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May 1, 2008

House amends budget bill to include KPERS COLA

In floor debate on the budget bill, Representative Bob Grant (D-Cherokee) made a motion to include a cost of living amendment for current KPERS retirees. The Grant amendment would provide a 1% COLA each year for three years.

In debate, Democrats Harold Lane (Topeka ), Julie Menghini (Pittsburg ), Tom Burroughs (Kansas City ), and Republican Bill Otto (Leroy) spoke in favor while Republican Richard Carlson (St. Mary’s) spoke against it.

Carlson objected because the budget is tight and “we took care of the retirees beginning in 2009.” What Carlson is referring to is the change in KPERS for persons first hired in 2009. Under the change, those new employees will be paying 50% more into KPERS in exchange for a 2% annual COLA when they retire. In other words, no retirees are taken care of in 2009 – those folks won’t be retiring until about 2030 or later! Up until then, retirees will be entirely dependent on the largesse of the legislature.

Grant spoke of “throwing a bone” to our retirees. In arguing for the Grant amendment, Tom Burroughs reminded the body that they appear to have no trouble approving all kinds of business tax cuts but wring their hands over a small “bone” to retirees. “We’re throwing business a T-bone but retirees just get the bone.”

The Grant amendment passed on a non-recorded vote of 67 to 48. Of course it still has to get through the Senate. The bill was advanced to final action and then “emergencied up” for a vote. The bill was ultimately passed after a lengthy “call of the House” on a vote of 64 to 60.

Senate adopts virtual schools conference committee report

The Senate followed along with the House in adopting the conference committee report on Senate Bill 669. This report contains the new funding formula for virtual schools (105% of BSAPP plus .25 weighting for non-proficient at-risk students in a virtual school with an approved at-risk program, AP class weighting for some rural students, and disaster stabilization aid for Greensburg, southeast Kansas ’ flooded areas, and Emporia.

The report now goes to the Governor.

Should Kansas have “de-coupled?”

A portion of the House budget debate was focused on how the state got into the budget mess they are. Of course, a lot of folks have been saying for some time now that the willy-nilly way in which the legislature considers tax policy was bound to lead to trouble. The fact is that they are way too happy to pass almost any tax cut the Kansas Chamber or Americans for Prosperity puts forward and pass the responsibility of paying for services onto local units of government that have no other option but to raise local residential property taxes.

The result is an out of balance tax system that is way too vulnerable to fluctuations in the economy thus creating these periods of budget crisis. Even when they get into trouble they try to buy their way out with additional business tax breaks.

One issue that was raised in today’s debate was why the legislature did not “decouple” from the federal tax code when it came to a large business tax cut in the federal economic stimulus package. You know that package that will give you a check from the feds to spend us out of our economic woes? It also includes some other provisions including a big business tax cut. Because the Kansas tax code – like most state tax codes – is tied (“coupled”) to the federal tax code, business gets the same break against their state taxes. It will cost the state about $87 million in lost revenue.

State Senator Marci Francisco (D-Lawrence) introduced legislation to temporarily de-couple that provision of the state tax code from the federal tax code – business would get the federal tax break but not the state one – but her bill went nowhere.

This is all in the context as well of a legislative post audit study that came to the conclusion that they could not find any benefit to the state from $1.5 billion of tax cuts or direct aid to businesses over the past five years! That post audit study, by the way, has mysteriously disappeared from the state’s web site.

All of this is why KNEA, KASB, and Kansas Action for Children have been calling for the establishment of a non-partisan tax modernization commission to bring recommendations for change.

Both Chambers are now in recess and will return later tonight.

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