Kansas budget still being worked on

Yesterday the Kansas House failed to pass a budget that did not require raising taxes. The budget, referred to as the “cuts budget” or the “Yoder budget” had only 45 votes in its favor, and would have been vetoed by the governor, based on his stated criteria for an acceptable budget.

Two amendments were offered that would use the sale of state-owned assets to generate revenue. The first amendment, offered in the morning session, passed with 79 votes. A second similar amendment offered late in the evening would have set a specific requirement of $175 million of asset sales with much of it earmarked for schools. That amendment failed, getting 56 yea votes and 64 nays.

The assets sales are important to conservatives, as the plan provides a way to raise revenue without a sales tax increase. The sales tax is viewed by conservatives as a long-term job killer, while the traditional spending lobbies and the governor view it as essential.

Questioning during debate, mostly by liberals but also by some Republicans, indicate much confusion surrounds the asset sale plans. In particular, Cindy Neighbor, a Democrat from Johnson County, asked who the tenants would be if the state sold some of its office buildings. Additionally, she asked for a list of properties that would be sold, the names of the buyers, and the sale prices for these properties.

Representative Ann Mah, a Topeka Democrat, referred to a Legislative Post Audit study that found there was only $7 million in assets that could be sold. Supporters of asset sales indicate there may be from $10 billion to $16 billion of state-owned property, although not all might be considered for sale. The discrepancy in the two figures derives from the fact that the audit Mah mentioned considered only land, and only that land that state agencies considered to be surplus. Supporters of the assets sales plan have a much broader definition of assets that might be considered for sale.

In any case, the state needs an inventory of the property it owns. A new system is coming online this summer that will help in this process.

At one time it was thought that the House would likely concur with whatever bills the Senate passed. But Hawver’s Capitol Report speculates that is less likely now, as House moderates and liberals are preparing their own budget bill, possibly ready this afternoon. It also appears the session will last until at least Friday.

The Senate did not debate its budget or tax bills yesterday. At yesterday’s caucus of senate Republicans, plans were developed to debate both today. The budget plan, as presented to the caucus, increases general fund spending by 3.2 percent, which is less than the governor’s plan. The plan results in a budget shortfall for fiscal years 2010 and 2011 of $300.7 million, requiring increased tax revenue to fund this amount.

Conservative members of the caucus asked about assumptions built into the budget, especially the 4.0 percent growth in tax receipts built into the budget. Several contented that this is not realistic, especially in light of falling tax receipts in the current and past years. Budget officials said that the 4.0 percent figure is what has been traditionally used. Although there are signs that the Kansas economy may be improving, it seems that the tax receipt projections are overly optimistic.

A question was also asked about the Bush tax cuts, which are scheduled to expire during the next fiscal year. It seems unlikely that these cuts will be extended. Budget officials explained that the impact of the expiration of these tax cuts on Kansas tax revenue will not be factored in until the November consensus revenue estimates.

The budget includes no funds for the transition to the new governor that will take office in January 2011.

If an increase in the sales tax passes and is signed into law, it would take effect on July 1. In an effort to gain revenue for the current year, retailers may start collecting the extra tax starting June 1 on a voluntary basis. 30 day notice of tax rate changes is required to be given to retailers. The budget estimates assume that one-third of retailers will collect the tax staring June 1.

The budget presented does not include a plan to sell state assets. That will probably be introduced as an amendment during today’s debate.

2 Comments

  • Why is there no requirement that you have to be a taxpayer before you are eligible to vote?

  • The founders of this country considered limiting voting to property owners. They wisely knew how tempting and easy it would be for people to vote largess for themselves out of the public treasury by simple majority vote, particularly by those people with little or no skin in the game.

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