KEPC WEEKLY UPDATE: Budget, tax, block grant, Abrams school formula, labor bill, UI bill, employment growth, lagging in federal funds?

In this issue …

  • Senate passes budget, House doesn’t try
  • More obligatory tax hearings
  • Governor signs school block grant bill
  • Hearings held on Abrams school formula
  • Senate trips over labor bill
  • UI bill gets strong House support
  • Kansas employment growth vastly different by region
  • Does Kansas lag in federal funds?


Senate passes budget, House doesn’t try

The Kansas Senate passed a budget bill this week that will require tax increases.  The vote was 26 to 13.  The Kansas House leadership decided early in the week not to even bring its budget up for debate,

With the state’s current tax structure the Senate budget is about $141 million short of being funded.  Something’s got to give because Kansas operates on a cash basis law and cannot spend what the state doesn’t have.  That means either tax increases or budget cuts or something else.

The House of Representatives had been tentatively scheduled to debate its spending plan on Tuesday, but media reports indicate turmoil over the weekend among Republicans caused the cancellation.  That turmoil probably revolved around conservative lawmakers who refuse to vote for anything that requires a tax increase.

Because the House decided not to run a budget bill, the Senate inserted the Senate budget into House Bill 2135 in a parliamentary maneuver.  That would bring the Senate’s version of the budget to the House for a straight up or down vote.  House members would not have the opportunity to offer amendments.

It’s likely that the House will vote Monday to send the bill to a conference committee where three senators and three representatives will negotiate over it.

The Kansas Legislature has adjourned until Monday.  Some conference committees have meetings scheduled.  Next week is the final week of the session prior to the First Adjournment.  Lawmakers will try to pass a budget before they leave the Statehouse.  They will then break until the veto session, which begins April 29th.


More obligatory tax hearings

Meanwhile, more hearings were held this week on tax legislation designed to raise the needed revenue to fund the budget.

The plan of tax committee leadership is to hold hearings (so they can say they did) before decided what taxes to raise during the veto session.  At that time, information on March and April tax collections will be available, as well as the best guess of the consensus revenue estimating group.

The Senate Assessment and Taxation Committee held a hearing on SB 233, the Governor’s cigarette and alcohol tax increases.  The proposal is widely viewed as unlikely to receive any legislative support.

The committee also heard testimony on SB 234, Governor Brownback’s other revenue raising proposal.  It includes some changes to the 2012 and 2013 income tax cuts, including near-freezing of rates and eliminating more of the itemized deductions sooner.


Governor signs school block grant bill

As the legislature was winding things up for the week late Wednesday afternoon, Governor Brownback signed the controversial school block grant bill in a private ceremony.  The bill deletes the 23-year-old school finance formula from the law and puts a two-year system of block grants into place while a new formula is developed.

News media were not informed and were not invited to the signing.

As of this writing, the panel of three judges hearing the school finance lawsuit has not taken action to stop the block grant legislation from going into effect, as was hinted last week.


Hearings held on Abrams school formula

The Senate Education Committee held two days of hearings on Senator Steve Abram’s (R-Arkansas City) pilot school finance proposal.   Testimony was mixed, with some school officials in favor of the legislation.  It would start with six school districts and expand over two years.

The plan includes six categories of state aid to K-12 public education:

  • Enrollment state aid
  • Poverty state aid
  • Sparsity state aid
  • Success incentive state aid
  • State equalization aid
  • KPERS employer contribution

Two large items of concern seem to be a lack of funding for students from non-English speaking families, as contained in the present formula, and the difficulty in tracking graduated students to gather information on the success state aid category.


Senate trips over labor bill

A bill to eliminate the Public Employees Relations Board and disallow payroll deductions for union dues got tripped up in the Kansas Senate, apparently over not allowing state workers and school district employees to deduct charitable contributions from their paychecks.  In particular, the United Ways in Kansas has been on the warpath, saying the provision will hurt the fundraising efforts of the charitable organizations.

The bill has been set aside for now.

Also tripped up in the Senate this week was Senate Substitute for HB 2326, concerning professional negotiations.  It was killed on a 13 to 27 vote.

It would have revised the Professional Negotiations Act concerning negotiable items, and provisions related to fact-finding when there is an impasse.


UI bill gets strong House support

Senate Bill 154, which revises the state’s Employment Security Law (Unemployment Insurance) passed the House this week 99 to 26 and is now in a conference committee to iron out differences between the two chambers.

The bill changes the calculation of maximum weekly benefits for the unemployed, as well as the unemployment taxes paid by employers.

The proposal moves from an “arrayed” system to a “fixed” system, based on an employer’s experience rating that reflects their usage of the unemployment system.  Many businesses have complained they have had no claims or few, yet pay big UI taxes.


Kansas employment growth vastly different by region

The latest Kansas Department of Labor report on nonfarm job growth shows jobs grew only 1.5% in the yearlong period from February of 2014 to February of 2015.

The differences in Kansas by region are striking.

The healthiest job growth was in the Manhattan Metropolitan Statistical Area (MSA) with a whopping 3.7%.  That was driven largely by growth in government jobs and the service sector .  The Manhattan MSA is made up of Pottawatomie and Riley Counties.

The Kansas City Area did well with 3.0% growth with strong showings by construction and financial activities.  That’s Johnson, Leavenworth, Linn, Miami, and Wyandotte Counties.

At the bottom end of the scale and most troubling was a very weak 0.4% growth in the Wichita MSA, made up of Butler, Harvey, Kingman, Sedgwick, and Sumner Counties.  The poor showing can be attributed to a dismal 1.7% decline in manufacturing, the economic lifeblood of the region.  There was also a 4.3% reduction in government jobs for the region.

Another way to look at the South Central Kansas employment situation is that the job rate growth at the state level was almost four times as fast as the Wichita MSA.

You can see the growth statewide and by region here. 


Does Kansas lag in federal funds?

Kansas gets 24.9% of its overall revenue from federal funds (less than most states) and 50% from taxes (more than most states).

The national average for states is 30% from federal funds.  That’s money used for programs like health, education, and transportation.

The information comes from Stateline, a publication of the Pew Charitable Trusts. Stateline based a chart on the latest 50-state data from the U.S. Census bureau for the fiscal year ending June 30, 2013.  The data accounts for all money used to pay for government services statewide.

Here’s a link to the Stateline information.


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