Dear Friend:
Greetings from Topeka – Day 104. We are budgeted for 90 days, yet here we sit at a cost of $43,000 per day. I am donating my overtime pay to the Shawnee Mission Education Foundation as a symbolic gesture – after all, my pay is state funding and this is one small way I can send additional resources to our public schools, even as I continue to fight for adequate funding in our state budget.
May Revenue Estimates
May revenue numbers came out last Friday and we were $6 million below estimates – yes, the very estimates that were revised downward just one month ago. Revenue Secretary Nick Jordan proclaimed that the numbers were better than May of last year. For context, look at May revenue for the past three years (Source: KS Legislative Research):
$2.693 billion - 2013
$2.01 billion - 2014
$2.07 billion - 2015
So, I guess hooray, we were less bad than last year?
Tax and Budget
As you know by now, the difference between our current budget plan and available revenue is approximately $800 million. The state cannot deficit-spend so accounting tricks are used to help close the gap:
- Money is swept from transportation then bonds are issued to pay for transportation projects.
- Other fee funds are being swept to the general fund to keep the government afloat.
- Some of these are one-time fixes, others just kick the can down the road for future taxpayers to pay the tab.
- Combined, these measures close about half of the gap, leaving $400 million still to be allocated or cut.
When you or I put together our family budget, we must live within our means. The same should be true at the state level – the Legislature has no business deciding how to spend money it doesn’t have. Thus far, there appears to be a lack of political will to make the revenue decisions needed to support this budget.
Despite calls for more spending cuts, the budget has been cut to the bone and state agencies are suffering. A recent story in the Topeka Capital Journal tells the tale of staffing shortages and forced overtime at our state hospitals. Similar situations exist in our corrections system, and the Kansas Highway Patrol. Filling vacancies is a major problem because the salary schedules fall so far below industry standard. The Department of Revenue was a month behind even processing tax payments this year because the usual seasonal help could not be hired – a symptom of the 4% across the board cuts made back in January.
Furloughs
We must pass a new budget by June 6 to avoid furlough of state employees. June 7 is the first day of the first pay period of the 2016 fiscal year. If we do not have a budget in place for FY 2016, payroll cannot be met. Agencies were advised this week to prepare to furlough all non-essential personnel. A short-term “stop-gap” budget plan is being prepared as a contingency. This would buy us anywhere from 1-3 months, depending on how it is drafted. I stand ready to pass a temporary appropriation bill in order to keep the doors open and to keep people working. That’s critical. But, it’s also critical for us to pass a long-term balanced budget that gives people the kind of stability they deserve so that we don’t continue to put our schools and our state employees in this position year after year.
Why do we find ourselves in this predicament?
Blind allegiance to the philosophy of supply-side economics is interfering with our collective ability to get the job done. The reality is that the numbers don’t add up and we are rapidly running out of time. This isn’t a political issue - this is a Kansas issue. We need real revenue reform that doesn’t pick winners and losers – protecting big business while punishing the little guy. We need to restore fairness, stability and reliability rather than just patching the hole and hoping for the best.
The legislature is currently deadlocked, and the governor is threatening to veto any legislation that puts his “March to Zero” income taxes in jeopardy or closes the loophole that exempts some businesses from paying any taxes at all. Instead of finding a practical plan to restore balance and steady revenue, the Senate debated repeal of over $500 million in sales and property tax exemptions for non-profit hospitals, bloodbanks, schools, Girl and Boy Scouts, and the YMCA, to name a few. This plan was defeated after midnight Sunday night. The extremes to which the income tax cuts of 2012 and 2013 are being protected is getting in the way of meaningful reform.
Until we can agree that we have a problem that needs solving, working out a viable solution appears unlikely. While many of my colleagues agree with me that we need to reform the tax code to fix the structural imbalance created by the 2012 and 2013 tax cut plans, there is a large contingency who view this as the perfect opportunity to shrink the size of state government. I will continue to stand up and fight for a plan that works for the longterm so that we do not have to come back and have this fight next year, and the year after that. The uncertainty created by such repeated battles is bad for business and bad for everyday Kansans like us.
