a $22.8 billion state spending plan Wednesday that provides a 5% pay raise for state employees, doesn’t account for any reduction in the state sales tax on food, and leaves the state general fund with a balance of $359.6 million.

The budget bill also invests $245 million in disability services, eliminates funding the governor set aside for an unlikely expansion of the Medicaid program, counts on federal aid to pay for the remodel of the Docking State Office Building and a new health agency lab, and reduces revenues by $255.1 million in the current fiscal year, which ends July 1, and $80.1 million next year to account for tax cuts that have already passed the Senate.

Those tax cuts include incentives for a mystery company that promises thousands of jobs if it chooses to move to Kansas, as well as credits for wildfire victims, aviation program graduates, and college graduates who move to rural areas of the state.

Not included: Gov. Laura Kelly’s proposed one-time $250 rebate on income taxes this year, which would have cost $460 million, or the elimination of the 6.5% state sales tax on food, which would cost $402 million over 12 months.

The Senate passed the spending plan on a 23-14 vote a day after a three-hour debate that centered on last-second changes. Senators still need to work out differences with a House plan that isn’t finished yet before both chambers can send a budget to the governor, who can utilize line-item vetoes.

Senators approved an amendment from Republican Sen. Caryn Tyson to add a 15% pay increase for legislative staff at a cost of $240,880. Those employees were not included in the governor’s proposal to raise executive branch salaries by 5%. The raise for state workers would come in the form of a $145.5 million lump sum to be distributed based on merit.

Senators also accepted a proposal from Sen. Tom Holland, D-Baldwin City, to require state contractors to use the E-Verify system to ensure employees can legally work in the U.S. The governor vetoed the same amendment a year ago.

Holland successfully proposed two additional amendments.

One of the amendments would have banned state contractors from outsourcing IT services overseas or using employees who are working in the U.S. on temporary H-1B visas. Holland said the proposal would help protect American jobs.

Sen. Rob Olson, R-Olathe, accused Holland of “dabbling” in hate.

“I have a company in my district called Garmin,” Olson said. “They have a lot of H-1B employees. They’re all over my neighborhood. Some of them are my best friends.”

Holland’s other amendment would have capped the monthly cost of insulin for those on the state employee health plan.

In both cases, Republicans complained that Holland was attempting to introduce complex policies that have never received a legislative hearing. Holland said he has repeatedly introduced the legislation and Republican leaders have refused to hold a hearing on it.

“This is why this place drives me nuts,” Holland said. “I’ve had this bill in the Public Health and Welfare (Committee) for several years. It’s never had a hearing. I’m sorry, if the committees aren’t going to work public policy, we need to work them here.”

“Everybody acts shocked,” he added, “when it’s like, ‘How could you dare bring this to effect good policy for Kansans?’ ”

Sen. Marci Francisco, D-Lawrence, proposed making a $62.75 million investment in special education services. The cost would be offset by reducing a planned $80 million payment toward debt on Big Hill, Clinton and Hillsdale reservoirs. Senators narrowly rejected that amendment.

The Senate budget makes adjustments to the current fiscal year that would result in spending $21.84 billion, including $8.14 billion from the state general fund. For the upcoming year, the budget expands to $22.8 billion, including $9.17 billion from the state general fund.

The ending balance in July would be $1 billion. A year later, the balance is expected to shrink to $359.6 million.

That balance includes a planned $400 million payment to the state pension fund.

The budget removes the governor’s addition of eight full-time employees to implement the elimination of the sales tax on food, as well as five employees for a special detox unit at Osawatomie State Hospital.

There is an investment of $245.5 million, including $103.6 million from the state, to improve reimbursement rates for disability services, Medicaid behavioral health services, and nursing care, among other services.

Senators deleted $60 million for the remodel of the Docking building and $32.5 million for a new Kansas Department of Health and Environment lab, with the expectation that funding could be offset by federal aid.

Instead of spending $18 million on new aircraft for the Kansas Highway Patrol, as the governor requested, the budget would redirect that money from highway funds.

— Sherman Smith reports for Kansas Reflector.


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