Tax reform has been having a rocky road this session. The shiny new Legislature passed tax reform early in the year, only to have it vetoed and that veto sustained by just three members of the Kansas Senate. Now, in the last gasp veto session, tax reform is back, but a bill introduced Monday was withdrawn quickly Tuesday, and then another introduced that raised a smidgen more money. Were all the objections just about how much it raised? Are there other problems? What is going on?
Send the kids out of the room, the sausage making is about to be explained.
Or, at least, what we understand of sausage making. We are seeing (or not seeing, as much is happening behind the scenes) a lot of strategy unfolding in the Kansas Legislature. There is a balance being sought between the Governor's veto power and the need for more revenue to cover expected and required services.
There is no doubt that tax reform is needed. Brownback's tax policies have left a smoking crater where roads, pensions, school funding and other services used to be. Estimates of how much more is needed rise well above $1 billion, when school finance is added in. KCEG estimates we need $900 million additional revenue every year.
But tax reform is not required by law.
A budget is. The Kansas Constitution requires a balanced two-year budget, and that deadline is June 30, 2017. A school finance plan is being required by the Kansas Supreme Court, and that deadline is also June 30, 2017. But tax reform is just a good idea. A necessary one. But not a required one.
The Legislature could pass a school finance plan, and a budget, even an unbalanced one, and leave it to the Governor to balance it by cutting spending with his line item veto. With estimated shortfalls in 2018 and 2019, and a current school proposal that adds $150 million, cumulative, each year for five years, there would have to be a lot of sweeping from the Kansas Department of Transportation, again, and many cuts to existing services.
Instead, the legislators we sent to Topeka to fix things are doing their best to wrangle tax reform before that budget scenario comes true. Whether it is school funding and then tax reform, or tax reform and then school funding (with included funding mechanisms or possibly another tax bill to fund it), the budget looks to be the last piece of the puzzle. When the budget bill passes, that might be the signal that legislators think they are done.
There's a lot of inside baseball here, and even we aren't entirely clear about what will happen. Will this new tax reform package pass? Will they add revenue provisions to the school funding bill (changing it from a policy bill into a budget bill with policy attached)? Will it take three more tax bills before they find a compromise that works? Will somebody try to move the budget bill early?
Here's what we do know.
Tax reform—restoring revenue and fixing Brownback's tax policies—is required to get Kansas back on firm footing, so we can begin to restore services, repay debts, and renew our faith in government. Our legislators are working hard to do the right thing. They know how critical it is to right the state, and to begin filling the revenue hole dug by the Brownback Administration. There is a budget bill out there, SB 189, which was passed by the Senate and waits further action in a House committee. While it sits, the school finance proposal, HB 2410, also sits in a House committee, awaiting action Friday or Monday of next week. And in the meantime, tax reform is being worked.
It has been a lively few days already this week. Stay tuned.
We will do our best to understand and tell you what is happening. After all, this is *your* government at work.
