KDOT targeted for $413M funding cut

by Don Schroeder

Week 2 of the legislative session has come and gone. Probably because of a concerted effort of the speaker and the Senate president, things are moving faster this year, but we have a long way to go. Budget issues are on everyone?s mind. Most of the regular committees and the budget subcommittees will meet next week.

When I reported last week, budget proposals were not yet available. Since then I have attended several meetings explaining the current and future budget proposals. Briefly, for the current 2015 fiscal year adjustments, the governor is proposing taking an additional $150 million from the Kansas Department of Transportation?$263 million is already supplied for non-KDOT purposes and the $150 million would be in addition. This would total $413 million for the current 2015 fiscal year.

Also proposed is sweeping $55 million from the Kansas Department of Health and Environment. This is money received from the federal government in additional reimbursements for medications in the Medicaid program as provided in the Affordable Care Act. About $31 million is to be repaid to support current programs.

Several other fund sweeps between $3 million and $18 million require legislative approval.

Changes that the governor can accomplish on his own are withholding nearly $41 million in employer contributions to KPERS and the allotment reductions of 4 percent for departments and agencies.

Also proposed is an increase in tobacco and liquor taxes and freezing the income tax rates at the 2016 level as a boost to revenues. The longer we delay implementation of the 4 percent allotments, the less relevant they are.

It is unknown if we will simply pass one big budget bill toward the end of the session or if we follow a more traditional path and pass three budget bills.

As for the 2016 budget, several proposals are on the table. The governor wants to get a handle on the three largest cost drivers in the budget. Those are: K-12 education, social services and KPERS.

The plan is to further pare down social service costs through elimination of caseloads and improved efficiencies through KanCare. The thinking is that more than $50 million can be saved each year by adjusting contracts a little and streamlining the eligibility screening process.

In regard to KPERS, the governor is encouraging bonding up to $1.5 billion to shore up the unfunded liability and also to move the amortization period out by 10 years to 2043. That is similar to refinancing your house for a longer time. The payments may be lower but for a longer time. The bottom line is more interest is owed by the end of the period. The bonding would have to be done at very favorable interest rates or it would not work as planned.

Finally, the K-12 proposal is to sunset the current funding formula and replace it in the future. In the meantime, block grants will be made to school districts for funding at current levels until a new formula is devised.

Again, we will learn more as time goes forward. I have some concerns about sunsetting the formula before a new formula is in place. How this may affect rural schools is unknown. It also seems a new formula, if needed, should be written and tested before abandoning the current formula.

Overall, the 2016 and 2017 budget proposals have not received much attention yet, but additional KDOT funds of $100 million each year is proposed to be transferred. If everything is added up, it looks like transfers from KDOT would be $1.139 billion over three years. Those transfers, along with delays in further lowering income taxes and increases in tobacco and liquor taxes, should balance out future years.

It can be difficult to get some of these changes through the legislature, so time will tell where taxes and expenditures will end up.

Other bills that have been introduced include legalizing marijuana, allowing concealed carry without a permit, and several constitutional amendments to change the judicial selection process. The last day for individuals to introduce bills is Feb. 11 and the date for non-exempt committees is Feb. 13.

Currently, about 100 bills have been introduced in each the House and Senate. We can expect several hundred more in each chamber before the deadline passes.

Typically, less than 20 percent of all bills introduced actually go anywhere, so the large number of introductions each year is pared down severely before session ends. The committee process sifts through the bills pretty well.

Thank-you again for the opportunity to serve as your representative in Kansas. Please contact me with issues or concerns you may have.

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

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