May 3, 2011
The legislature met in Topeka for the first day of the veto session on Wednesday, April 27th. During the veto session, conference committees continue to work on reconciliation of House and Senate legislation, but the top priority is passing a budget. On April 15th, the Consensus Revenue Estimating Group revised its revenue estimates for FY 2011 and FY 2012 for a combined decrease of $31.7 million. With consistently declining income, it is clear that the legislature must agree to a budget with a healthy ending balance to ensure the state is able to meet its obligations throughout the year if the trend of lower than expected revenues continues.
When the legislature left for the April break, the Senate budget contained an ending balance of approximately $2 million while the House budget had an $80 million ending balance. My concern is that neither of these ending balances provide for the possibility of lower than expected revenues, nor does it get close to the statutory 7.5% ending balance. I voted against the House budget for these reasons and will continue to oppose it unless significant improvements are made.
Need for Tax Reform
Last week Ernst and Young released a comparison study of state competitiveness for businesses looking for investment locations. Unfortunately, Kansas was ranked 48th out of the fifty states due in part to its effective tax rate of 11.2%. As Kansas struggles desperately to recruit new businesses to bring jobs and opportunities to the state, one of the most critical changes that can be made to grow the economy is reform of the state tax structure.
The House has addressed this need with the March to Economic Growth Act that would phase out the individual income tax and reduce the corporate tax to 3.5% with a trigger based on growth. By providing a consistent and less complicated tax structure, this bill limits the role of state government and fosters business growth and investment. People vote with their feet. The Ernst and Young study made it clear that Kansas must act because businesses and job growth flow to states with lower effective tax rates.
Governor’s Statements on the Veto Session
n Friday morning Governor Brownback met with members of the media to discuss his thoughts on the 2011 Veto Session. The main focus of Brownback’s meeting was on creating jobs in Kansans. Over 100,000 residents are currently unemployed and we must ensure businesses have the necessary tools to invest in and create jobs. As a result, the House has taken several steps to create and pass policies that promote a business friendly environment including Rural Opportunity Zone (ROZ) legislation, expensing legislation and workers compensation legislation—along with broad-based tax reform in an effort to eliminate the personal income tax in Kansas. With passage of ROZ legislation and workers compensation reform, Kansas has already seen a positive response from the business industry both inside and outside of the state.
The Governor also encouraged the Legislature to work on compromises regarding KPERS and the budget. Currently, KPERS has an unfunded actual liability of over $8 billion, the second worst pension system in the nation. Over 225,000 state workers depend on KPERS for their retirement pension and the system must be better funded and reformed. The main point of contention between the House and Senate concerns the option of transitioning to a 401(k) like plan. Regardless of the final KPERS outcome the most difficult part for KPERS members will be in transitioning from the current system to the new, still unknown, model. As previously mentioned, members from the House and Senate are meeting to work out the differences between the two respective budgets. Governor Brownback explicitly stated that he understands the process of finalizing the budget is a daunting process but encouraged the Legislature to pass a budget that “contains the biggest ending balance possible.”Going further, the Governor discussed allotments and said the issuances of allotments are not the Kansas way and we should not be in a process of doing allotments in the future.
He noted he was pleased with the progression of the Veto Session in its first week, but also urged legislators to finish what’s been a successful session thus far by reaching consensus on the budget and making substantive progress on the KPERS plan.
On Thursday, members of the House were saddened to learn Representative Rocky Fund had passed away after a courageous and hard fought battle with cancer. Please keep Rocky’s friends and family in your thoughts and prayers during this difficult time.
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
Facebook: Amanda Grosserode