January 11, 2017
By Jonathan Shorman
Senate GOP leaders lashed out against Gov. Sam Brownback’s budget proposal Wednesday, arguing the plan lacked a true structural fix to the state’s shortfall.
Brownback’s office hit back, accusing Senate President Susan Wagle of preferring tax hikes and “punishing” across-the-board cuts. The conflict turned a long-running cold war between the two Republicans hot, and plainly unmasked the tensions between the Legislature and the governor.
In both the House and Senate, lawmakers reacted to Brownback’s budget proposal with a mix of lukewarm offers to look at some elements and negative statements that flatly ruled out supporting other items.
Plans to securitize tobacco settlement dollars drew opposition, but legislators expressed openness toward an accounting maneuver to allow the state to spend more than $300 million from an investment fund related to unclaimed property.
State budget director Shawn Sullivan disclosed the governor’s budget proposal to House and Senate panels. The plan calls for a series of tax increases, including hiking cigarette taxes, and other changes to fill an approximately $350 million budget hole in the current fiscal year and more than $500 million shortfall next year.
Senate GOP leaders released a joint statement saying the proposal lacks a “structural fix” to the state’s current-year shortfall. The statement, authored by Wagle, Vice President Jeff Longbine, Majority Leader Jim Denning and the Ways and Means Committee Chairwoman Sen. Carolyn McGinn, said the state can’t afford to kick the can down the road any longer.
“The governor continues to use one-time money, adds new taxes on the middle class, and neglects to fix the LLC loophole. The math simply just doesn’t add up. The solution will require a combination of cuts and changes to tax policy,” the statement said. “Many members of the Senate would rather see a long-term fix and we expect to debate alternative proposals. We look forward to working with the House and the governor to reach a sustainable solution for all Kansans.”
An hour later, Brownback spokeswoman Melika Willoughby hit back, saying the governor’s budget solves the state’s challenges and provides for a sustainable future.
Brownback’s office rejected the argument by Wagle and other GOP senators that the proposal doesn’t offer structural balance. Willoughby challenged Wagle to build a balanced budget of her own.
“Senate President Wagle may prefer unfair retroactive tax hikes for the middle class and job creators or punishing across the board cuts, but Governor Brownback’s budget recruits teachers, encourages classroom innovation, and restores Medicaid funding,” Willoughby said.
Part of the plan calls for transferring $317 million from the Unclaimed Property Fund to the Pooled Money Investment Board, which will then loan the amount to the general fund. The loan would then be paid back over the next seven years.
House Appropriations Chairman Rep. Troy Waymaster, R-Bunker Hill, said that he would prefer a payback timeframe no greater than five years. He said he would want the state to charge interest on the loan.
“I don’t have any objections to the option of looking at that fund. As I mentioned before, as a former banker, I look at seven years as long-term debt and I really don’t particularly like the structured payout,” Waymaster said.
McGinn, R-Sedgwick, said she would prefer to hold off on unloading the investment fund. Instead, she suggested it could potentially be used next year.
On Tuesday, Gov. Sam Brownback asked lawmakers to resolve the current-year shortfall by the end of the month. Lawmakers are wrestling with whether legislation filling this year’s shortfall can be decoupled from a larger package that sets tax and budget policy for future years.
McGinn said lawmakers want structural balance, and that the majority of the current-year shortfall will be filled with cuts. She added she would attempt to find money elsewhere as well.
“I don’t see how we’re going to exercise this PMIB,” and get get to the money quickly, McGinn said, referring to the Pooled Money Investment Board. “We need to make some quick, structural changes at this time.”
But Sen. Laura Kelly, D-Topeka, said the state can use the money from the investment fund, though she cautioned she wasn’t ready to commit to supporting the governor’s proposal and wanted to look at the details first. The cuts that would be necessary in the current year if the investment fund isn’t used would prove devastating, she argued.
She indicated the cuts needed would hobble state agencies.
“I am not inclined to do massive cuts,” Kelly said.
Kelly said a $1 per pack proposed increase in cigarette taxes is probably “dead on arrival.” Raising the tax would only drive more shoppers across state lines, particularly to Missouri, and cost the state sales tax revenue, she said.
Rep. Kathy Wolfe Moore, D-Kansas City, said she fears the Legislature will have no choice but to go along with unwinding the investment fund. The alternative, she argued, would involve massive spending cuts.
“That’s the toughest one,” Wolfe Moore said. “Because what I understand is that we’re going to begin to run out of money in March to pay the bills. So no tax fix will do that for this year. So I don’t think we have any choice but to use one-time money. I think the choices are bad and worse.”
House Tax Chairman Rep. Steven Johnson, R-Assaria, said the investment fund appeared available and that he is willing to consider the proposal, with caveats. Support from him would be conditional on a long-term budget fix.
“I am not willing to consider it without a bridge to a structural balance,” Johnson said. “If we’re not getting to something where in a year we can pay the bills, then kicking one more time would be a mistake.”
Senate Minority Leader Anthony Hensley, D-Topeka, said Brownback’s budget wasn’t realistic.
“They’re taking hocus pocus budgeting to a new level, even for them,” Hensley said. “It’s more of the same and it’s not what I would call a real straightforward budget proposal.”
Even before Wednesday’s budget presentation, Republican and Democratic legislators had said tobacco securitization was a non-starter. The administration unsuccessfully pitched securitization to lawmakers a year ago, and the reception this year didn’t appear warmer.
Annie McKay, president and CEO of Kansas Action for Children, said the Legislature arguably was more supportive of the governor’s policy proposals last year and still questioned securitization. Newly-elected legislators are again raising the same questions, she said.
“I think it goes to show you that there’s a lot of policymakers who believe in the importance of investing in little kids and understand that a dedicated stream that has supported early childhood programs in Kansas for 20 years is something that we should not sell off,” McKay said.
This article was originally published on the Topeka Capital-Journal website, here.
Paid for by Senate Democratic Committee, Will Lawrence, Treasurer