Tax Study Released Today

A new study on the ramifications of lowering the state income tax was released today at a statehouse news conference. Bernie Koch, executive director of KEPC, and study author Dr. John Wong presented findings at the statehouse today. The study finds that, for every 1 job created, 1.63 are lost due to study released today finds that a lowering of the income tax would result in a loss of 1.63 jobs due to a reduction in overall state spending. The study was commissioned by the Kansas Economic Progress Council.

The press release is available here, and the ful text of the study is available here.

Dr. Wong’s slide deck is available here.

KEPC UPDATE: Short breather then more problems…

A regular reader of the KEPC News told me this weekend (after the end of the Kansas Legislature’s special session on school finance) that he would like to read some good news here for a change.

There is good news for the moment.  The legislature appears to have fixed the problem with state distribution of certain education funds that will satisfy the Kansas Supreme Court.  That means schools will not close after June 30.

The bill (Substitute for HB 2001) passed the House 116 to 6 and the Senate 38 to one.

Here’s a link to how the House voted.

Here’s a link to how the Senate voted.

The bill puts $37.6  million into Local Option Budget (LOB) equalization aid for property-poor school districts.

  • $4.1 million is transferred from TANF funds (Temporary Assistance for Needy Families)
  • Virtual state aid contributes $2.8 million (this is for programs that fund virtual schools-learning over the Internet)
  • $10.5 million comes from tobacco settlement funds
  • $7.2 million comes from the extraordinary need fund set up by last year’s block grant bill
  • $5 million is transferred to the extraordinary need fund from KDOT’s $4 motor vehicle registration fee
  • If the sale of the Kansas Bioscience Authority raises more than $25 million, the excess (up to $13 million) will go to fund LOB equalization

That doesn’t add up to $37.8 but there are a lot of moving parts, and the Bioscience Authority sale is not expected to raise that much money.  Even Governor Brownback has said so.

I have been trying to find an online link to what this bill means to each school district in Kansas, but that does not appear to be available yet.

We do know from Kansas Legislative Research that 77 school districts would lose some state aid, 169 would gain, and there would be no change in 40 districts.

Under the original plan introduced Thursday, 141 districts would have lost.  That plan would have used a 0.5 percent cut to general state aid to K-12 education to finance the LOB equalization.  The elimination of that provision is what caused more districts to come out better.


Here’s the bad news.

Lost in all of the euphoria is the undisputed fact that more budget problems are on the way, probably next week.

In remarks to the House Appropriations Committee on Thursday, Legislative Research Assistant Director for Fiscal Affairs J.G. Scott said:

  • The projected ending balance for the current fiscal year (FY 2016-which ends Thursday) is $21.5 million
  • The projected ending balance for FY 2017 is $87 million
  • He noted receipts were short of expectations in May by $66 million
  • It appears revenues will be short again in June and the $21.5 million ending balance will be wiped out
  • He said the state may have to sweep funds, and delay certain payments to get through FY 2016
  • In that case, the FY 2017 ending balance probably isn’t there

Governor Sam Brownback’s budget director, Shawn Sullivan echoed those concerns in remarks to the State Finance Council last Wednesday.  The hall talk around the Statehouse last week was June could be in the neighborhood of $40 million or more below estimates.  Sullivan reportedly told the Council June revenues (to be announced July 1) could be $40 to $50 million short.

Sullivan said the state might have to take $16 million in highway funds and delay payments to school districts.  Another option was to transfer up to $45 million in Medicaid fee funds to the state general fund.

It’s ironic that much of the criticism of local school districts has been aimed at their reserves, which school officials have been saying they need in case of delayed state payments.  It appears that’s exactly what might happen.

All of this occurred at a Finance Council meeting where the group voted 8 to one to take out a $900 million certificate of indebtedness for next fiscal year as a cash management tool.  That would allow the state to borrow money from itself at low cash times of the year, but to pay it back before the year is done.

The state’s ongoing budget problems are expected to continue and will have to be faced by the 2017 Kansas Legislature, which (by the way) is supposed to rewrite the school finance formula.

Sorry, I’m just the messenger.

KEPC UPDATE: Lawmakers return, consequences for education, construction jobs disappear, higher ed tuition increases

In this issue … Lawmakers return for special session on Thursday Consequences for education are already here Construction jobs WAY down in Kansas Higher education tuition increases adopted   Lawmakers return for special session on Thursday Kansas legislators return to Topeka Thursday for a special session that will try to “fix” school finance and prevent […]

[Continue reading…]

KEPC UPDATE: Govt turmoil, revenues down, court waits, jobs tepid, higher ed tuition increases

In this issue … A week of turmoil for state government on several fronts Revenues down but Governor finds $25 million for a highway project Supreme Court now waiting for Brownback and the legislature Jobs report still tepid Higher education tuition increases proposed   A week of turmoil for state government on several fronts So […]

[Continue reading…]

KEPC UPDATE: Waiting for supreme court, budget, highway disaster, negative ratings, higher ed warnings…and we told you so…

In this issue … Waiting for the Supreme Court Brownback has until Thursday to decide budget The highway program disaster Negative bond ratings Higher education warnings on budget cuts Hate to say we told you so   Waiting for the Supreme Court As if Kansas public schools didn’t have enough to worry about these days […]

[Continue reading…]

KEPC UPDATE: Ended & unbalanced, prop tax lid, STAR Bonds/Bioscience, Budget process improvements, Angels, Eco devo incentives

In this issue … Lawmakers end session with unbalanced budget Property tax lid passes STAR Bonds changes/Selling the Bioscience Authority Bill tries to improve the budget process Angel investor extension passes Bill sets fees for economic development incentives   Lawmakers end session with unbalanced budget The 2016 Kansas Legislative session ended at 3:28 a.m. Monday […]

[Continue reading…]

KEPC UPDATE: Lawmakers return, biz income tax, property tax, STAR Bond, S&P, Question

  In this issue … Lawmakers return Business income tax bills: more questions than answers Property tax lid almost finalized Is Star Bond legislation frozen? S&P puts Kansas on watch Question   Lawmakers return Kansas legislators returned to Topeka for the veto session this week facing an estimated $290 million budget hole over the next […]

[Continue reading…]

KEPC UPDATE: Revenues plunge, Governor announces actions, KDOT half billion

In this issue … Revenues plunge Governor announces actions KDOT will delay half a billion in projects   Revenues plunge The official revenue estimates for the State of Kansas were reduced dramatically Wednesday, forcing the Brownback Administration to announce major cuts to transportation.  The Governor also proposed options that include cuts to K-12 and higher […]

[Continue reading…]

KEPC UPDATE: Adjourned, school finance, property tax, mental health services

In this issue … Legislature adjourned until veto session School finance fix sent to Governor Brownback Property tax lid almost settled Mental health beds a local problem due to state problems   Legislature adjourned until veto session The 2016 Kansas Legislature adjourned Thursday afternoon and will return to the Statehouse in a little over a […]

[Continue reading…]

KEPC UPDATE: Tax Foundation, property tax lid, school finance fix, USD winners and losers, STAR Bond bill, adjourn next Thurs?

  In this issue … Tax Foundation critical of Kansas business pass through exemption Committee passes property tax lid School finance fix is in turmoil How to know if your school district is a winner or loser with the Senate bill STAR Bonds bill moves after Senate veto override: includes sale of Bioscience Authority Leadership […]

[Continue reading…]

KEPC UPDATE: Where we are; ed plans, biz tax bills, tax lid, ed bill drama, regents report, USD cash balances, tax transfer bill

In this issue … Where we are Chairs working on education plans Business income tax bills surface Tax lid hearings held Controversial education bill hearing cancelled Regents outline higher education cuts School district cash balances Sales tax transfer bill still in committee   Where we are With just two weeks left in the regular legislative […]

[Continue reading…]