March 8, 2011
This was a shortened week in Topeka. We did not meet on Monday or Tuesday to give clerical staff time to process the many pieces of legislation passed last week, and Friday was shortened due to a funeral that the clerical staff needed to attend. The pace will pick up again next week with the next hard deadline approaching on April 2. The next few weeks we will spend a majority of our time addressing the budget and considering legislation passed by the Senate which is now in the House.
Reflections from Topeka
February Revenue Returns
This week the Kansas Department of Revenue reported tax-only collections for February totaled $224 million, $11.5 million below the estimate of $235.5 million. Sales taxes were up $3.5 million with $143.5 million collected. Individual income tax receipts from February were $37.3 million, $12 million below the $50 million projection. However, the state deducts tax refunds from monthly income tax collections to produce the final figure for the month. Therefore the shortfall is most likely the result of paid tax returns.
For the current fiscal year, corporate income taxes are $22.3 million below the estimate of $148.5 million with current collections totaling $126.1 million. Individual income taxes are $101 million above FY 2010 figures and $20.6 million above estimates for this fiscal year. Tax only revenues in February 2010 totaled $195 million while tax only revenues for February 2011 were $224 million, resulting in a $29 million difference. To date, revenues are $3.448 billion, $6.4 million below the estimate of $3.455 billion for the current fiscal year.
Employment Security Law (SB 77)
This bill recently came to my attention. Here are some details. SB 77 revises certain provisions of the state employment security law regarding loan interest payments, the taxable wage base and extending tax rate caps on certain employers. The bill creates the Employment Security Interest Assessment Fund to pay interest and principal owed to the U.S. Department of Labor for unemployment compensation advances. Starting in 2011, 50 percent of the surcharge revenue from negative account employers must be deposited in the fund while remaining revenue would continue to be deposited into the Employment Security Trust Fund.
Over a period of three years, the bill increases the taxable wage base. For the 2011 the taxable wage base remains $8,000 but the base increases to $9,000 in 2012 and $10,000 in 2013. Beginning in 2014 and for all years thereafter the base is set at $11,000. The measure increases the number of rate groups for negative balance employers from 10 to 20 and increases the surcharge rate applied to those employers from two percent to four percent.
Under current law, a person may receive unemployment compensation if they left their job to follow their spouse to another location for employment, known as the “trailing spouse” provision. The bill amends that law to allow spouses to collect unemployment only if they are the spouse of personnel in the U.S. armed forces or military reserves.
Employers are currently classified into three categories: ineligible employers, negative balance employers and positive balance employers. Ineligible employers are employers who do not have 24 months of payroll experience. Negative balance employers have contributed less to unemployment insurance then what their former employees have collected. Positive balance employers have contributed more to unemployment insurance than what their former employees have collected.
At the beginning of 2009, the Employment Security Trust Fund had a balance of $566.5 million. However, the recession caused the state to pay out $766.8 million in unemployment benefits during 2009. By January 9, 2010, the balance of the trust fund had shrunk to $65.2 million and the state had to borrow money from the federal government to ensure the unemployed in Kansas continued to receive their unemployment. As of January 31, 2011 the balance of that loan is $100.8 million and it is estimated the state will have to pay $6 to $9 million in interest this year to the federal government. Interest began to accrue on the loan balance at the start of the year and the payment is due by September 30, 2011.
If the state is unable to find a way to pay the interest payment, Kansas employers might begin to lose credits to offset the Federal Unemployment Tax Act (FUTA) and the state might lose future borrowing privileges and federal grant funding for administrative costs. In addition, failure to pay the interest might result in the federal government directly collecting the principal directly from Kansas employers through FUTA taxes.
KANSAS DEPARTMENT OF TRANSPORTATION (KDOT)
Many thanks to State Rep. Charlotte O'Hara. Rep. O'Hara reported on KDOT in her newsletter with permission given for reposting. I've taken just the facts and removed Rep. O'Hara's thoughts. If you'd like to know what she has to say on this issue, I'm sure she would be glad to add you to her email list!
KDOTs revenue streams:
**The Kansas Turnpike Authority is NOT part of KDOT and has it's own budget.**
- Motor fuels tax
- Vehicle registration tax
- Bonds issued (currently $1.9 billion, source: Kansas Fiscal Facts Aug. 2010)
- Sales tax
- Federal Highway Funds
KDOT is not in the State General Fund. It is off fund and in the All Funds category. This means that the Legislature does not have control over its budget other than statutorily setting the tax rate in the various categories. The Secretary of Transportation is the head of KDOT and serves at the pleasure of the governor.
In 1989 KDOT came to the legislature with a ten year transportation plan which increased motor fuels tax 7 cent a gallon, increased sales tax .25%, increased registration tax and gave KDOT additional bonding authority.
Then in 1999 KDOT came to the legislature with another ten year transportation plan. All of the tax increases from the 1989 transportation plan remained in place. KDOT in 1999 was given another 6 cents a gallon increase in the fuels tax, again additional bonding authority and a small increase in revenue from sales tax.
The result: From 1989 through 2003, our state fuel tax increased from 11 cents a gallon to the current 24 cents a gallon or 118.1% increase.
Fast forward to 2010 and KDOT brings another transportation plan to the legislature. There are no roll backs from all of the tax increases given to them in both 1989 and 1999. In 2010 KDOT was given $21 million additional sales tax revenues (which brings the sales tax portion KDOT's budget to $289 million) until 2013 when an additional $137 million kicks in when the .4 of the 1 cent sales tax increase implemented in July 2010 is permanently dedicated to KDOT. This will be approximately a 9% increase in their budget. Their bonding authority has also been expanded.
KDOT has grown their budget to 20% of the $8.7 billion All Funds Budget (remember KDOT is not under State General Funds) for 2011. The Governor's Freeze Bill swept $200 million from KDOT to help balance the Fiscal Year 2011 Budget. They only had $150 million and needed to issue $50 million in bonds to make up the difference. (They had issued $325 million in bonds in 2010.)
Of concern: in 2005 the ratio between maintenance and construction was 2 to 5. In 2010 the ratio was 1.3 to 6, 2011 1 to 7 and 2012 1 to 6.4. So in 2005 for every $2 spent on maintenance, $5 was spent on new construction. This year for every $1 spent on maintenance we spend $7 on new roads.
I will continue to participate in the Legislative Forums hosted by Tim Owens (yet to be scheduled) as well as any other forums that I am invited to attend. As these events are planned, I will post them on my website as well as inform you in the weekly legislative update.
3 District Meet and Greet with State Representatives
Amanda Grosserode, Jim Denning, and Greg Smith
Date: Saturday, March 12th
Location: Valley View Methodist Church- Fellowship Hall
Address: 8412 West 95th Street
Legislative Forum hosted by State Senator Tim Owens with invited State Representatives
Date: Saturday, March 26th
Location: Matt Ross Community Center
Address: 8101 Marty Street, Overland Park
2011 Legislative Breakfast Series
hosted by the local Chambers of Commerce
Date: Saturday, April 16th
Where: Ritz Charles Overland Park
Address: 9000 W 137th
Here for more information about cost, to RSVP, and other dates in the breakfast series.
I hope you are tracking the legislature’s work in Topeka and, if possible, take the time to visit this session. If you will be visiting, let my office know so I can schedule time to meet with you. In the meantime, I’m always anxious to hear your thoughts on how the issues discussed in Topeka affect you. Reliable feedback is very important in making sure I’m accurately representing my friends and neighbors here in the district. Please feel free to call or email and I’d be happy to discuss any topic in which you are interested. Thank you for the honor of serving you.
Office phone: 785-296-7659
Legislative email: email@example.com
Facebook: Amanda Grosserode