Search continues for state funding sources

by Rep. Don Schroeder

Kansas House of Representatives

The veto session continues with few solutions. Tax conferees continue to float proposals that continue to fail. However, the Education Committee kicked a school funding proposal out of the committee without a favorable recommendation. That basically means the committee does not necessarily agree the proposal is good, but will leave it up to the full House and Senate to determine.

The K-12 Committee kicked out its school funding bill Monday. The information I have received says the final bill has many similarities with the old funding formula that was abandoned two years ago. The main discussion is whether enough funding is provided in the right areas to improve outcomes.

As the bill came out of committee, it would provide $185 million the first year, $100 million the second year and then be indexed to inflation after that. So the remaining three years are estimated to increase funding between $55 million and $60 million per year. It remains to be seen if it passes the Legislature and meets court muster.

The next question is: Where the money comes from to fund the education proposal? As I have stated in the past, a bill was passed by the Legislature and vetoed by the governor that would have produced nearly $500 million per year. That additional tax probably would have funded the first two years of the school plan and made at least the full 2018 payment to KPERS, with a small carryover and no other program increases. But the veto was not overridden, so we continue to struggle with budgetary funding.

On Monday, the tax conference committee met and the House offered full repeal of the 2012 tax cuts. The Senate considered that and reported back Thursday, but apparently there was little interest to run that proposal across the Senate floor.

The overall revenue proceeds would be about $600 million the first year and increase to $750 million the second year—and appear low because all the deductions and credits would also be reinstated. At any rate, if there were enough votes to pass, the governor will almost certainly veto with little possibility of override.

The Appropriations Committee has not met for some time. Really nothing to meet and discuss. We have not kicked out a final budget proposal yet as some are saying we need to know what revenues are first; others are say we need to know how much is needed for the budget first.

My thinking is that we need to discuss where cuts are coming from if no additional revenues are approved, and that might stimulate some thinking on how to resolve that issue. Of course, the speaker controls that.

Last week Friday we worked a sales tax bill on the House floor. It began as a proposal to allow Marion County to extend a sales tax for county infrastructure and was heavily amended to include elimination of several services that are currently exempt from sales taxes. In Kansas, most services are not taxed while goods are taxed. There are many tax exemptions included in state laws, some sensible, others not.

To make a long story short, about $56 million of current exemptions were included in the amendment, including sales tax on memberships to some organizations. This would have put sales tax on YMCA memberships, but not sales taxes on purchases made by the YMCA itself. The YMCA membership sales tax was taken out on the House floor.

Of course, removing service exemptions is somewhat controversial, but with the economy moving away from goods and more to services it is probably a necessary first step. Internet sales are also pushing tax policy in that direction. We will see if any of the amendment remains in place through the conference committee process.

We will be in session at least another week. Many of these issues take time to work out and muster support. It is surprising how patient the Legislature seems to be to find some type of solution. Hopefully, solutions will be found soon and the session can finally end.

Rep. Don Schroeder represents District 74, which includes Hillsboro and much of the southern half of Marion County.