Tuesday, May 18, 2010

Tax battle in the 2010 legislative session

Here is a good summary of the recent legislative session written by Mark Tallman with the Kansas Association of School Boards.

May 18, 2010

Tax increase battle defines 2010 legislative session


Long before the start of the 2010 session, it was clear legislators would face a fundamental choice: whether or not to raise state tax revenue to avoid further deep cuts in state programs such as education, social services, public safety and highways.

In 2009, with the worst economic crisis facing the state since the Great Depression, tax revenues fell sharply and the Legislature reduced general state aid for school districts by nearly $100 million and eliminated $30 million in capital outlay state aid, professional development and special education aid. As revenue continued to fall, Governor Mark Parkinson ordered another $39 million reduction in June, followed by a $37 million cut in November, reducing base state aid to the 2006 level. The state failed to fund $100 million in costs under the school finance formula due to higher enrollment and weightings, and lower revenue from the statewide mill levy; as well as $13 million to keep special education aid at 92 percent of the excess cost formula. The base budget per pupil fell from a statutory commitment of $4,492 to $4,012.

When new revenue estimates were released in November, the state general fund faced a deficit of nearly $400 million for the upcoming Fiscal Year 2010-11, despite cutting almost $1 billion from the budget that was approved for FY 2009. In his message on January 11, the first day of the 2010 session, the Governor told legislators that spending cuts had gone as far as possible without doing permanent damage to state programs and interests. He proposed a one-cent increase in the state sales tax for three years, and increasing the cigarette tax to the national average.

Exactly four months later, early in the morning of May 11, the Kansas House voted 64-61 to concur in a one cent sales tax increase that was expected to raise over $300 million. The bill had been approved five days earlier by the Kansas Senate on a vote of 23-17. Supporters of the tax were generally the same legislators who also passed a budget designed to keep funding for K-12 education at the same level next year as in the current year, restore or minimize cuts to a range of social service programs, and boost funding for the state's transportation system.

Although tax increases are always controversial, this may have been the most contested in recent history. Opposition was led by activists in the state's dominant Republican Party; the State Chamber of Commerce, which threatened political retribution against legislators voting for tax increases; and groups calling for limited government that paid for newspaper, radio and televisions spots denouncing higher taxes and spending. Support for more revenue came from a new coalition of education and social service interests (including KASB) called Kansans for Quality Communities; a group of local chambers of commerce that broke from the state organization over differences in the impact a sales tax increase would have; and Governor Parkinson, a former state Republican chairman who switched parties and inherited the office when Governor Sebelius left to join President Obama's cabinet. (Two other past state G.O.P. chairs, Rochelle Chronister of Neodesha, and Dennis Jones of Lakin, pushed the 2010 Commission to call for a tax increase to maintain K-12 education funding.)

Tax increase opponents first argued cuts to school districts had been minimal and additional cuts could be absorbed by using cash balances or finding greater efficiencies. Then, some legislators proposed allowing school districts to make up for any cuts through higher local taxes, as long as state taxes weren't raised. Finally, proposals were made to avoid cutting school funding by selling off state property. But in both the House and Senate, a coalition of generally more moderate Republicans and most Democrats rejected these options and passed a budget maintaining school funding at current levels, backed by state tax revenue.

The political verdict on the choice for taxes will be made in the August 3 primary and November 3 general elections. For school districts, it means deeper cuts are not inevitable, but they are also not impossible. Even with the tax increase, the Fiscal Year 2011 budget assumes increased federal funding that has not yet passed Congress. With no projected ending balance, further shortfall in state revenues in the next year could force delays in aid payments and more spending cuts to avoid a deficit. The precarious budget situation suggests districts may well want to preserve reasonable cash reserves, despite criticism from some organizations and legislators.

Nor is the picture likely to change in the near future. Current projections show the state will face a budget deficit in FY 2012 even with higher revenues, in part due to expiring federal stimulus funding, and the boost in the state sales tax for the state general fund will expire in FY 2014. School district costs and requirements are projected to increase more rapidly than revenues.

With the battle over the budget and taxes overshadowing most other issues, an unusually small number of education bills were passed. The Legislature made a permanent change in the notice day for teacher and administrator contracts; made some changes in special education funding; extended the potential life of school buses; and removed required State Board of Education approval of school building construction plans. A number of other bills, however, fell by the wayside.

KASB is preparing a complete report on education issues in the 2010 Legislature, which will be released by the end of the month.

Mark Tallman
Assistant Executive Director/Advocacy
Kansas Association of School Boards
mtallman@kasb.org

Tuesday, May 11, 2010

Governor Parkinson's "Call for Civility"

A thank you to Governor Parkinson for his leadership in this budget battle would be in order. Here is a message that he gave yesterday.


A Call for Civility

The following is a message from Governor Mark Parkinson on Monday, May 10:

Two weeks ago, in my letter to legislators welcoming them back for the veto session, I wrote about Kansas’ ability to rise above the partisan bickering seen in Washington and come together to solve real problems.

Today, the 88th day of a 90 day Session, I am disappointed to see that civility slipping away. The political games, divisive debates and entrenched gridlock of Washington have found their way to Topeka. And fanning the flames of partisanship is the Kansas Chamber of Commerce.

This weekend, the president of the Kansas Chamber of Commerce was quoted as saying that by passing a one-cent sales tax to prevent further cuts to schools, Medicaid and safety-net services, the legislature has “catered to the needs of those at the government trough.”

It is heartbreaking to think that somebody would equate the disabled, the elderly, school children, veterans, law enforcement and the poor to pigs at a trough.

Kansans who have been laid off in this recession and are humbly accepting unemployment benefits to put food on the table for their families, are not pigs at the trough.

Kansas mothers, fathers, grandfathers and grandmothers, who depend on Medicaid to receive care in their final years, are not pigs at the trough.

Our children, who are given only one small window to receive a quality education and be productive members of our society, are not pigs at the trough.

Our law enforcement, corrections officers and emergency responders who keep our streets safe and seek justice for crime victims are not pigs at the trough.

The hurtful words of the Chamber are not reflective of the Kansas I know and love, and they are not acceptable in a time of crisis.

In my letter to legislators I wrote that “our days are limited but the possibilities for success are limitless.” I still believe this. Let’s reject the political threats and shameful insults of special interests, and instead, come together for the common good.

That’s the Kansas I know.

Governor Mark Parkinson

State Capitol
300 SW 10th Ave. Room 241-S
Topeka, KS 66612
1-877-KS-WORKS
http://www.governor.ks.gov/

Budget Battle Over

The "Budget Battle" is over! The coalition of Democrats and Moderate Republicans prevailed. This morning after 2:00 a.m. the House concurred with the Senate and passed a 1 cent sales tax increase. Passage of this revenue bill ensures that for Buhler USD 313 we will have enough budget authority to finish this fiscal year and next year without deeper cuts to the budget! I truly believe that it was a grassroots effort that made a difference. Even though we did not change votes with our Reno County delegation, the sentiment in Topeka moved from one of deeper cuts to one of finding revenue sources. Thanks to all of you who became politically active.


Today is a day of celebration and the beginning of a new era with school finance!

Sincerely,
David

Monday, May 10, 2010

The End is Near?

The headline of this Blog entry is not referring to prophecy; but rather, the Kansas legislative session!

I believe that the Kansas Legislature is close to finishing its session in Topeka.  To date, both the House and Senate have passed a budget bill that does not make additional cuts to K-12 Education.  The Senate has also passed a revenue bill that raises the state sales tax by 1% for the next three years.  The House has not passed a revenue bill.  I hear that the House is held up by 12 Johnson County Representatives who won't vote for the revenue bill unless House Sub for SB74 is passed.  House Sub for SB74 is refereed to as the "Johnson County Candy Bill". This bill would flow the KPERS contribution of each district through the General Fund.  By doing so it would artificially increase the General Fund which would then increase each school district's LOB authority.  Local school boards would have the option to increase the LOB authority and pay for it by local property taxes with no state aid.  This bill is very dis-equalizing.  If a wealthy local school district, like those in Johnson County, choose to use this option, they would see very small increases in property taxes. While others, like Buhler would see much greater increases.  (Also, this authority is only good for one year, then it is subject to voters approval).

I certainly hope that this ploy does not derail the final revenue bill which was crafted by Moderate Republicans and Democrats.  I'll keep you posted.

David

Friday, May 7, 2010

Senate approves a sales tax increase

Here is a legislative update written by Mark Tallman of the Kansas Association of School Boards.  There is some compelling testimony in this article.

Hopefully, we are nearing an end to the session that will not cut K-12 funding any deeper.  Things could happen very quickly in the next day or so.  It is still not a sure thing that a revenue bill will make it through both houses.  So please be vigilant to follow the news.

May 7, 2010

Senate approves sales tax increase


The Kansas Senate voted 23-17 Thursday night to increase the state sales tax by 1 percent per dollar, raising over $300 million in each of the next three years to avoid deeper cuts in education, social services and other state programs. Wednesday, Senators approved Senate Sub for HB 2360, which will help finance the budget. Every Senator who voted for the budget voted for the tax bill; every Senator who voted against the tax increase voted against the budget.

Also Thursday, the Kansas House opened debate on a budget substitute developed by a coalition of House Democrats and moderate Republicans. The alternative budget plan was presented after the House rejected the "no tax increase" plan written by Republican leaders on Tuesday. The alternative plan is similar to the budget bill passed by the Senate, and would also require a $300 million tax increase.

The Senate vote on the tax bill, which also includes increased funding for the state highway fund and increases in the state food sales tax rebate and earned income tax credit, was bi-partisan, with 15 of the 31 Republicans joining eight of the nine Democrats in supporting the plan. Here is the roll call vote on final action for Senate Sub for HB 2360:

On roll call, the vote was: Yeas 23, Nays 17, Present and Passing 0, Absent or Not Voting 0.

Yeas: Brungardt, Emler, Faust-Goudeau, Francisco, Haley, Hensley, Holland, Huntington, Kelly, Kultala, Lee, Marshall, McGinn, Morris, Ostmeyer, Owens, Reitz, Schmidt V, Schodorf, Taddiken, Teichman, Umbarger, Vratil.

Nays: Abrams, Apple, Barnett, Brownlee, Bruce, Colyer, Donovan, Huelskamp, Kelsey, Lynn, Masterson, Petersen, Pilcher-Cook, Pyle, Schmidt D, Steineger, Wagle.

The vote capped hours of debate and amendments, including speeches from opponents, who argued raising taxes will damage the state's economic recovery and impose a new burden on struggling families, and supporters who said it is needed to maintain the state's long-term investment in education and infrastructure, and to preserve a safety net of social programs for those same families.

Perhaps the most passionate speech of the night was an explanation of the vote by perhaps the most surprising "yes," vote: Sen. Ralph Ostmeyer, R-Grinnell. He said he was breaking his long-standing opposition to any tax increase and disappointing his conservative colleagues because increased state revenue is the only way to maintain schools in his rural district, and because long-time supporters urged his support of increasing taxes. Despite saying the vote could be his "political death warrant" and ensure an opponent in the next election, he asked for permission to add his vote as a "yes" after the roll was initially closed and his vote was not necessary to pass the bill. Another somewhat surprising vote was Sen. David Haley, D-Kansas City, who said he was casting the first tax increase vote of his Senate career.

The dramatic Senate vote does not guarantee a quick end to the session, however. The House must first determine whether it has the votes to pass a bill requiring revenue and the tax plan to fund it. Those votes could come as early as today, and are expected to be extremely close. Because the Senate placed its tax package in a House bill, the House could simply vote to concur in Senate amendments. If the House passes a budget, the normal procedure would be to resolve differences in a conference committee. However, if the two budgets are "close enough," either chamber could agree to the bill passed by the other without a conference. Last year, the House concurred in the final budget and revenue bills passed by the Senate.

What You Can Do:

The most important thing school leaders can do today is to send a message of thanks to Senators who voted for the tax increase for education and other programs in the face of strong, well-financed opposition. Second, please continue to urge House members to pass a budget that keeps school funding at least at current levels, and pass a revenue bill similar to the Senate plan that provides on-going, dependable funding for that budget. A link to your legislator is available here.

However, both the Senate budget and House alternative contain revenue assumptions that may not materialize, and leave no ending balances or reserves. Even under these proposals, further reductions in state aid for schools are possible. School leaders should keep that in mind when adopting their own budget plans and determining how much money to keep in reserves or cash balances.

Mark Tallman

Thursday, May 6, 2010

Senate approves budget with no further cuts to K-12 education

More positive news -- The Senate budget was approved yesterday, without the support of Senator Bruce. It maintains current K-12 funding. Today the Senate will vote on a plan to fund their budget which will require a tax increase. Senator Bruce is now accepting his email (at least my last one to him did not bounce back). Please let him know that we need to preserve K-12 funding and ask him to support a revenue plan to meet the Senate's budget.


Here is a excerpt for the Kansas Association of School Board's Legislative Update that I received this morning.

Senate approves budget without K-12 cuts

The Senate passed a budget for next year, Fiscal Year 2011, that keeps K-12 education funding at the current year's level, but leaves a $300 million deficit. Senators are expected to take up a proposal to fill that hole today with a one cent increase in the state sales tax. The proposal also includes a small increase in business taxes by disallowing a federal tax deduction for Kansas income tax, worth about $17 million. The revenue plan also includes increased funding for a state highway plan.

Although Senate Ways and Means Committee Chairman Jay Emler, R-Lindsborg, warned the body it was irresponsible to vote in favor of the budget without also being willing to support a tax increase, it remains unclear if there will be enough votes to pass the tax plan. Here is the final action roll call on the Senate budget plan:

Yeas 23, Nays 17, Present and Passing 0, Absent or Not Voting 0.

Yeas: Brungardt, Emler, Faust-Goudeau, Francisco, Haley, Hensley, Holland, Huntington, Kelly, Kultala, Lee, Marshall, McGinn, Morris, Ostmeyer, Owens, Reitz, Schmidt V, Schodorf, Taddiken, Teichman, Umbarger, Vratil.

Nays: Abrams, Apple, Barnett, Brownlee, Bruce, Colyer, Donovan, Huelskamp, Kelsey, Lynn, Masterson, Petersen, Pilcher-Cook, Pyle, Schmidt D, Steineger, Wagle.
On the House side, after soundly defeating a budget offered by House Republican leadership to avoid a tax increase Tuesday night, Representatives spent Wednesday waiting for an alternative plan developed by Democrats and a group of moderate Republicans. Although the details were ready by mid-evening, the final bill draft was not expected until late evening, and the House adjourned until 8 a.m. today, when further consideration of the budget is expected. The proposed budget alternative closely matches the plan approved by the Senate, but likewise requires $300 million in new tax revenue. The Senate revenue plan has been placed in Senate Sub for HB 2360 which would allow the House to quickly consider that proposal if approved by the Senate.

House rejects budget that cuts K-12 Ed. deeper

Great News! Last night (Tuesday) the House rejected a budget bill that required no new taxes by a vote of 45 to pass and 74 opposed! This was accomplished by a coalition of Democrats and moderate Republicans. The next debate on a House bill will probably be this afternoon.

The Senate will debate its budget bill also this afternoon. It hold K-12 funding harmless.

We must keep our voices heard. I encourage all of us to drop an email or make a phone call to our local legislators encouraging them to not cut K-12 funding any deeper. (Terry Bruce is now accepting email!) I believe we are making a difference, but we must continue to have our voices heard for a few more days.

Time for Action

Now is the time to contact legislators about the need for increased funding for K-12 schools. Both Senate and House will be debating school finance bills today. I have heard that the State Chamber of Commerce has targeted many legislators with their anti-tax telephone calls. Legislators need to hear from us about devastation that will be caused by more cuts. To date the Buhler USD 313 Board has made 4 rounds of cuts in the past 18 months that total over $2,000,000!

Please ask them to support the Senate plan to raise revenue through "Senate Sub for HB 2631". This bill raises revenue mainly through a one cent sales tax.

The House is debating a bills that would slash school funding by an additional $131 million. In addition, to make up for some of that shortfall it would give local boards of education the right to raise property taxes through an increase in the LOB. So the bottom line is the House bills would cut our funding by $359,777 and raise local property taxes.

Please contact them ASAP.