Budget deficit easily is top issue in Topeka

by Don Schroeder

The 2015 legislative session has begun. The first week is typically formality with statewide and legislative elected officials being sworn in to office.

Several resolutions must be passed by both the House and Senate to formally begin session. The governor gave the State of the State message Thursday evening and the Legislature received the governor?s budget proposal Friday afternoon.

Friday morning the Senate Ways and Means and House Appropriations committees were given an overview of the governor?s budget proposal. I was able to attend that briefing but little additional information was available. Basically the focus is to reduce the largest budget cost-drivers. Those are K-12 funding, Medicaid and KPERS.

The current 2015 budget needs some touching up, so the governor has already proposed to take some Kansas Department of Transportation, Kansas Public Employees Retirement System, and Kansas Department of Health and Environment money, along with cutting most other agencies by 4 percent to bridge the gap.

That actually makes the 2016 budget gap look even bigger because the 2015 gap was filled largely through borrowing from agencies rather than making structural budget adjustments.

During this session we will work out details for the 2016 budget, so here is a quick look at where things currently stand.

The 2016 budget estimates show about $648 million shortfall, which is a little over 10 percent of the state general fund. Using that number, if schools, higher education and social services are left untouched, there would not be enough left to run any other part of the state government.

In other words, things like public safety, agriculture, Department of Commerce and many others would no longer exist. That?s not going to happen, and is where the structural changes come in to play. It just seems that programs will have to be eliminated and funding formulas changed to make it possible to continue to operate all of state government.

If the governor and Legislature wish to reduce spending, it needs to be done in a logical way that defines the most important priorities. A concern is that the tax burden is not simply shifted from state to local government. Local government receives most of its revenues from property taxes, so a shift of that sort could be problematic.

There are some who would like to change the use value of agricultural land to market value to accomplish this and that could increase ag land taxes dramatically.

What the governor is proposing is to try to save money by reducing caseloads for social services, shore up KPERS by using $1.5 billion in bonding, and sunsetting the current school funding formula and providing block grants to schools at current funding levels.

After the funding formula is sunset, a new funding formula is supposed to be worked out by the Legisla?ture within two or three years. Even though schools would have more flexibility with their funds, the concern is that there could be more pressure to increase property taxes to make up for the flat funding level from the state.

On the tax side, it is proposed to increase tobacco and liquor taxes, which would yield about $107 million per year, and to transfer an additional $100 million from KDOT to the general fund per year.

With the additional $100 million, transfers from KDOT to the state general fund would total $383 million annually. Obviously, the transfer of that much will have a big impact on the future of Kansas highways.

Another part of the proposal is to freeze the income tax rates at the 2016 level, which is slightly lower than the 2015 level currently in place.

There are a few other provisions, but these are the main items for revenue. All of these proposals could look completely different by the time the legislature is finished with them. The full budget document only became available as I am writing this, and it will take time to sort through several hundred pages to see what is actually there.

My committee assignments are unchanged. They are Agriculture and Natural Resources, Ag Budget and Telecomm.

If you would like to express your thoughts on any legislative issue, please feel free to contact my office. My phone is 785-296-7500, and the email is don.schroeder@house.ks.gov. Full contact information for every legislative member is available on the Kansas Legislature website.

Don Schroeder represents District 74 , which includes much of southern Marion County.

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