The last-minute scrambling of the Kansas Legislature to come up with a budget plan and avoid state furloughs drew some comments at Thursday night’s Unified Government Commission meeting.
On Friday morning, legislators were still discussing tax plans, with some new ideas floated.
In a report to the UG Commission Thursday, UG lobbyist Mike Taylor said a preliminary tax plan had been passed raising the sales tax to 6.65 percent, up from 6.15 percent. However, the House later voted to reject this tax plan on Thursday. On Jan. 1, the tax on grocery store food would have dropped to 5.9 percent under that plan, he said. The cigarette tax would have gone up 50 cents a pack.
Also under this preliminary plan, income tax rates would be frozen at two levels, 2.7 for lower-income and 5.6 for higher incomes, he said. There was discussion about putting tax back on LLCs and sole proprietorships that pay no tax, and the governor has threatened to veto that, he said.
One House plan for the budget passed on Wednesday, that was $400 million short of revenues needed, he said.
“They’re kind of working two tracks,” he said. “They’re working a tax plan to generate $400-some million in new revenues, and they’ve got to fill the $400 million hole in the budget. They also have a second budget plan that would fill the hole by cutting every agency in the state an additional 5.7 percent across the board. That would be a $450 million reduction to the state budget that would affect every entity.”
Because of the state’s pay cycles, if they don’t get something done by Sunday, as many as 66,000 state employees may have to be furloughed, as they wouldn’t get that paycheck until July 1, the state’s new fiscal year.
If the state Legislature cuts more out of the budget, the UG will have to analyze the trickle-down to local governments and how many more duties the local government would have to pick up, Taylor said. That is unknown at present, he added.
“They’re in major disagreement,” Taylor said.
The Republican Party has fractured over whether to cut more spending or raise more taxes, he added.
On Tuesday, a senator from southeast Kansas proposed a property tax lid on local government, he said. There were no previous discussions on it and no hearings. Taylor said. It would have meant that if local government revenues exceeded last year’s amounts plus consumer price index increase, there would have to be a public vote on the budget on Aug. 1, he said. Taylor said that’s about the time the budget is being adopted and that plan’s timeline didn’t work. He said the conferees have agreed to take this out, but others have said they will bring it back next year.
A decision by the Kansas Supreme Court on school finance could affect the budget, according to Taylor. Observers are awaiting a decision, which did not come down today, on school finance.
“Depending on what the court decides, it could be like a nuclear bomb,” Taylor said.
If the Legislature cuts out $450 million from the budget, it would cut public schools an additional $180 million, he said.
“I don’t think the court is going to tolerate that,” he said. That might mean the legislature going back to a special session at some point, he said.
Another bill in the Legislature, that would allow the state to quit sending out motor vehicle registration renewals, now may have been stopped, Taylor said. That could have cost the UG $3 million a year in lost revenue, he said. There is a recommendation from the conference committee to not approve it, and it isn’t final yet. Several other bills were stopped that would have cost the UG more money, he said.
The Legislature passed a local elections bill that moves the local city and school elections from spring of odd-numbered years to fall of odd-numbered years, remaining nonpartisan. The original proposal was to move them to even-numbered years at the same time as federal elections, and make them partisan. Taylor said he expected to see this come back again in future years, perhaps after 2017. The election bill also includes a provision to fill local vacancies within six months. Another idea that may be proposed in the future is to allow voters to cast a straight ticket vote. Taking these proposals together, Taylor said he views it as the “world domination plan.”
Taylor said a bill affecting the Woodlands, allowing horse and dog tracks to offer slots at the same percentage that casinos offer, passed the Senate but was assigned to a committee in the House that will never hear it. The UG took a position that supports the casino and the original amount for gaming tax that was in the state law that racetracks would have to pay. To bring both the casino and racetrack to the same percentage of taxation was viewed as unfair by the casino as it had to make a commitment of a minimum of $225 million to invest in the casino, while the racetrack was not required to make a commitment. The casino would have to give away a lot more of its revenue than the racetrack would, he said, citing development agreements with the UG.
Mayor Mark Holland said he couldn’t support issuing a special use permit for the Woodlands that would undermine the casino and its 900 jobs. He said it would be irresponsible for the commission to support it.
“Even if the state allows it, that doesn’t mean we have to allow it in our community,” he said. “I would support the Woodlands coming back online under the current law and not with percentages that undercut our casino,” he said.
At 105 days on Thursday, it is the second longest legislative session in the history of the Kansas Legislature, Taylor said. Since it costs $43,000 to keep the legislators in session, it’s now costing Kansas $645,000 in unbudgeted costs as lawmakers wrangle with the tax and revenue questions. The longest session was in 2012, at 107 days.