On the question of adequacy of funding, the Shawnee District Court three-judge panel ruled the block grant scheme (their term, not mine) is unconstitutional because it locks in a level of funding already found to be unconstitutionally inadequate, nor does it make provision for increasing student enrollment, changing needs of students or rising costs.
Regarding equity, the panel ruled the legislative remedy the court found to be acceptable in March of 2014 was reversed through legislative action in 2015 and never enacted, so the equity portion of the case has been reopened. The changes made this year in SB 7 (the Block Grant bill) were ruled unconstitutional as the block grant scheme has a wildly disparate impact on districts around the state.
The notion that KPERS (Kansas Public Employee Retirement System) funds count as increased funding was rejected, with the court noting these funds are nothing more than a pass-through line item on the books, as they only spend a matter of hours in the district accounts and cannot be spent on any other aspect of district operations.
District reserve funds have repeatedly been cited by the state as the basis for the argument that schools have plenty of money but are choosing not to spend it. The court tore those arguments apart in the opinion, specifically mentioning that districts exercising best-practice judgment by keeping funds in reserve to maintain cash flow, solvency and preparation for emergencies should not be penalized by a state that has failed to do the same.
The court outlined several steps that need to happen immediately – payment of $50 million the legislature rescinded from the 2015 budget for equalization aid, as well as repeal of the new calculation methods for both capital outlay and Local Option Budget (LOB) equalization aid – and the ultimate step in the event that the legislature fails to act – repeal of the block grant bill and restoration of the school funding formula. The repeal of the block grant bill has been stayed until the appeals process plays out. Indeed, the Attorney General filed the state’s appeal with the Supreme Court on Friday afternoon just hours after the opinion came down.
The court acknowledged the role of the legislature in the appropriations process:
- Page 68: “ We recognize the need for the exercise of additional appropriation authority from the legislature for FY2016 and FY2017 amounts due, but rely on each legislator’s solemn oath of office and respect for our constitutional form of government to provide such authority.
The opinion leaves it to the legislature to make decisions about how to bring school funding into compliance, rather than determining that path for us.
I am pleased the court ruling affirmed what many of us have been saying all along – our schools have suffered significant budget cuts and the consequences are putting our children at risk. We have a constitutional duty – and a moral obligation – to get this right, to ensure all our children have access to a good quality education, not just an education that is “good enough” as the state has argued. The battle is far from over, but I will continue to fight on behalf of all Kansas children.
Tax plan
The legislature closed the books on the 2015 session after having passed the single largest tax increase in the history of the state. A whopping $384 million in new taxes, combined with a new $47 million tax on healthcare, comprise the final package (HB 2109, SB 270).
By the narrowest of margins, the House and Senate gave approval to the revenue package after weeks of haggling, arm-twisting, reports of outright blackmail and political pressure by leadership. Here are the component parts:
- Increases the state sales tax to 6.5% (generates an estimated $164 million)
- Hikes tobacco taxes by 50 cents per pack (generates $40 million)
- Retains an exemption passed in 2012 for 330,000 businesses which shields income for these LLC's from taxation, including owners salary and draws
- Wipes out itemized deductions, except for charitable contributions (yielding $97 million)
- Retains the Food Sales Tax Credit program but drops plans to LOWER the sales tax on food to 4.95%
- Continues the Governor's "March to Zero" on income taxes by accelerating (yes, accelerating) the triggering mechanism that will force even further income tax rate reductions in 2019
- Taxes guaranteed payments by LLCs (a move widely panned as easily avoided by a decent accountant)
- Amnesty for delinquent tax payers (estimated to generate $30 million)
- Drops all reference to a commission appointed to examine and then possibly sunset the myriad of state sales tax exemptions
- Creates a lid on property taxes at the local level that requires a vote of the people each time that property values increase (estimated to cost Johnson County over $1 million per countywide election)
Probably the most puzzling piece of this entire matter is that even at $384 million, the tax package will not raise enough revenue to prevent the Governor from making additional budget cuts. Our fiscal analysts in the Legislative Research Department are estimating the Governor will need to find $50 million in further spending cuts to balance the budget. A last minute bill gave the Governor authority to cut up to $100 million if forecasted tax revenues do not materialize or if expenditures exceed estimates.
I worked very hard with a group of colleagues for real revenue reform to provide stability and certainty by solving our cash flow problems with common sense solutions, not mere Band-Aids that ensure we will be revisiting this fiscal crisis again and again and again. The obvious components of a reliable plan involve removing the future rate cuts from the statute books and fixing the loophole that allows some 330,000 private Kansas businesses to enjoy the benefits of the public sector without contributing a share of the costs as the rest of us do. The governor’s repeated veto threat meant we could not gather 63 people to support these measures. Additionally, we did not have adequate time to read and vet the specifics of the bill. For these reasons, I voted against the final tax plan that passed. It over-estimates the potential revenue generated by certain elements, and still falls short of needed revenues.
Sine Die
On Friday, June 26 the legislature finally convened for what is known as “Sine Die,” the ceremonial last day of the legislative session. Ordinarily, no business is conducted on Sine Die other than the passage of the adjournment order, however this has been no ordinary session. As previously mentioned, because the tax bill was put together so hurriedly and the vote taken without time provided to read the bill, drafting mistakes were made. The property tax lid was intended to begin in 2018, but that was inadvertently omitted from the final draft of the bill, which would make the lid effective July 1, 2015. We were asked to pass a bill to clean up this error. The July 1 date would have been impossible for cities and counties to comply with, as their budget processes are nearly complete and certain election deadlines and requirements have passed.
After ensuring the only element of the bill we were voting on was the January 1, 2018 date correction, I voted yes on this technical amendment. My hope is we can hold the proper public hearings to vet the tax lid policy in future hearings. Having been inserted at the last minute as a way to gain votes for the tax bill, there are many elements of this policy that conflict with both the budget timeline for local units of government, and the election cycle.
Final Thoughts
The challenges of this legislative session were many, and I am not satisfied with the outcome, however, I am a big believer that being a part of the process is important. Giving voice to concerns and providing alternatives that reflect the sensibilities of our district is critical. Representing you means listening to all the angles, asking tough questions, and making choices based on the information gathered, not simply rubber-stamping an agenda. Our choices do not remain theoretical – our choices impact the daily lives of all Kansans.
This morning, I was sickened by an article detailing a homicide inside our mental health system potentially related to overcrowding and staffing shortages at Osawatomie State Hospital. I have been saying for years that at the point when the needs of the people are being shortchanged by the absence of resources, driven by political ideology rather than real-world data, we are in trouble. Let us hope the investigation proves otherwise, but if a life was lost because of tax and budget policy decisions, I hope it will be the wake up call needed to get things right.
