Gov. Kelly praises Medicaid compromise, vows to aid laid-off Kansas aviation workers

Gov. Laura Kelly spoke glowingly of the Medicaid expansion deal she reached with a top Republican leader in her State of the State address Wednesday, but warned two of Kansas’s most critical industries — aviation and agriculture — remain “incredibly fragile.”

The Democratic governor’s second annual speech to the Legislature took place as nearly 3,000 Kansas aviation workers face layoffs in the coming weeks, victims of Boeing’s decision to shut down production of its 737 Max after crashes overseas killed hundreds of people.

“Even as we speak, thousands of Wichita families are suddenly fearful that soon they may be unable to provide for their families,” Kelly said in her prepared remarks.

Spirit AeroSystems, which makes the aircraft’s fuselages, announced last week it would layoff 2,800 workers, all of them based in Wichita.

Kelly also described “a precarious moment” for agriculture, blaming without naming President Donald Trump for trade warfare that has impacted Kansas exports.

“Between historic flooding last spring and escalating trade tensions over the last two years, net farm incomes have dropped 50 percent from their peak in 2013,” Kelly said.

On other matters, the governor painted a more optimistic picture of the state and described a decade of recovery following the Great Recession.

She touted progress in addressing a crisis in the state’s prisons and in boosting a beleaguered child welfare system. She promised a push to lessen the impact of the state’s tax on food.

House Speaker Ron Ryckman, an Olathe Republican, delivered the official GOP response. While allowing that Kelly and Republicans both want a bright future for the state, he said they differ in their visions of how to get there.

“We must end the era of a government that works for bureaucrats,” Ryckman said, “and instead make Kansas work for us, the people.”

House Majority Leader Dan Hawkins, a Wichita Republican, said Kelly “talked about a lot of different things, we just hope that her policy parallels what she said.”

For example, her call for a reduction of the sales tax on food has support from both sides of the aisle, but it didn’t get done last year when it came to her desk as part of a Republican plan coupled to various other cuts.

“She vetoed that twice last year,” Hawkins said. “So I can’t wait to see, I hope she does exactly what she says she’s going to do.”

He wasn’t the only one striking at least a partially bipartisan tone.

“There’s some bipartisan agreement, especially on maybe reducing the sales tax on food and what-not, and there’s some things we’ll oppose, obviously, but the things that we agree on we’ll look forward to working together on,” said Rep. Nick Hoheisel, R-Wichita and chairman of the South Central Kansas Legislative Delegation.

Hoheisel said he does expect to oppose Kelly’s plan for Medicaid expansion.

Medicaid expansion

Kelly spent significant time on the importance of Medicaid expansion — a key goal that she didn’t accomplish last year. Supporters of expansion hope the deal she reached last week with Senate Majority Leader Jim Denning, an Overland Park Republican, will become law after years of debates and setbacks.

“Kansas proved once more what’s ‘right’ with our state. We stunned outsiders who had watched the disastrous policies of the previous decade unfold and had all but written us off,” Kelly said.

If Kansas expands Medicaid eligibility to 138 percent of the federal poverty level, the federal government will pay for 90 percent of the cost. The expansion would cover the working poor, who make too much currently to qualify for KanCare, but too little to receive federal subsidies.

Conservative Republicans have attacked the Medicaid compromise reached by Kelly and Denning, in some instances comparing it to socialized medicine. But the deal appears to have shifted momentum in the Capitol, with expansion supporters believing they have the upper hand.

More than 100,000 Kansans could ultimately be eligible for health coverage under the expanded program.

“When we add this to our list of bipartisan accomplishments, it will not only save lives, it will close the book on a long, senseless, expensive political fight -- making room to improve access to health care and grow the Kansas economy,” Kelly said.

House Minority Leader Tom Sawyer, D-Wichita, said “I’m really hopeful that we get Medicaid expansion passed after seven years of trying to get that done and finally help 150,000 Kansans get health care.”

Threats to aviation, ag

Still, progress on expansion comes as thousands of Kansans expect to be out of a job within weeks.

Kelly promised help in the crisis brought on by the Max issue, which came on the heels of hundreds of course-of-business layoffs at Wichita’s Textron Aviation division, maker of Cessna and Beechcraft planes. Also affected are numerous small Spirit suppliers.

“I instructed my Labor Secretary, Delia Garcia, to take an all-hands-on-deck approach to help workers, Spirit and other Kansas businesses that will be negatively impacted,” she said.

To aid the state’s farmers, she called on the U.S. Senate to pass the United States Mexico Canada Agreement, or USMCA, the president’s replacement for the former NAFTA trade pact. The new trade deal has already passed the U.S. House.

During the speech, Kelly recognized a guest in the gallery from Kansas’ largest trading partner country, Canadian Consul General Stephane Lessard. And she said she has instructed her Commerce Secretary, David Toland, to rebuild the state’s International Trade Division.

“When it comes to the livelihoods of Kansas families and businesses, we won’t wait on Washington and the USMCA agreement,” Kelly said.

Tax reform

Kelly signaled she plans a multi-year effort to reform the state’s tax code beginning this year with a “first step” in lowering taxes on groceries, “starting with Kansans who need help the most.” Kansas has one of the country’s highest sales tax rates on food — 6.5 percent statewide and higher in most cities.

The governor has previously embraced a proposal to bring back a food sales tax rebate program that would give low-income families a tax break on food purchases. Some advocates have said an across-the-board rate reduction would be more effective. A rate cut would likely be much more expensive, however.

Kelly indicated her budget will include some form of property tax relief. A tax council created by the governor has previously recommended reactiving a tax relief program dormant for 15 years.

Kansas is required to send a share of its sales tax collections to cities and counties each year through a program called the Local Ad Valorem Tax Reduction Fund. But the Legislature has continuously waived the rule since 2004, opting to use the tax dollars as a hedge against the Great Recession and Gov. Sam Brownback’s signature tax cuts.

“Together, the food and property tax relief I will offer will take meaningful strides in rebuilding our overall tax structure so that it is more fair and more fiscally responsible,” Kelly said.

Senate President Susan Wagle, a Wichita Republican, expressed concern with the property tax plan.

“She has asked that we send money back to the bureaucrats in local government, thinking that will lower property taxes for Kansas property owners,” Wagle said. “That is so false. We’ve done that in the past. It’s never worked.”

Prisons

Kelly also claimed a measure of success in efforts to bring order to the state prison system.

For years, Kansas prisons have been in a crisis fueled by an expanding inmate population and chronic short staffing that has, at times, stretched guards and prisoners alike to their breaking point.

“It led to violent inmate uprisings at multiple facilities,” the governor said. “The situation was so dire at El Dorado that I was forced last February to declare a state of emergency.”

The state Department of Corrections began sending some inmates to a private prison in Arizona operated by CoreCivic as a way to relieve the pressure on Kansas facilities.

Kelly praised the Legislature for making money available to address the problems behind bars.

“Together, we acted, investing $30 million dollars to reduce overcrowding, address staff shortages and enhance safety in our prisons,” she said. “Today, the situation has stabilized. The emergency declaration has been lifted.”

Kelly promised to increase efforts to shift prisons’ focus from punishment to rehabilitation and vocational training, so inmates can return to productive roles in society.

“By expanding and innovating our capacity for substance abuse treatment and mental health treatment, we can bend the curve on our prison population long-term, improve public safety and strengthen Kansas communities,” she said.

This story was originally published January 15, 2020 at 7:12 PM.