The Senate passed the last budget bill of 2014 today - Senate Sub for HB 2231 on a vote of 22-18. Click here for the Conference Committee Explanation and click here for the three column comparison of House/Senate budget items. Finally, this is the overall budget profile, including the prior budget bills passed this session for education and the judiciary. Remember, these documents are showing changes to the Governors Recommended Budget.
The bill does include the consensus caseloads adjustments, provisions for shifting funds in KDADS for the Rainbow Alternative Project and the Governor’s Budget Amendments for mental health, substance abuse treatment, and reducing HCBS waiting lists. The conference committee also added a one time $250 payment to state employees.
The budget bill will have to be voted on by the House of Representatives this afternoon. There are still multiple conference committee reports and other issues pending for action today – including tax policy – but leaders are hoping to adjourn the session today. Technically, they still have another 7 days allotted for the 2014 session if they need them.
Here are notes from the Senate debate -
HB 2231 – 2014 Budget
Senator Ty Masterson, Ways and Means Committee Chair – This is what is left of the state budget – could call it the leftover items that have not already been addressed – the rats and cats. We have already passed a budget bill for Judiciary and one for Education.
This is the remaining budget. The runs do not include the reduced revenues in April.
The Conference Committee did agree to a $250 one-time bonus this year. It is all state employees, not only classified. It does not include elected officials.
It looks like we took $15 million out of Commerce, but it just reflects the $5 million to each university.
Changed transfer to Bioscience Authority from $27 m to $32 m. Took the $5 m from the KEY fund (tobacco dollars). We had an increase in receipts from tobacco dollars in consensus report of around $7 m.
Senator Kelly - distributed of the projections for reduced revenues that are not currently a part of the consensus revenues. “Reality of our budget situation”.
Started FY 13 with $709 m in our ending balance. By the end of FY 15, will have blown through that. We are not dealing with the reality of the decreases in revenues. This is budgeting with blinders on. No one wants to deal with the elephant in the room. Even though we have made significant cuts in programs already, we should be looking at more cuts in each fiscal year just to avoid deficit budgeting: Would need to cut $48.4 m in 14; $277 m in 15; For 16, we would need to cut another$ 193 m to come to 0 balance. For FY 17 - $77 m; FY 18 - $38.2 m; and FY 19 - $181 m.
Just to come to zero. When you add those figures up, that comes to $1.26 billion in cuts that we would need to make just to come to zero balances. I know that it is an election year and no one wants to make cuts that would be necessary and no one wants to raise the taxes that would be necessary. In reality, we will have to face this. That is the main reason I didn’t sign this conference report. There are also some very specific items that I oppose.
When we raised the transfer to the Bioscience Authority, we took it out of the mouths of babes – we took it from the Children’s Initiatives Funds. It is not like we are over budgeting in that area. We have lots of needs in children’s programs and that is where that money should be spent if we are going to spend it.
The $250 December payment to state employees is a one time payment and does nothing to elevate the pay scale of our state employees.
The use of one time funds to balance our budget has become the norm. We are spending ½ billion over the two years to fund schools transportation, for mental health grants – what is that about? We are using gaming money. We built into the gaming statute to use the money for debt service, infrastructure, and property tax relief. What are we using it for? Teacher pension fund contribution. Not to pay down the unfunded liability, but just the base contribution.
Those are some of the reasons and there are a lot more reasons. When the $90 million hit was announced this week, we should have gotten together to reboot and address the issue. We didn’t’ do that.
Senator Hawk – I have concerns about higher education. Kansas has cut 22.8% to higher ed in the past few years. Most states have now started increasing funding again. Only 8 states are still cutting. Our neighboring states have increased funding. Tuitions are being pushed up. Only 7 states increased tuition over ____, Kansas is one of them. It makes college less affordable and less accessible for our lower income students. There has been no restoration of the 1.5% cut across the board. We only restored ½ of the salary cuts. Our employees felt the need to move to unclassified employee status, and that has cost Emporia State and Wichita State the funding for longevity bonuses.
I came here because I care about doing the right thing in the present. I also care about doing the right thing in the future. The Georgetown Center says that by 2020, over 60% of all jobs will require college education. They project that without significant investment in higher education, our system will not keep up with the commercial demand for educated employees.
Senator Haley- talked about concerns with pay issues for Judiciary – information from local Court administrator. Are we going to be going back to furlough days and courts being unable to be open five days a week?
A: Refer to HB 2338 which we already passed to fund the Judiciary Budget. This bill includes a provision to clarify the fees that remain with the Judiciary.
Haley – the concerns that have been expressed to me were since the passage of HB 2338. Is there anything in this budget that might improve the budget condition for the Judiciary?
A: There was no further action that needed to be taken to but adding the $8.2 million to prevent any furloughs. The only clarification that was needed was the language that is included in this bill about the fees.
Senator Francisco – Kansas Water Office – reducing payments for the John Redmond Reservoir dredging project?
A; Simply an adjustment to what was necessary for those bond payments.
Francisco – moving $50,000 from State Water Plan – coming from stream bank stabilization?
Yes.
We know that dredging is very expensive. But I think this is a very necessary. My concern is that stream bank stabilization is what we hope will help reduce the silt going into our reservoirs. We are not looking at long term use of these funds.
Talked about meeting with conference committee on SB 84 – which wants to repeal renewable portfolio standards. The motivation is to reduce utility bills. I have attended conferences in Manhattan and ______. A quote from Tracy Streeter regarding the Neosho water basin, cost of shutting down the grid every time they have to shut down Wolf Creek for technical problems relating to water system – costs every utility customer $_____. This is very expensive. I oppose taking any money from our stream bank stabilization projects.
Money to address deferred maintenance projects from our universities, KS Historical Society – could be using gaming funds for our infrastructure.
I would suggest that we could also be using our transportation funds for highways and for rail. We have needs in these areas, but we are using the funds for base budgeting.
Senator Holland – talk about something near and dear to my heart – Kansas tax policy. Talked about the administration paying Dr. Art Laffer to come and talk to us about how to improve our state budget by changing state tax policy – had a book called “Eureka – how to solve California’s problems”. Also had Dr. Art Hall who came and talk to us about cutting Kansas marginal income tax to improve the Kansas economy. Unfortunately, we have basically shot craps in our Kansas economic policy.
Six state region – economic indicators. Showed that Kansas lags in the primary economic indicators for growth. Employment, per capita income, creation of business, more.. This is data brought forward by the Governor’s own Economic Policy Council. I give credit to our legislative committees and their work, but they have been dealt a very difficult hand. Our whole system is built on a house of cards. If we were really trying to build up our small businesses, then why are we giving the same benefits to the huge multi-million dollar companies. And then when we have to try to balance the books on this policy, why are we actually taxing businesses on their losses? What are we really doing to the small businesses we are trying to encourage when we know they are going to
What about our PEAK program? When we talk about giving these businesses benefits based on their employee income taxes, if that is where we are trying to encourage this glide path to zero? Our tax policies are inconsistent and as we pursue our state level goals, we are
If you want to buy into supply side theory, it doesn’t work. If you want to redistribute income in this state, this is your ticket. If you want to cut programs in this state, this is your ticket.
The grand experiment has failed, the rat has died. Rigor mortis has set in. Now, we aren’t going to deal with this until next January. That cage is really going to stink by then. The sooner we start making changes to our tax code to provide a more stable revenue picture for this state, and to provide a more stable outlook for our citizens,
Senator Pettey – cited Moody’s downgrade to Kansas bond rating – came out yesterday. Downgraded Kansas highway revenue bonds because we are shifting transportation funds to underwrite other areas of the state budget. More…
This will put us below the national ratings. Could be improved if we increased our funding of our pension obligations and our bond obligations. Our budget is not doing that.
The April shortfall means that we will need to collect $800 to $900 million in the remaining months of the year to meet our projected revenues for the current fiscal year. Fiscal staff indicates that we may end the year $200 million below estimates. These drops have been made steeper due to our income tax reductions – our decline in income tax withholding is due to the reduction in income tax rates that are more beneficial to higher income Kansans and place more tax burden on lower income Kansans. More…
Cited Duane Goossen quote on Moody’s downgrade. Cited Masterson quote – saying this downgrade should have little effect on our bond health.
A well respected and informed entity has just given us a low grade. That should be a concern to us. I encourage us to consider how we are going to deal with next year’s budget.
Senator Francisco – home inspector’s funds – fees will be collected but won’t go to real estate commission, would go to the Kansas association of real estate inspectors.
Masterson – went with the House position on this. For the purposes of the private association self-regulating the home inspectors.
Francisco – is it true that we received information that the real estate commission has notified us that they will be short of funds and that we have not passed the bill that would allow them to self-fund?
Masteron – I agree that the bill has not passed and that we, as a Senate, did support that bill to allow the fee increases to deal with that. This was a House position and they held very strongly to it, that is one area where we gave in to the House position.
Francisco – this is an area where we are not allowing the Real Estate Commission to collect the moneys they need to regulate. I think it is inappropriate to send the moneys to a private organization with no state obligations or ties.
Senator Hensley – in the interest of full disclosure, I am the last speaker on our side. I think our members have made some very good points. Would call to your attention the graph that Senator Kelly passed out looking at the state general fund profile in the out years. Looks like we will have enough money to fund this budget at least for this fiscal year, but does
I have a copy of a handout that the Governor provided to a group of lobbyists regarding the state general fund profiles – regarding projecting ending balances. It basically states that projecting ending balances more than one year out is very difficult to do with any accuracy. The handout goes from 2012 to FY 15. Interesting to note that it doesn’t go beyond 2015. Goes back over the projected deficit.
We need to face reality – we are a small Midwestern state. Quoted the Governor saying – look out Texas, here comes Kansas. Why would we want to emulate Texas – it is a much larger state with much more resources. Talked about the study done by a blue ribbon commission that reviewed the Kansas tax policy, equating it to a three legged stool Indicating that the three legs should be as close to parity as possible = income tax / sales tax / property tax. Staff says we reached near parity about ten years ago. In reality, this is a self-inflicted budget crisis that we have imposed on ourselves. And we have heard evidence today that these tax cuts are not leading us out of our economic situation by creating jobs or new businesses. And what we have done has increased the burden to low income Kansans by eliminating our
When we started this session, I offered an amendment to reinstate the renter’s homestead exemption, but the answer to why that amendment was rejected was because we couldn’t afford it. “we can’t afford it” – we are going to hear that a lot. We in this chamber are going to be around for another two years and we are going to be hearing that a lot.
To think that this trickle down economic theory is going to a boon to Kansas as espoused by Dr. Laffer and Dr. Hall and others by bringing us additional jobs and growth – I don’t see it. If you are interested in the overall health of Kansas budgets as I am, I would ask you to vote against this budget. There are some good things in this budget, but it doesn’t do the job overall.
Senator McGinn – clarify a question regarding leadership day pay – five or six years ago, leadership day pay was limited. That is now over, it is wide open. I only want to share it because I remember that four or five years ago, it was a big issue and I don’t understand why it isn’t an issue any more. There are several senators who were here then who thought it was a big issue then , but maybe it isn’t important any more.
At the beginning of April, the Senate passed an amendment that stated - No state agency named in 2013 session laws of Kansas or any school district shall expend any money for implementing common core standards unless Kansas Legislature expressly allows it (not actual language). Make no mistake, a vote for this budget is a vote permitting / giving consent for further implementation of common core. There are many reasons to vote no and many reasons to vote yes on this budget. Have many reasons to vote no. I will be voting no.
Masterson – I haven’t had to work too hard carrying the budget today, mostly just listened.
Disagree that this is a vote on common core. That is a different issue and it has had its opportunity for consideration.
Our role in this chamber is to find consensus – find the votes we can agree on. Funny to have the comments from the same group that includes protests for blowing through money and also that we didn’t spend enough. And the protests that we “steal” money – we are transferring money directly to those budgets from sales taxes and other revenues that should be coming to us from the beginning and then budgeted from us. Criticized the protests on ending balances and shifting of funds, when those practices were used in prior budget processes.
This ending balance is solid, this budget is balanced. We have issues to deal with next year. We can’t go below zero – we must deal with it and we will. I’m not saying we don’t have issues – but we will deal with it. This chamber and the other has reasonable people in it, and we will deal with those issues.
22 yes – 18 no
Hensley explanation of vote.
Pyle explanation of vote.
Baumgardner – new senator – appreciate work on the budget. Concerned about $200 million number. Also, when we have a budget that pays amounts such as $76 to individuals, I cannot support that.
Fitzgerald – explanation of vote – appreciate the work on the budget, appreciate the funding for Corrections, but must vote no. We are still spending too much money – taking money from private citizens and spending it on government.
Appointment of David Dillon before we leave town – need to remember.
Caucus at 1:30 p.m. – come back to vote on remaining items at 3:00 p.m. Will then check on House status and wait for more conference reports.
