1.12.12 Newsletter

January rolls around and that means it’s time for the Legislature to get back to work. On Monday this week the gavel dropped for the first time and unlike last January, there wasn't any snow on the ground and it felt like spring outside. While many Kansans were enjoying the last few days of this unseasonable warm winter, the Governor presented his State of the State address reaffirming the stronger position the state is in from last year.

When Governor Brownback was sworn into office last January the state had just over $800 in the bank. This is not just an embarrassment to the state but puts Kansans at risk. This year when the governor gave his one year update on the progress we have made, the state had a balance of more than $100 million.

During the State of the State, the governor laid out an aggressive agenda for the legislature on a range of issues including taxes, the budget, KPERS, school finance, Medicaid, and water rights. While the days will be long and the decisions difficult, the state will be better for it. We are at a crossroads in so many ways and only politically difficult decisions will move the state forward to where it needs to be.

Taxes

Over the past decade, Kansas has experienced a loss of private sector jobs. Between 2001 and 2011 Kansas lost nearly 39,700 jobs. During the same time, Kansas has also seen unemployment rise, tax revenues fall, and had numerous budget shortfalls. This session we begin by facing the challenge of reversing a climate of stagnating economic growth, loss of population, and declining small businesses.

The proposal is based on the fact that the other nine states with no income tax have experienced the greatest growth of population, either in their region or in the country, as well as the greatest economic growth, including growth of tax revenues. That being said, Governor Brownback’s Tax proposal relies on the reduction and simplification of the current Kansas Tax code. Specifically it is to reduce the income tax rate on all individuals, eventually removing income tax outright. The lower bracket $15,000 or less ($30,000 or less for married filing together) will have a 3% income tax rate and those above $15,000 will have a 4.9% tax rate. This tax rate will be the second lowest rate in our region. It will also eliminate most deductions and credits while adding a double standard head of household deduction of $9,000. The plan also retains the corporate income tax rate as well as sales and use tax at their current levels.

This policy will allow for the growth of small businesses which currently employ 55% of the non-government workforce. It also sets Kansas up for a surplus of 4.9% in FY2012 and at least a 7.5% surplus at the end of FY 2013 while funding for schools stay the same as current levels or increase. The removal of the Earned Income Tax Credit will be used to finance the double standard head of household deduction and the rest will be put into programs such as Medicaid which will be matched by Federal dollars to help aid those hurting most in these hard times.

School Finance

Undertaking the reworking of the school finance formula is a huge and important task and now is the time because the state’s school finance formula has continually been marred in litigation leaving little certainty to school districts on when and how much any given district will receive. From past history we know that the winners from these lawsuits have not been our Miami county schools. Louisburg, Paola, and Spring Hill received some of the lowest increases as a result of the litigation but have had to pay the taxes to meet the court’s ruling for other schools across the state.

This same formula has not changed in 20 years while our state looks much different today than it did 20 years ago. The time has come to make an update to the formula to make is simpler, give greater control to local districts and parents while ensuring no district loses money. The new finance formula being proposed does just that and here in Miami county all of our schools will see an increase in funding with the new formula. Districts should have the discretion to make spending decisions without being subject to Topeka spending rules. This one size fits all approach doesn’t work in a state as diverse as Kansas. We have more than 280 school districts of varying sizes and there is not one budget that will fit them all. This is why local control is a must.

Budget

The governor has proposed a responsible, pro-growth budget which for the first time in years meets the statutory 7.5% ending balance requirement. It is great to get back to 7.5% being the norm instead of the exception. The ending balance allows our state the cash flow necessary to not be late on our payments to our K-12 schools. It is refreshing that our state is getting back on track, living within our means just like our families have to.

The budget recommends expenditures of $6.1 billion for FY 2013 which is a .6% reduction from last year and for a second year in a row reduces all funds expenditures. Not only has expenditures dropped but the governor, through an early retirement program, has cut state employees by 377. The governor has held education funding harmless keeping school funding intact. The governor also recommended using expanded lottery act revenue from new casinos to reduce the state’s debt load by $48 million keeping future generations from paying our debts.

KPERS

The first rule of being stuck in a deep hole is to stop digging and that is exactly the plan for KPERS. While the hole of $8.3 billion seems deep, there is a manageable solution. The first step is to fund the state’s year to year obligations and this budget does that. The next step is to reform the system to prevent future employees from becoming trapped in an inflexible system. However current KPERS members, those retired and already vested, will not see a change in the program. Those individuals will continue to receive the payments promised. The recommendations for new employees are still being considered but at the end of the day the state must move toward a defined contribution plan like many private sector employers. This will ensure the fund stays solvent and retirees who have been promised a pension will receive it.

Water Rights

Kansas is an agriculture state and relies heavily on the Ogallala aquifer for farming. However our state has continued to have a “use it or lose it” water policy. At a time when the state is under extreme drought and the aquifer water levels continue to drop this policy continues to make the problem worse not better. Agriculture will continue to be critical to Kansas in the future as it has been since statehood. If we as a state want to continue to grow we must have water and that is why we must repeal this “use it or lose it” policy in place of responsible water use.

House Leadership Bills and Committee Work

House Leadership is researching topics and plan to sponsor three bills. The first is Casey’s law which would require legal guardians and parents to notify law enforcement when their child is missing. The second is a review of mandatory reporting laws to make sure that we are providing protection on college campuses in our state.  Finally, an Arts Commission Check Off on the state’s tax return form would be included and would allow income taxpayers the opportunity to support the Arts.

Aging and Long Term Care Committee

I will again be serving on the Aging and Long Term Care Committee.  We have a full agenda this year and are looking at sponsoring the following several bills. The first bill relates to long term care.  Residents on “spend down” in a long term care facility would be able to assign the state as a beneficiary on their life insurance (if they have it) and would then be able to leave the balance to their family after the cost of their care is paid.  Currently the policy must be sold for the cash value and spent.

We will also request a bill to establish policy concerning how sex offenders are handled in long term care facilities.   With so many registered offenders that are becoming older, the state must provide common sense protection for residents who live in these facilities.  Another bill request involves Adult Protective Services.  Reports of suspected neglect or abuse are now reported to three different agencies, SRS, Department of Aging, and the Attorney General’s office.  It would make sense to have these three combined into one contact agency.  We will also have a related bill that addresses fiduciary and physical abuse of senior citizens.

The Governor has set important goals for the legislature and it will be up to us to refine them.  If you have thoughts on any issue which comes before the legislature this year, please do not hesitate to call me. The best legislation involves a collaborative effort between representatives and the people. If there is anything I can help you with please contact me at 785.291.3500 or email me at jene.vickrey@house.ks.gov

I look forward to a productive and worthwhile session.

Sincerely,

Jene Vickrey