Mark Peterson: Beleaguered tax revenue starts its effects

The State of the State address is finished and the governor has left Republican legislators near tears and Democratic legislators scratching their heads. The leaders have appeared in front of the journalists to declare that big problems remain over school finance again, Medicaid expansion again, KPERS solvency again and refilling depleted transportation infrastructure accounts again.

Pundits assert that 2018 will be a significant year as Kansans pick a new governor, test the Republican hold on two out of four congressional seats and elect a new state House of Representatives. There will be declarations that policy solutions will go begging because of competitive clashes between candidates, incumbents and interests. And whatever happens, everyone must disavow further tax increases.

As this news is spilling out, facts will be glossed over or unmentioned because they don’t have the sizzle and sound-bite qualities that get peoples’ attention. The most important of these difficult facts involve the multi-year chasm that has been created by reduced revenue and resulting failures to provide previously enacted services to Kansans.

In December, the Kansas Legislative Research Department reported that over the last 12 years, state tax revenues have increased at a rate of 1.4 percent per year. In the same time period, the annual change in the Consumer Price Index was about 2 percent — so Kansas revenue receipts for state government ran about 30 percent behind the year-to-year increase in the cost of goods and services.

Inflation aside, there are additional factors. Consider the slow increase in public school students, and the much more dramatic increase in numbers of elderly — both of which drive big chunks of the state’s general fund budget. Since the 2006-07 school year, the state Department of Education K-12 headcount has grown by 23,000. It’s a modest 4.5-percent increase, but even at our judicially disapproved level of insufficient school funding, that increase represents nearly $90 million more annual cost than existed 12 years ago.

Demographers predict people 65 and over will exceed the number of juveniles here in Kansas by mid-century. The change in these past 12 years suggests those estimates are conservative. Over 90 percent of these elderly receive Social Security benefits and according to 2014 data, 29 percent live at or below two times the federal poverty level. These Kansans will need Medicaid subsidized nursing care in large numbers. Even many currently above this arbitrary level are likely to need such assistance in their final years, if national trends hold.

These are realities that must be dealt with this year in Topeka and for years to come. Choking the flow of tax revenue compounded problems that were already growing. These cuts in effect defunded nearly $2 billion in programs and services enacted before the Brownback Administration took office. Just getting back to parity with those commitments and then coping with our looming challenges will require the public to know the facts, stay anchored in reality and demand effective accountable decisions from our leaders.

This story was originally published January 14, 2018 at 4:19 AM with the headline "Mark Peterson: Beleaguered tax revenue starts its effects."