Category: Kansas Legislature

House panel begins examination of possibly transferring $1 billion into KPERS

Pending bill covers $254 million in missed state payments and much more

by Tim Carpenter, Kansas Reflector

Topeka — The Kansas Legislature began consideration of a bill Wednesday transferring an eye-popping $1 billion from the state treasury to cover years of missed state payments and to shrink the unfunded liability of the Kansas Public Employees Retirement System.

In addition to clearing debt of $254 million resulting from skipped payments to KPERS from 2017 to 2019, the bill would infuse $746 million into the pension system to bring it closer to fulfilling long-term obligations to former government workers. Despite higher pension investment by the Legislature in recent years, the unfunded actuarial liability of KPERS stands at $5 billion. The House bill would cut that burden to $4.25 billion.

Adam Proffitt, the governor’s budget director, told the House Insurance and Pension Committee that relying on the state’s large budget surplus to cover the debt to KPERS would save taxpayers about $171 million in interest payments over the next 16 years.

Gov. Laura Kelly recommended paying off this debt, but didn’t propose the full $1 billion transfer that would occur under House Bill 2561.

Alan Conroy, executive director of KPERS, endorsed the House legislation. The proposal also attracted support of Republican state Rep. Steven Johnson, a candidate for state treasurer and the House committee’s chairman, and Attorney General Derek Schmidt, a GOP candidate for governor.

Johnson said the legislation would pay dividends by reducing debt, solidifying the pension’s balance sheet and meaningfully reducing future cash-flow requirements.

“I’m excited about this bill,” he said. “Passing this legislation would result in a landmark achievement of restoring the trust fund to over 80% funded under our current assumptions. Not only has this not happened in many years, one decade ago we were looking at a grim reality of further erosion of our funded ratio below 56%.”

Schmidt said expanded state revenue fueled in part by “reckless spending decisions” by Congress and President Joe Biden presented the state with an opportunity to allocate a portion of the surplus to strengthening KPERS. Contents of the House bill, including the early repayment and the bonus contribution, would free up money for tax reductions or spending on public education, transportation and social services, he said.

“Aggressively prepaying at least $1 billion now will save taxpayers hundreds of millions of dollars in debt service — more than $400 million saved over the next five years,” Schmidt said.

The House bill stood in contrast to “unwise and failed proposals” from legislators and Kelly to refinance KPERS’ debt that would have increased costs to taxpayers of the retirement program, the attorney general said.

In the past, in addition to increasing contribution rates to KPERS, the Legislature ordered issuance of $2 billion in bonds to help the system’s bottom line. Proceeds from sale of bonds was invested in the market with the goal of making a profit and devoting that money to lowering liabilities within KPERS. The state’s bond issues for KPERS began in 2004 with $500 million before the $1 billion issue in 2015 and another $500 million issue in 2021.

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.
See more at https://kansasreflector.com/2022/02/09/house-panel-begins-examination-of-possibly-transferring-1-billion-into-kpers/

Kansas House completes override of Gov. Kelly’s veto of congressional redistricting map

by Tim Carpenter, Kansas Reflector

Topeka — The Kansas House ratified action of their brethren in the Kansas Senate to complete Wednesday an override of Gov. Laura Kelly’s veto of the congressional redistricting map designed by the Republican legislators to undercut viability of Democratic candidates.

The GOP-controlled House cobbled together by 85-37 margin for a two-thirds majority necessary to thwart the governor’s veto of the map known as Ad Astra 2.

The Senate initiated the override process Monday, but fell short of votes. On reconsideration Tuesday, Senate leadership produced a 27-11 margin to deflect Kelly’s objections to a map splitting the 3rd District held by Democratic U.S. Rep. Sharice Davids.

It would move Wyandotte County Democrats into the 2nd District and transfer the moderate stronghold of Lawrence from the 2nd District to the 1st District.

The fundamental idea is to weaken Davids sufficiently for a GOP nominee to prevail, but not alter the balance of power in the two nearby districts enough to matter.

“Ad Astra 2 is a good map,” said Rep. Chris Croft, an Overland Park Republican and chair of the House’s redistricting committee.

Initially, the GOP struggled to deliver the minimum 83 votes required by the constitution. There was a “call of the House,” in which the doors were locked and nine absent representatives were summoned to the floor. The missing included six Republicans and three Democrats.

Rep. Tom Burroughs, D-Kansas City, Kansas, said the congressional map placing Wyandotte County north of Interstate 70 into the 2nd District held by Republican U.S. Rep. Jake LaTurner shattered a majority minority community.

By one count, the move would deposit half the Hispanic population and one-third of Black residents in Wyandotte County into the agrarian 1st District stretching beyond the Capitol in Topeka, the Flint Hills of central Kansas to the feedlots of Garden City about 380 miles away. The heavily Republican Big First is represented by GOP U.S. Rep. Tracey Mann.

“When you divide communities of color, you take away a voice,” Burroughs said. “The subliminal message is your voices don’t matter. Your very existence and contribution to the community and to the state process don’t matter.”

He also said it was his hope the judicial branch eventually finds the state’s congressional map unconstitutional.

The Legislature also is responsible for crafting new maps for the 125-member House and 40-member Senate as well as boundaries of the 10 Kansas State Board of Education districts.

In 2012, conflict over the maps in the Legislature led to drawing of the boundaries by a three-judge panel in U.S. District Court.

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.
See more at https://kansasreflector.com/2022/02/09/kansas-house-completes-override-of-gov-kellys-veto-of-congressional-redistricting-map/

Kansas House gives incentive package for secret company megaproject stamp of approval

Senate to take up bill Wednesday

by Noah Taborda, Kansas Reflector

Topeka — Kansas representatives deflected concerns Tuesday about the secrecy surrounding a bill wooing an unnamed company expected to invest billions of dollars in the state, sending the measure back to the Senate with their stamp of approval.

The Attracting Powerful Economic Expansion Act, or APEX, was brought forward at the behest of the governor and the secretary of commerce. It looks to provide Kansas with an edge over Oklahoma in competing for a production plant into which the secret company plans to invest $4 billion. The bill provides a refundable tax credit of up to 15%— Kansas would be on the hook for $600 million in this instance — paid back over 10 years.

In addition, the measure offers payroll reimbursement for the company of 7.5%. Estimates from nonpartisan legislative staff indicate the act would cost approximately $1.2 billion.

After more than an hour of debate, concerns about the secrecy of the deal, which involved some members entering into nondisclosure agreements to learn more concrete details, were trumped by the potential many legislators saw in the bill.

“I think that we have reached a reasonable compromise,” said Rep. Stephanie Clayton, D-Overland Park, noting efforts to clean up the Senate proposal. “I am very proud to have worked with the members of the House Commerce Committee … to make sure that we get something reasonable that does have good oversight and something that honestly gives every single one of us an opportunity to take a good, old-fashioned, pro-business vote.”

The House voted 80 to 41 to send the bill over to the Senate for a concurrence vote. Should the Senate approve the bill, APEX will head to Gov. Laura Kelly for final approval.

Both the governor’s proposal and the Senate iteration raised concerns in the House Commerce panel about potential impacts to the budget. Estimates from legislative staff indicated Kelly’s proposal would sap the budget surplus and leave the state in a deficit in 2026.

The Senate revised the bill by removing refundability from the tax credit and including a corporate income tax cut that would leave the state in a better, albeit still negative, budgetary situation.

To ease those concerns, the House reinstated the refundable credit, extended the payout from three to 10 years and added oversight from the State Finance Council before any the secretary of commerce reaches any agreement or amends any payout durations. They also added a sunset of May 1, 2024, and limited the number of agreements the state can reach to one per year.

The House proposal still cuts the corporate income tax of 4% by 0.5%, but only once for each project, rather than each year the company benefits from the incentive package, as the Senate proposed.

Despite the added safeguards, Rep. John Carmichael, a Wichita Democrat, was unwilling to bet his constituents’ tax dollars on the program, even if he had confidence in the governor and commerce secretary. He said that for all they knew the company could be pornographic, driving home that question marks surrounding the bill were many, except for the select few who signed NDAs.

“Did somebody buy this deal? We don’t know.” Carmichael said. “You’re going to go spend your constituents’ money on the hope and the prayer that people who’ve signed nondisclosure agreements are representing you, as a legislator and your constituents, because you can’t represent them yourself.”

The measure also includes clawback provisions requiring the company to repay funds should it leave the state 10 to 15 years after the deal.

Rep. Leo Delperdang, a Wichita Republican, voted in favor of the measure after admitting he was conflicted about which side he fell on. He urged legislators to keep in mind the potential effect approving this budgetary boon could have on the feasibility of some other proposals, such as eliminating the food sales tax.

“I am assuming the same is true for any rainy-day funds or the efforts from several in this body for Medicaid expansion,” Delperdang said.

Rep. Henry Helgerson echoed Delperdang’s concerns about potential collateral damage.

“We’re betting the bank,” the Eastborough Democrat said. “We’re betting school finance. We’re betting the social service network. Somebody better get down here and ask, are we biting off more than we can chew?”

The APEX bill also incentivizes employees of the company looking to relocate to Kansas through a $10 million matching incentive fund. An amendment from Rep. Trevor Jacobs, a Fort Scott Republican would reduce the amount of money offered to employees for food and lodging while they relocate.

The Senate plans to take up the House version of the bill Wednesday.

In a meeting of Senate Republicans, Sen. Caryn Tyson, of Parker, asked for an official cost estimate for the incentives package.

“We’re voting blind here,” Tyson said. “Even the talking heads on PBS are mocking us for this legislation.”

The Department of Commerce has argued the state needs the program after whiffing in the past on 11 megaprojects.

Lt. Gov. and Commerce secretary David Toland asked senators to put aside politics and work to push this measure across the finish line. He said the state is at risk of missing another economic opportunity should it fail to pass this bill.

“Failing to take into account $2.5 billion annually in new economic activity, along with presenting projections that are only based on worst-case scenarios paints a picture that shows none of the benefits to Kansas,” Toland said. “The opportunity we have in front of us today would be transformative, by creating thousands of new jobs and injecting billions of dollars into the Kansas economy.”

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.

See more at https://kansasreflector.com/2022/02/08/kansas-house-gives-incentive-package-for-secret-company-megaproject-stamp-of-approval/