Senate gives OK to budget that won’t balance without cut or tax hikes

March 29, 2017

By Jonathan Shorman

A state budget that sets out nearly $13 billion in spending over the next two years cleared a key hurdle in the Senate on Wednesday, but the bill would leave Kansas hundreds of millions of dollars in debt without new revenue.

The budget given first-round approval functions primarily as a statement of priorities. The House must pass its own budget, and the two chambers then would negotiate a final version.

Under Senate Bill 189, the University of Kansas would receive about $1.9 million in additional funding next year, while Kansas State University would receive about $1.1 million more. The boost comes after Gov. Sam Brownback cut the universities’ state aid by a larger percentage than other institutions last year.

 The legislation would provide state workers with a 2 percent across-the-board raise at a cost of about $20 million. State workers haven’t received a raise in several years, although some have received raises when moving out of the state’s civil service system.

The budget doesn’t balance. In crafting the plan, senators assumed the Legislature will eventually approve a package of tax increases that will pay for the budget.

Kansas would face a budget shortfall of more than $500 million over the next two fiscal years if the budget became law without new revenue. The new fiscal year begins July 1.

Sen. Carolyn McGinn, R-Sedgwick, the lead senator on the budget, sought to reassure her peers that lawmakers will cut the budget if they don’t increase taxes.

“We will make cuts if we do not have the revenues,” said McGinn, chair of the Senate Ways and Means Committee.

That wasn’t enough for some conservatives, who sought changes. Sen. Ty Masterson, R-Andover, offered an unsuccessful amendment that would have pulled new spending from the bill.

The Legislature won’t pass a final budget until later in the session. The bill, known as “omnibus,” will come after state officials issue a new revenue forecast April 20.

Sen. Steve Fitzgerald, R-Leavenworth, said new spending could be added later, in the omnibus bill, once senators have more information about the state’s revenue picture.

“We’re not talking spending less or more. We’re not talking about spending on different priorities. What we’re talking about is sequencing and timing our decisions to coincide with what we will know once we get past certain things, such as the new revenue estimates,” Fitzgerald said.

The Senate budget bill doesn’t provide money for Medicaid expansion – which is awaiting action from Brownback – and it doesn’t provide more money for education, said Sen. Laura Kelly, D-Topeka. The Legislature faces a court-imposed deadline of June 30 to enact a new school finance formula.

But Kelly said she supports the budget, saying it accomplishes other important things. It uses fewer fund transfers and other accounting maneuvers – which she called “funny money” – than have been used in the past to balance the budget.

Senate Minority Leader Anthony Hensley, D-Topeka, said the bill highlights the need to pass a tax plan.

“That’s the reality of the situation that we have to come to grips with. We’re going to have to have a revenue package to do what we want to do,” Hensley said.

The Legislature’s first run at tax increases, House Bill 2178, would have raised personal income tax rates, reinstated a third bracket, and taxed non-wage business income. The bill would have generated more than $1 billion over two years.

Brownback vetoed the bill. An effort to override the veto faltered in the Senate.

The revenue generated from House Bill 2178 would have been enough to balance the Senate budget. The plan would have left Kansas with more than $200 million in reserves in each of the next two years.

Discussions are underway in the House and Senate about a new tax plan. Tax committees in both chambers have been developing legislation that would impose a single income tax rate on Kansans – a so-called flat tax.

The House Tax Committee voted Wednesday to send a 5 percent flat tax proposal to the floor.

Senate President Susan Wagle, R-Wichita, said Republican senators originally wanted to debate a tax plan the same day as a budget plan, but that’s not the way things worked out. Now, senators are faced with voting on a budget but are unsure of whether a tax plan will fund it, she said.

“We’re kind of caught in this scenario – is the chicken first, or the egg?”

This article was originally published on the Wichita Eagle website, here.