Kansas lawmakers begin session facing budget shortfall for second year in a row

Kansas lawmakers begin 2016, an election year, facing questions about how to right the state’s finances without repeating the tumult of last year’s session.

They met for a record 114 days — and faced a barrage of criticism — as they struggled to pass tax increases to fill a budget gap. The normal session is 90 days, and some legislative leaders have talked about meeting 75 days this year.

Fixing a new budget deficit will be one of the most urgent matters when lawmakers convene Monday. A $14 million shortfall is projected for the fiscal year that ends in June, and a $170 million shortfall looms for the next fiscal year.

Lawmakers also must decide whether to create a new school finance formula this session or wait until 2017.

If they act this year, they could face backlash in the fall, when all House and Senate seats are up for election. If they wait, the political makeup of the Legislature, currently dominated by conservative Republicans, could change.

The two issues are closely related. K-12 education makes up more than half of the state’s budget. And both would be affected if the Kansas Supreme Court rules in an ongoing school funding lawsuit that the state has to pay millions more to school districts.

Gov. Sam Brownback and other Republican leaders say they don’t plan to consider tax changes this year.

“There’s no stomach for a tax increase,” said Senate President Susan Wagle.

Instead, legislators hope that a private efficiency study will identify costs savings that will put the state on firmer financial footing. Consulting firm Alvarez & Marsal will present a preliminary report Tuesday, a few hours before the governor delivers his annual State of the State address.

The study “will give us valuable ideas to make state government work better and ensure we are effectively spending each tax dollar,” House Speaker Ray Merrick, R-Stilwell, said in an e-mail.

Some efficiencies may be able to be implemented quickly, said Rep. Ron Ryckman, R-Olathe, the House Appropriations chair. But “the majority will be more long-term structural changes … that will benefit our taxpayers in future years.”

That means lawmakers would still need to craft a budget fix for the next 18 months.

Wagle said across-the-board spending cuts could be necessary.

“I’ve talked to a number of legislators and they would rather see an across-the-board cut than come back in 2017 and face another shortfall because we have not fixed our structural imbalance,” said Wagle, who has criticized Brownback in the past for relying on one-time funding sweeps to plug budget holes.

She said she, Brownback and Merrick are united about keeping the income tax cuts that Brownback and lawmakers enacted during his first term.

Last year, she unsuccessfully pushed to roll back a portion of the tax plan that exempted 330,000 business owners and farmers from paying individual income tax — a move the governor threatened to veto. This year, she is focused on cuts instead.

Budget adjustments

Lawmakers passed a preliminary version of the 2017 budget last session, but the governor will present adjustments Wednesday.

Brownback has not said what he might propose to deal with the projected shortfall.

“We will continue to monitor revenue and our focus will be on managing state spending,” Eileen Hawley, the governor’s spokeswoman, said in an e-mail.

Political rivals predict that Brownback will look to sweep more money from the Kansas Department of Transportation.

“KDOT’s a convenient pot of money that they can use,” said Senate Minority Leader Anthony Hensley, D-Topeka, one of the governor’s most outspoken critics.

Rep. Melissa Rooker. R-Fairway, a moderate who often breaks from her party, said Brownback and legislative leaders are “clearly maneuvering to protect those income tax cuts at all costs.” She also predicted KDOT would be used as a cash source.

“I think the stage has been set … to simply cover over the gap with bonded money. The cash gets swept and the band plays on,” Rooker said. “Kick the can down the road past the election is absolutely the mantra I think they would like to follow.”

Crafting a formula

Uncertainty about the state’s finances will make it difficult to pass a new way to fund schools this year, Wagle said.

The Legislature eliminated the old school finance formula last session — a move being challenged in court — and enacted block grants, which are meant to serve as a temporary funding system through 2017.

“I just don’t see it happening this session,” Wagle said, noting that she was in the Legislature for the debates on the old formula in 1992. She said it will take longer than the session to thoroughly research the various aspects of school finance and craft a formula that funds schools equitably.

“It’s just not something that you pull out of your pocket and debate,” Wagle said. “It’s something that you need to clearly analyze before you debate it.”

Hensley, a public school teacher, said not developing a new formula this year “does a disservice to local school districts to keep them in the lurch.” He questioned whether majority Republicans have the political will to pass a formula.

Other lawmakers are more optimistic. “We were elected to work every year we’re in session,” Ryckman said.

He would like to pass a preliminary school finance bill this year, then tweak it next session if necessary based on feedback from school districts, before it goes into effect for the 2018 fiscal year.

He acknowledged that it will be difficult to pass school finance legislation this year but said lawmakers should try to make progress.

Another possibility would be to create a pilot program for a small group of districts before it’s implemented statewide.

‘Let’s do it’

Rep. Ron Highland, R-Wamego, who chairs the House Education Committee, similarly wants work toward passing something this session.

“I’m hearing from legislators and (House) leadership, ‘Let’s do it,’ ” said Highland. “… You can never say for sure, but personally I would like to see a school finance formula to vote on (this year).”

Highland was the primary author of a draft report on school funding that asserted districts aren’t doing enough to ensure taxpayer money is used efficiently. The draft, tabled by a special committee last week, recommended a number of changes, including limits on school districts issuing bonds, privatizing school district functions and implementing bulk purchasing for districts to save costs.

Lawmakers plan to vote on an updated version of the report sometime during the session.

Senate Vice President Jeff King, R-Independence, said the purpose of the two-year block grant bill “was to take two years to derive a new school finance formula.”

“To me that’s a good thing. We should take time, get input from all interested parties, consider our options and weigh them before moving forward,” King said. “And so I certainly think there will be school finance discussions in the Legislature this year. I don’t think there will be a final formula. Because again, I think it’s a two-year process.”

Waiting until after the election offers lawmakers a chance to talk to voters on the campaign trail about what they want out of a school finance formula before they pass a final bill, King said.

Mark Desetti, legislative director of the Kansas National Education Association, doubted that lawmakers will take action on school finance this year – especially after last year’s marathon session.

“There seems to be a desire to just patch things together to get out of the current fiscal mess and get on with their campaigns,” Desetti said. “So I have a feeling that they will do as little as possible this year. They’ll do what they need to do to get out in a timely fashion. … ‘Let’s just do some damage control and move on.’ ”

This story was originally published January 9, 2016 at 3:54 PM.