The Kansas Legislature returns Wednesday with most of the major items from the beginning of the 90-day session still to be settled in the 17-day wrapup session.
Rep. Sydney Carlin acknowledged the lack of progress thus far. “It is the same list we started the year with and we haven’t gotten too far along,” she said. “Just because we don’t have an answer now doesn’t mean there isn’t a solution.”
Two major items — the budget and congressional redistricting — must by law be decided by the end of the session. Other major initiatives of Gov. Sam Brownback that have been debated this year — in education, tax policy and the Kansas Public Employees Retirement System — could be held for continuation of discussion during next year’s session.
Three members of the area delegation — Carlin, Rep. Tom Phillips and Sen. Roger Reitz — are uncertain whether any of those proposals will actually be completed by the end of the session. They also agree the overhauls are probably too much to be handled in one session.
“I think the legislature could have made small changes in every one of these things during one session,” Carlin said. “But the changes are so critical that it can’t happen. We are so far apart.”
Brownback has been pushing for his school finance formula reform proposal to be passed this session and to go into effect for the 2013-14 school year. Details of the plan include setting the base state aid per pupil at the statutory amount of $4,492, and removal of the formula weightings, restrictions on how to spend money and the cap on the local option budget.
However, the proposal’s progress has been the slowest out of the three, leading it to be the most likely candidate to be a part of next year’s legislative agenda.
Reitz said his communications with Sen. Jean Schodorf, the Senate Education Committee chair, have indicated the committee’s distaste for Brownback’s proposal.
“The general consensus that I’ve gotten from the chair of the Senate education committee chair is they’d like to stick with the formula as it currently is,” he said.
The Senate has instead passed a bill by a margin of 31-9 that would increase the base state aid per pupil (BSAPP) by $74 for each of the next two years.
The BSAPP would increase from the current $3,780 to $3,854 for the 2012-13 school year and $3,928 for the 2013-14 school year. The bill would also allow local school boards to increase the local option budget authority from the current 30 percent maximum to 32 percent in 2012-13 and 33 percent in 2013-14.
Carlin called the Senate plan “really good for education.” “With the over half a billion surplus we have, we have to take care of our schools,” she said.
Phillips agreed with putting money back in schools, provided the legislature doesn’t start using up the $500 million surplus.
The statutory ending balance is 7.5 percent, which the state hasn’t met since 2008. Phillips said the legislature should strive for 7.5 percent but advocated flexibility given the recent cuts made by the state. “Given the economic climate we’re coming out of, we could accept less than the 7.5 percent to shore up where we’ve struggled,” he said.
As far as the formula proposal, Phillips said he’s been hearing from other legislators that more time is needed to determine the implications of the changes.
“From what I’m hearing and reading, that’s just too big of a change for the legislature to take on for one year. That may very well be the case for the tax proposal.”
The status of Brownback’s plan to eventually eliminate personal income tax has been up in the air due to the distinct differences in the Senate and House plans.
The Senate’s measure removed Brownback’s proposals to continue the temporary one-cent sales tax increase that started in 2010 and eliminate many tax credits and deductions such as mortgage interest and charitable contributions. The House’s plan also eliminated the one-cent sales tax while removing sales taxes from food.
These changes make the tax plan significantly more costly. Over five years, the Senate bill would reduce state revenues by $3.7 billion; the Senate received the bill with the cost of $575 million. The House bill would reduce state revenues nearly $2.2 billion over five years.
Carlin said there’s nothing for her to really consider since the plans are “miles apart” at this stage. “What we have right now is nothing from me to agree to or not agree to,” she said. “The House is different from the Senate and both are different from the governor’s proposal.”
Carlin and Phillips said the public has told them about concerns with property taxes, an area worth further examination. Phillips said he would use the summer to look at the exemptions allowed over the past 20 years.
“At this point, I’m very leery of the idea of total elimination of the state income tax,” he said. “I’m fearful taking out that revenue stream could create some potential funding shortfalls.”
The state already is dealing with an $8.3 billion shortfall with KPERS, which is why work is being done to restructure the system. The recommendation is a 401(k)-style framework for new employees to enter into for KPERS. The changes would take affect for employees hired after Jan. 1, 2014. No changes would be made for existing employees, however.
Phillips said he liked the cash balance plan with the KPERS reform, which would require employee and employer contributions. “We will not be breaking our promises to our current enrollees and those counting on those benefits,” he said.
Reitz, however, said the reform’s removal of the defined benefit plan based on salary and years of service is trouble. “That will be very up in the air on what you have at the end of your tenure,” he said about future retirement funds. “That’s very worrisome.”
What happens with these various topics will effect the budget process as the session winds down.
The Senate Ways and Means Committee and the House Appropriations Committee held meetings last week to prepare for the session’s restart. Lawmakers didn’t get the differences in the two budgets for fiscal year 2013 settled before the break. Carlin, a member of the Appropriations Committee, said a FY12 appropriations bill is to blame for the breakdown. “Three budgets are hanging because of this one tweak in education that we haven’t done,” she said.
The disagreement involved where school funding was coming from for this fiscal year. The state is allocating $24.6 million due to increased student enrollment, but the House wanted to use transportation money while the Senate wanted to use general state revenues.
Carlin said she disagreed with the House’s stance, reasoning that the state should use the surplus money. “That’s why we went home without a budget,” she said.