Category Archives: Kansas state government

The plan to raise your taxes that can’t be found

A coalition of Kansas advocacy groups wants to raise your taxes, but the plan is difficult to find.

On Wednesday a coalition of groups presented their plan to balance the Kansas budget and provide more tax revenue to spend. But — this plan can’t be found at any of the participating groups’ websites. So as a service to these groups, (Kansas Center for Economic Growth, Kansas Action for Children, Kansas Contractors Association, Kansas Organization of State Employees, and Kansas-National Education Association) I present a scanned version of the plan. Maybe one of the groups will send me a digital original.

Click here to view the plan.

Gary Sherrer and Kansas Policy Institute

A former Kansas government official criticizes Kansas Policy Institute.

I wouldn’t normally use a Facebook comment in a public way, but the comment was left in public, to a post on my Facebook profile. Plus, the writer is a former Kansas government official. He’s Gary Sherrer, who has been Lieutenant Governor, Secretary of Commerce, and Chair of the Kansas Board of Regents.

From the author's Facebook profile, starting December 2, 2016. Click for larger.
From the author’s Facebook profile, starting December 2, 2016. Click for larger.
Sherrer had criticized the truthfulness of Kansas Policy Institute, claiming he “could write an essay” on his criticism of KPI. Upon my suggestion for him to do so, he offered two criticisms.

First, Sherrer wrote this: “They count KAPERS payments that in the past were direct state payments. Now they send them to the school districts and within hours transfer them back to the state yet it shows as increased revenue in the local budget. Same $s just an accounting trick.”

This is a standard argument of Kansas public school spending advocates, which is that because of a change in the way teacher retirement funds (KPERS contributions) are handled, it looks like the state is spending more on schools, when in fact it is not.

In response, Kansas Policy Institute noted this: “According to Dale Dennis, KPERS funding was last sent directly to KPERS in 2004; it has since been sent directly to school districts included in reported school funding totals.”1

Dale Dennis is Deputy Commissioner at Kansas State Department of Education and head of Fiscal and Administrative Services.

Wichita Public Schools, State Revenue by Source, KPERS ContributionsEven though Dennis is the state’s top education finance official, we don’t have to rely solely on him to illustrate changes in KPERS payment accounting. Information from the Wichita public school district2 shows the same. Here I’ve plotted the funding sent by the state of Kansas to USD 259 for KPERS contributions. As Dennis indicated, in 2005 the Wichita school district started receiving money from the state for KPERS. Prior to that year it received none.

So if anyone wants to claim that KPERS payment accounting has been changed in order to be deceptive, why don’t we ask former governor Kathleen Sebelius why it happened under her watch?

Additionally, the argument that the KPERS funds are held by school districts for just hours or minutes is trivial. If the state allowed school districts to hold the funds for two days, two weeks, two months — would that make any meaningful difference? Instead, school districts ought to be thankful that the taxpayers of the state of Kansas cover part of employee retirement costs. But we don’t hear those thanks, just complaints.

Sherrer is correct on one thing: There are people in government who may be touting increased KPERS payments as increased school spending. Two things: KPERS spending is school spending. If not that, what is it? Second, these people are not Kansas Policy Institute. KPT takes efforts to separate KPERS spending from other school spending.3

Here’s something else from Sherrer: “Anther example- local property taxes collected for schools was always sent directly to the school district- after all it is local not state tax $s. Now the local sends it to the state, then it is sent to school districts. Again, same dollars but trick accounting to make it look like increased state spending.”

I’ve never seen KPI make the claim that Sherrer makes. Others may make it, but KPI takes steps to adjust figures for this change.4

Finally, Sherrer writes: “When is Kansas Policy going do do research on the financial disaster called the Kansas budget?” Well, KPI has done this, providing a detailed roadmap. In my reporting on KPI’s plan, I wrote:

The State of Kansas has implemented tax reform that reduces the tax burden for Kansans. A remaining challenge that has not yet been tackled is spending reform, that is, aligning Kansas state government spending with a smaller stream of tax revenue. Critics of tax reform say the Kansas budget is a mess or a train wreck, pointing to projections of large deficits before long. Tax increases or service cuts will be required to balance the budget, contend critics.

In a policy brief released today, Kansas Policy Institute presented a plan for bringing the budget in balance while retaining low tax rates (and future reductions) and accommodating projected future spending needs for Medicare and schools.

You can more about the plan at For Kansas budget, balance is attainable.


Notes

  1. Trabert, Dave. State school board member should practice what he preaches. https://kansaspolicy.org/state-school-board-member-practice-preaches/.
  2. USD 259 Comprehensive Annual Financial Report for 2015, State Revenue by Source, Governmental Funds, and USD 259 Comprehensive Annual Financial Report for 2007, State Revenue by Source, Governmental Funds.
  3. For example, see Dorsey, David. Non-KPERS funding sets another per-pupil record in 2015-16. https://kansaspolicy.org/non-kpers-funding-sets-another-per-pupil-record-in-2015-16/.
  4. For example, see Parkes, Patrick. State school funding ranks high in Kansas. https://kansaspolicy.org/state-school-funding-ranks-high-in-kansas/.

Decoding Duane Goossen

The writing of Duane Goossen, a former Kansas budget director, requires decoding and explanation. This time, his vehicle is “Rise Up, Kansas.”

Duane Goossen was Kansas budget director from 1998 to 2010.1 He is critical of the administration of Kansas Governor Sam Brownback and recent sessions of the Kansas Legislature. It’s useful to examine his writings so that Kansans may become aware of the ramifications of his recommendations, and how during his years as budget director he was unable to adhere to the principles he now advocates. Following, some language from his recent article Rise Up, Kansas.

Goossen: “This marks the beginning of a hopeful new chapter in the Kansas story. It also presents a desperately needed opening for comprehensive tax reform.”

Comprehensive tax reform. That sounds good, as “reform” has a positive connotation. It means change for the better. But in this case reform means raising taxes, and by a lot. In fact, advocates of tax increases generally won’t say by how much they want to raise taxes.

As an example, in May a coalition of spending groups called for what they termed “Option 4.” It would eliminate all tax cuts enacted since 2012. This action would reinstate the tax on pass-through business income — the so-called “LLC loophole.” But this would also raise income taxes wage income, as those tax rates also were reduced in 2012. For example, income tax rates for a married family earning up to $30,000 would rise to 3.50 percent from the current 2.70 percent. That’s an increase of 30 percent in the income tax rate. For other income levels the increase is greater.2

A spokesperson for the Option 4 coalition argued that rolling back the tax cuts could increase revenue to the state by $1 billion. By the way, the Option 4 coalition did not call for the rollback of the sales tax increase passed in 2015. I should qualify that with apparently, as no handouts explaining Option 4 can be found. In addition, an audio recording of the press conference has been removed.

Members of the Option 4 coalition included Shannon Cotsoradis of Kansas Action for Children, Bob Totten from the Kansas Contractors Association, Rebecca Proctor of the Kansas Organization of State Employees, and Mark Desetti from the Kansas National Education Association.3

With the exception of the pass-through business income tax, failing to be specific about whose taxes will be raised by how much is characteristic of spending groups. In fact, these spending groups generally shy away from using the term tax. Look at these examples of language from Goossen’s article:

  • damage to state finances
  • hemorrhage revenue
  • can’t start healing while still in triage mode
  • fix our structural revenue imbalance
  • broaden the tax base
  • means reviewing our entire tax code
  • modernizing all revenue sources
  • get our fiscal house back in order
  • begin with commonsense basics
  • new priorities
  • recover the opportunities we lost
  • senseless era of crisis
  • begin restoring those opportunities
  • rise above the political fray
  • find courage to make difficult decisions
  • imagine the possibilities

Commonsense basics. Who could be against that? Yet each of these terms is a call for more and higher taxes.

Goossen: “Three credit rating downgrades”

The Kansas credit rating has declined. In making this decision, Moody’s mentioned “revenue reductions (resulting from tax cuts) which have not been fully offset by recurring spending cuts.4 So Kansas has a decision: Offset revenue reductions with higher taxes or spending cuts. Moody’s doesn’t care which is chosen, but Goossen and the spending coalition does.

KPERS funded ratio through 2014Of note, Moody’s mentions another problem: “an underfunded retirement system for which the state is not making actuarially required contributions.” This is an ongoing problem, as the nearby chart illustrates. The funding ratio of the Kansas retirement plan has deteriorated for many years, including the years when Duane Goossen was Kansas budget director. (Recently Kansas has improved the funding ratio of KPERS, but it did that by borrowing funds, which was an unwise decision. Because of the borrowing, Kansas has delayed schedule KPERS contributions, which effectively pays for current spending with long-term debt.5)

Moody’s also mentioned “In recent years the state has appropriated funds from or shifted costs to the State Highway Fund to help balance the general fund budget.” This too, is an ongoing problem.6 “Raiding the Bank of KDOT” has been a problem for many years, including the years when Duane Goossen was Kansas budget director.

Goossen: “It will likely take a generation to fully recover from this horrible experiment.”

Spending in Kansas. Click for larger.
Spending in Kansas. Click for larger.
Goossen is not specific as to the nature of the damage. Generally, a claim of slashed state spending is made. But it’s difficult to see the purported decline. Some programs may have been cut, but overall, spending is level or climbing, as can be seen in the nearby chart.7 Additionally, in comparison to other states Kansas spends a lot, and continues to.8

Goossen: “lifting the burden the Brownback plan forced onto our lowest-earning Kansans.”

Yes, we should sharply reduce or eliminate the sales tax on groceries. It affects low-income households most severly.9

Goossen: “And it means establishing a responsible state savings account.”

Kansas General Funding ending balance. Click for larger.
Kansas General Funding ending balance. Click for larger.
Kansas doesn’t have what some states have, which is a true rainy day fund that is governed by statute as to when contributions must be made and when the fund may be used. Instead, Kansas has a simple requirement for an ending balance of 7.5 percent, which the state has regularly ignored for decades. Low ending balances are a hallmark of Kansas government, including the years when Duane Goossen was Kansas budget director. In fact, in one year his budget had a negative ending balance.10


Notes

  1. Goossen, Duane. Kansas Budget Blog. http://www.kansasbudget.com/.
  2. Kansas Policy Institute. *Option 4: Soak the poor. https://kansaspolicy.org/option-4-soak-poor/.
  3. Hancock, Peter. Session resumes with call for total repeal of Brownback tax cuts. Lawrence Journal-World, April 27, 2016. http://www2.ljworld.com/news/2016/apr/27/session-resumes-call-total-repeal-brownback-tax-cu/.
  4. Moody’s Investors Service, Inc. Moody’s downgrades Kansas issuer rating to Aa2 from Aa1, notched ratings to Aa3 from Aa2 and KDOT highway revenue bonds to Aa2 from Aa1; outlook stable. April 30, 2014. https://www.moodys.com/research/Moodys-downgrades-Kansas-issuer-rating-to-Aa2-from-Aa1-notched–PR_298383.
  5. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. https://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/.
  6. Weeks, Bob. Kansas transportation bonds economics worse than told. https://wichitaliberty.org/kansas-government/kansas-transportation-bonds-economics-worse-than-told/.
  7. Weeks, Bob. Kansas government spending. https://wichitaliberty.org/kansas-government/kansas-government-spending-2/.
  8. Weeks, Bob. Spending in the states, per capita. Interactive visualization. https://wichitaliberty.org/economics/spending-states-per-capita-2/.
  9. Weeks, Bob. Kansas sales tax has disproportionate harmful effects. https://wichitaliberty.org/taxation/kansas-sales-tax-has-disproportionate-harmful-effects/.
  10. Weeks, Bob. Kansas General Fund. https://wichitaliberty.org/kansas-government/kansas-general-fund-2/.

Did the Kansas Supreme Court read these cases?

The merit system of judicial selection in Kansas has sprung a leak, finds the United States Supreme Court.

One of the purported benefits of the merit system of judicial selection in Kansas is that it produces quality jurists who rule on the law, not on their personal beliefs or ideologies.

But a recent case shows otherwise. Following, a selection of dialog between Kansas Attorney General Derek Schmidt and United States Supreme Court Justice Antonin Scalia:1

JUSTICE SCALIA: Did the Kansas Supreme Court read these cases?
MR. SCHMIDT: Perhaps I ought not answer that, Justice Scalia, but —
JUSTICE SCALIA: How can you explain it if — if indeed our prior cases are so clear on the point?
MR. SCHMIDT: Justice Scalia, I, of course, don’t —
JUSTICE SCALIA: They don’t like the death penalty.

Here, in one exchange, Scalia exposes the legal incompetence of the Kansas Supreme Court because they rule based on their policy preferences, not the law. “Did the Kansas Supreme Court read these cases?” That’s a question a law school professor asks a lazy student. It shouldn’t need to be asked of justices on the highest court in Kansas.

But the United States Supreme Court found it necessary to ask if Kansas judges were reading their cases. This is precisely what the merit system is supposed to avoid.

For more on this see this video from Joseph Ashby.


Notes

  1. Oral arguments in Kansas v. Gleason and Kansas v. Carr, October 7, 2015. http://www.supremecourt.gov/oral_arguments/argument_transcripts/2015/14-452_b18j.pdf.

How would higher Kansas taxes help?

Candidates in Kansas who promise more spending ought to explain just how higher taxes will — purportedly — help the Kansas economy.

Are low taxes important to an economy, especially a state economy? When the Tax Foundation looked at the issue, it concluded this: “In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth.”1

Per-capita tax collections, Kansas and nearby states. Click for larger.
Per-capita tax collections, Kansas and nearby states. Click for larger.
Many of these studies concerned the national economy and taxes, but some looked at state taxes. When we look at Kansas, we see that Kansas already taxes and spends quite a lot, compared to other states. Nearby is a chart showing per-capita state tax collections in Kansas and Colorado.2

State and Local Government Employee and Payroll. Click for larger.
State and Local Government Employee and Payroll. Click for larger.
Looking at other data, I found that considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.3

State and local government employment and costs, selected states. Click for larger.
State and local government employment and costs, selected states. Click for larger.
From another source of data, I found this: “In the visualization, you can see that Kansas spends quite a bit more than nearby states. Of special interest is Minnesota, which is often used as an example of a high-tax state, and a state with excellent schools and services. But Minnesota spends barely more than Kansas, on a per-person basis. What about Colorado? It seems that Kansans often look to Colorado as a state full of bounty. But Kansas outspends Colorado. Same for New Mexico, Wisconsin, Texas, and — especially — Missouri.”4

Please don’t argue that the economic health of a state is determined by its budget, that is, whether it is balanced or not. And if you want to argue that Kansas has borrowed money through the highway fund and spent it in the general fund: That’s true, and we should not do that. But that action allowed Kansas to keep spending, much like borrowing allows the federal government to keep spending more that it raises through taxes.

Some argue that if the state taxes more, it can spend more, and therefore the economy expands. But: The money taken from Kansans is money that they can’t spend. And if one wants to argue that government spends more carefully and efficiently than do private individuals spending their own money — well, give it a try. Empirically, not many people believe this.

And isn’t government spending the purpose of taxation? Nearby are figures showing Kansas general fund spending. You can see that for two years Kansas spent much more than it collected in revenue, using a large ending balance as the source of funds. If one believes in the Keynesian theory of fiscal effects — which most liberals and progressives do — this “deficit” spending spared spending cuts and therefore boosted the Kansas economy.

Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.
Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.

Regarding the spending cuts that some claim: Have there been severe spending cuts in Kansas? While some programs have been trimmed, overall state spending continues on a largely upward trend (for all funds spending) or remains mostly flat (for general fund spending), after accounting for population and inflation.5

kansas-per-capita-spending-adjusted-for-cpi-2016-10

Kansas revenue estimate errors. Click for larger.
Kansas revenue estimate errors. Click for larger.
We also hear that the Kansas economy is in bad shape because tax revenue has fallen short of estimates. This is not a good indicator of economic health. Instead, it illustrates the difficulty of economic forecasting. Moreover, the negative estimate variances — revenue shortfalls, in other words — in 2002 to 2003 and 2009 to 2010 were generally much larger in magnitude than those of recent years.6 Remember how the Obama administration told us that without the 2009 stimulus package unemployment would rise to a certain level? Well, the stimulus bill passed, we spent the money, and unemployment was higher than what the administration said it would be without the stimulus. And for a long time, too.7

We also hear that transfers from KDOT — the highway fund — have hurt Kansas, especially in construction jobs. Our state’s two largest newspapers recently editorialized on this matter.8 They correctly reported that Kansas construction jobs were down. But it wasn’t highway construction jobs that caused the loss of jobs, except for a very small portion.

KDOT spending on major road programs. Click for larger version.
KDOT spending on major road programs. Click for larger version.
Furthermore, the state has continued to spend on highway programs, without regard to transfers from the highway fund. When we look at actual spending on roads, we see something different from what is often told. KDOT’s Comprehensive Annual Financial Report shows spending in the categories “Preservation” and “Expansion and Enhancement” has grown rapidly over the past five years. Spending in the category “Maintenance” has been level, while spending on “Modernization” has declined. For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2015 totaled $932,666 million, up from a low of $698,770 in fiscal 2010.

We should not borrow money, place it in the highway fund, and then transfer the funds to the general fund, as the state has done for many years. But actual spending on highways has risen, nonetheless.

So: Just how will higher taxes help the Kansas economy?


Notes

  1. McBride, William. What Is the Evidence on Taxes and Growth? Tax Foundation, 2012. http://taxfoundation.org/article/what-evidence-taxes-and-growth.
  2. Weeks, Bob. Tax collections by the states. Interactive visualization. https://wichitaliberty.org/economics/tax-collections-states-2/.
  3. Weeks, Bob. State and local government employee and payroll. Interactive visualization. https://wichitaliberty.org/economics/state-local-government-employee-payroll/.
  4. Weeks, Bob. Kansas, a frugal state? Interactive visualization. https://wichitaliberty.org/economics/kansas-frugal-state/
  5. Weeks, Bob. Kansas government spending. https://wichitaliberty.org/kansas-government/kansas-government-spending-2/.
  6. Weeks, Bob. Kansas revenue estimates. https://wichitaliberty.org/kansas-government/kansas-revenue-estimates/.
  7. Weeks, Bob. Brownback and Obama stimulus plans. https://wichitaliberty.org/economics/brownback-and-obama-stimulus-plans/.
  8. Weeks, Bob. Topeka Capital-Journal falls for a story. https://wichitaliberty.org/kansas-news-media/topeka-capital-journal-falls-story/.

Kansas Democrats: They don’t add it up — or they don’t tell us

Kansas Democrats (and some Republicans) are campaigning on some very expensive programs, and they’re aren’t adding it up for us.

A sampling of campaign literature from Kansas Democratic candidates in south and west Wichita for the Kansas Legislature1 reveals several common threads:

  • Few will identify themselves as Democrats.
  • Eliminating the LLC loophole is popular.
  • Eliminating or reducing sales tax on food is popular.
  • Eliminating the 2015 sales tax increase is popular.
  • Fully funding schools is popular.
  • None of these show the cost of these ideas, nor do they offer ideas on how to pay for these things, except for eliminating the LLC loophole.

What will these things cost? Here’s some figures.

LLC loophole and food sales tax: This year a bill was proposed in the Kansas Legislature to restore taxation of non-wage business income, that is, to eliminate the so-called “LLC loophole.” It would also reduce the sales tax on food from 6.5 percent to 2.6 percent. The fiscal note for this bill estimated an increase in tax revenue to the state of $260.9 million from the non-wage business income, and a loss of revenue to the state of $234.1 million for the sales tax reduction.2

Extrapolating the food sales tax figures implies that eliminating the sales tax on food would mean a loss of revenue to the state of $435 million, assuming no change in consumer behavior.

Rollback general sales tax: In 2015 when the legislature voted to raise the statewide sales tax from 6.15 percent to 6.50 percent on July 1, 2015, it was estimated that revenue to the state would increase by 164.2 million. For fiscal year 2017, by 186.7 million.3

(By the way, the tax on cigarettes was increased by an estimated $40.39 million. If we’re rolling back sales tax increases, we should roll back this 50 cent per pack increase, too. I haven’t seen any advocates for this.)

Fully funding schools: Who knows what “full funding” really means? The Kansas Supreme Court believes it — and it alone — has the ability to put a number on this. A consensus seems to be developing at around $450 million per year in additional school funding is what the court may order.

Adding up the costs (using some numbers a few years old): $260.9 million – $435 million – $164.2 million – $450 million equals -$1,310.1 million in changes to annual general fund revenue. ($-1,350.5 million if we want to be fair to smokers.)

This is the proposed change to Kansas general fund revenue that these candidates omit from their campaigns. It is the amount by which taxes must be raised, or spending be cut (or a combination of taxes and cuts). Some of these numbers are estimates that could be off by a lot. There can be some quibbling, such as reducing the food sales tax instead of eliminating it, which will change the numbers. But there’s no doubt that the plans Kansas Democrats propose will cost a lot of money.

Total revenue to the general fund in 2016 was $6,073.4 million. Major sources include:
Income taxes (individual, corporate, financial institution): $2,640.8 million
Excise taxes (sales, compensating use, cigarette, liquor, severance): $2,927.7 million

So if the state wanted to raise spending by, say, $1.310 billion dollars, it would have to raise income taxes by 49.7 percent, or excise taxes by 44.7 percent. Or a combination. Either way, that’s a lot.

When you see candidates for the Kansas Legislature — Democratic and Republican — mention these programs, ask if they know how much they will cost. Ask whose taxes will be raised or whose programs will be cut.

And ask this really important question: Just how will all this make Kansas a better state?

  1. Photographs of a number of pieces may be viewed in this folder at Flickr: https://flic.kr/s/aHskMJfGNc.
  2. Kansas Legislature. HB 2444. Eliminating the business non-wage income tax exemption and reducing the sales tax rate on food. http://www.kslegislature.org/li/b2015_16/measures/hb2444/.
  3. Kansas Legislature. Revenue Enhancements and Other Provisions; Senate Sub. for HB 2109, as amended by House Sub. for SB 270 and HB 2142. http://www.kslegislature.org/li/b2015_16/measures/documents/summary_hb_2109_2015.pdf.

Kansas Governor Sam Brownback on myths and reality

Kansas Governor Sam Brownback addressed a luncheon gathering at the Wichita Pachyderm Club to set the record straight on what he called myths. Recorded on October 14, 2016.

Myths

  • The Kansas tax plan is failing.
  • Kansas schools have been cut.
  • State employee pensions are severely underfunded.
  • Kansas highways are crumbling.
  • Welfare numbers are down because we are kicking people off.
  • Vulnerable Kansans aren’t being served.
  • Kansans are fleeing to Missouri.

View below, or click here to view at YouTube.

Kansas revenue estimates

Kansas revenue estimates are frequently in the news and have become a political issue. Here’s a look at them over the past decades.

A favorite criticism of liberals and progressives across the nation is that in Kansas, actual revenues to the state’s general fund have fallen short of projections, month after month. Reading most newspaper reports and editorials, one might think that these negative variances are a new phenomenon, and one relished by the Left. As many as a dozen articles on this topic have appeared in the New York Times in the past two years.

The revenue estimates in Kansas are produced by a body known as the Consensus Revenue Estimating Group. It consists of one member each from the Division of the Budget, Department of Revenue, Legislative Research Department, and one consulting economist each from the University of Kansas, Kansas State University, and Wichita State University.

As described: “This group meets each spring and fall. Before December 4th, the group makes its initial estimate for the budget year and revises the estimate for the current year. By April 20th, the fall estimate is reviewed, along with any additional data. A revised estimate is published, which the Legislature may use in adjusting expenditures, if necessary.”1

The estimates are important because the legislature and governor are required to use them when formulating budgets and spending plans. If the estimates are high, meaning that revenue is less than expected, it’s possible that the legislature or (more likely) the governor will need to make spending cuts. (The other alternative is that leftover funds from prior years may be used, if available.)

If, on the other hand, the estimates are too low, meaning that revenue is higher than expected, the state has collected too much tax revenue. In this case, the state should refund the excess to taxpayers. Some states do that, notably Colorado, although residents may vote to let the state keep the excess.

Some states have true rainy day funds, and the excess revenue might be used to build that fund’s balance. In a true rainy day fund, the fund’s balances can be spent only under specific sets of circumstances.

But in Kansas, the excess revenue is simply called the “ending balance” and is available to spend at the legislature’s whim. That’s what happened in fiscal years 2014 and 2015, when the state spent $340 million and $308 million, respectively, of the ending balance rather than cut spending.

What has been the history of the revenue estimates compared to actual revenue? First, know that making these estimates is not easy. Some of the inputs to the process include the inflation rate in future years, interest rates in future years, and the prices of oil and natural gas in the future. If someone knew these values with any certainty, they could earn huge profits by trading in futures markets.

The state makes the revenue estimates available.2 I’ve presented the results since 1975 in a chart at the end of this article. For each year, two numbers are presented. One it the difference from the Original Estimate and actual revenue. The other is the difference from the Adjusted Final Estimate and actual revenue.

We can see that in fiscal years 2014 and 2016, the variance of the estimates is negative, meaning that revenue was lower than the estimates. The magnitude of these variances, however, is not out of line with the magnitude of the variances of other years, either positive or negative.

In fact, the negative variances — revenue shortfalls, in other words — in 2002 to 2003 and 2009 to 2010 were generally much larger in magnitude than those of recent years. This is of interest as Duane Goossen, who was budget director during these periods, is a prominent critic of the recent revenue shortfalls. Evidently he has forgotten the difficulty of creating these estimates.

While Goossen along with newspaper reporters and editorialists use the negative revenue estimate variances as a political weapon against the governor and conservatives, it is in the interest of the people of Kansas that revenue estimates be as accurate as possible. In an effort to produce more accurate revenue estimates, Governor Brownback created a commission to study the issue. That group released its report in October.3

Kansas revenue estimate errors. Click for larger.
Kansas revenue estimate errors. Click for larger.


Notes

  1. Consensus Revenue Estimating Group. Available at budget.ks.gov/cre.htm.
  2. Kansas Division of the Budget. State General Fund Receipt Revisions for FY 2016 and FY 2017. May 2, 2016. Available at: budget.ks.gov/files/FY2017/CRE_Long_Memo_April2016.pdf. Also Kansas Legislative Research for 2016 figures.
  3. Governor’s Consensus Revenue Estimating Working Group. Final Recommendations. Available at budget.ks.gov/files/FY2017/cre_workgroup_report.pdf.

Video in the Kansas Senate

A plan to increase visibility of the Kansas Senate is a good start, and needs to go just one or two steps farther.

The Kansas Republican Senatorial Committee has released a plan to make Kansas better. One plank concerns transparency, specifically this: “Under our plan, legislative meetings and Senate proceedings will be public and streamed live online for public viewing.”1

This is a good idea, and one that should have, and could have, been implemented long ago. But it doesn’t go quite far enough. The problem is that many people who might want to watch the proceedings can’t do so at the time the Kansas Senate meets. We need to have archived video.

This would require the Senate to capture the video rather than simply streaming it. Then, the video must be made available somewhere. YouTube is an obvious choice, and it is free.

Then, to make the experience complete, the Senate needs to make documents available to the public as they are made available to legislators. An example is an amendment to a bill that the chamber is debating.

A related matter is the availability of testimony in the Kansas Legislature. Specifically, the written testimony and informational presentations provided to committees would be of interest and value to citizens. Most committees — perhaps all — require conferees to supply a pdf or Microsoft Word version of their testimony in advance of the hearing. These electronic documents could be placed online before the committee hearing. Then, anyone with a computer, tablet, or smartphone could have these documents available to them.

On the Kansas Legislature website, each committee has its own page. On these committee pages there are links for “Committee Agenda,” “Committee Minutes,” and “Testimony.” But in most cases there is no data behind these links. In February 2015 I investigated and found that only about one-third of standing committees in the Kansas Legislature were providing written testimony online.2

Since then, several committees have used the commercial file-sharing service Dropbox to make testimony and documents available to everyone. This is a reasonable way to accomplish an important goal.


Notes

  1. betterkansasplan.com. Transparency in Government. Available at betterkansasplan.com/better/#1475545628382-66e77cef-bde5.
  2. Weeks, Bob. Availability of testimony in the Kansas Legislature. Available at wichitaliberty.org/kansas-government/availability-testimony-kansas-legislature/.

Kansas government spending

Kansas government spending, starting in 1967. Total spending and per capita spending, adjusted for inflation. Also spending as percent of Kansas GDP.

Sources of data:
* Kansas Fiscal Facts 2016
* 2016 and 2017 are approved figures, not actual spending
* 2015 and beyond population are my estimates
* CPI is Consumer Price Index – All Urban Consumers, CUUR0000AA0
* 2016 and later GDP is estimated

Click charts for larger versions.

kansas-spending-adjusted-for-cpi-2016-10

kansas-per-capita-spending-adjusted-for-cpi-2016-10

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Kansas tax receipts

Kansas tax receipts by category, presented in an interactive visualization.

The Kansas Division of the Budget publishes monthly statistics regarding tax collections. These figures have been gathered and are presented in an interactive visualization. In the visualization, there are these available tabs:

Table.s: A table of data. For each month the two data items supplied by the state are the actual value and the estimated. This table also holds the computed variance, or difference, between the actual value and the estimated value. A positive number means the actual value was greater than the estimated value.

Collections: Shows monthly collections for each component. Because monthly numbers vary widely, this data is presented as the moving average of the previous 12 months.

Annual Change: Shows the change from the same month of the previous year. A positive value means the value for this month is greater than the same month last year.

Estimates: The Governor’s Consensus Revenue Estimating Working Group provides monthly estimates. This chart shows the variance, or difference, between the actual value and the estimated value. A positive number means the actual value was greater than the estimated value.

Running Total Estimates: This is the cumulative sum of the estimate variances, reset to zero at the start of each fiscal year (July 1).

Running Total Change from Prior Year: This is the cumulative sum of the monthly changes from the prior year, reset to zero at the start of each fiscal year (July 1).

For the past two years, individual income tax collections have been relatively flat. There are variations each month, but overall the trend is slightly up. Corporate income tax collections are on a slight downward trajectory.

Retail sales tax and compensating use tax have been mostly rising for two years. A higher sales tax rate took effect on July 1, 2015, with the rate rising from 6.15 percent to 6.50 percent.

Cigarette taxes have risen rapidly since July 2015 when higher tax rates on these products took effect. The same trend is present in the tobacco products tax.

Severance taxes — tax collected on natural gas and oil as it is extracted from the ground — have been on a downward trend as prices for these produces have fallen. This is a sizable tax. In June 2014 collections of this tax were running at about $143 million per year. For September 2016, the rate is $22 million annually.

Click here to use the visualization.

Source of data is Kansas Division of the Budget.

Selecting judges in Kansas

Appellate court judges make new law, and Kansas has the most elitist and least democratic supreme court selection system in the country.

What is the substantive difference between these two systems?

A) A state’s chief executive appoints a person to be a judge on the state’s highest court. Then the state’s senate confirms or rejects.

B) A nation’s chief executive appoints a person to be a judge on the nation’s highest court. Then the nation’s senate confirms or rejects.

Perhaps there is a difference that I’m not smart enough to see. I’m open to persuasion. Until then, I agree with KU Law Professor Stephen Ware and his 2007 analysis of the way Kansas selects Supreme Court judges as compared to the other states.1 That analysis concludes that “Kansas is the only state in the union that gives the members of its bar majority control over the selection of state supreme court justices.”

Ware has made other powerful arguments in favor of discarding the system Kansas uses: “In supreme court selection, the bar has more power in Kansas than in any other state. This extraordinary bar power gives Kansas the most elitist and least democratic supreme court selection system in the country. While members of the Kansas bar make several arguments in defense of the extraordinary powers they exercise under this system, these arguments rest on a one-sided view of the role of a judge.”2

Judges, Ware says, make law, and that is a political matter: “Non-lawyers who do not know that judges inevitably make law may believe that the role of a judge consists only of its professional/technical side and, therefore, believe that judges should be selected entirely on their professional competence and ethics and that assessments of these factors are best left to lawyers. In short, a lawyer who omits lawmaking from a published statement about the judicial role is furthering a misimpression that helps empower lawyers at the expense of non-lawyers, in violation of basic democratic equality, the principle of one-person, one-vote.”3

Kansas exhibits a pattern of selecting governors from alternate political parties.
Kansas exhibits a pattern of selecting governors from alternate political parties.
For Kansas progressives and Democrats to oppose Kansas adopting the same system that has enabled Barack Obama to appoint two liberal justices to the U.S. Supreme Court, with perhaps more to come — don’t they realize that Kansas will (likely) have a Democratic governor someday? As Clay Barker noted, for the last 50 years, no Kansas governor has been followed by a successor of the same party (except for Mark Parkinson filling the remainder of a term after Kathleen Sebelius resigned). If that pattern holds — and there’s no guarantee that it will — the next Kansas governor will be a Democrat.

Superficially, it doesn’t seem to make sense for Kansas Democrats to oppose the governor making judicial selections while supporting the President of the United States having the same power. It does make sense, however, when we realize that Kansas Democrats are comfortable with the state’s bar selecting the judicial nominees that the governor may consider. (Which gives truly useful and enjoyable bars a bad name.) Lawyers, especially lawyers that take an active role in politics, tend to be Democrats, and progressive Democrats at that. If the Kansas bar was dominated by constitutional conservatives, would Kansas Democrats feel the same?

I’m not claiming that the motives of conservative Kansas Republicans are pure. Will they change their stance on the desirability of the governor appointing Supreme Court judges if there is a Democratic governor? I don’t know, but I have a suspicion.

Defenders of the current Kansas system claim that the system is based on merit, not politics. To which we must note that this year the Kansas Supreme Court was reversed by the United States Supreme Court. It wasn’t even close, with justices voting eight to zero that the Kansas court was wrong in its application of the law. (The other Supreme Court justice said “I do not believe these cases should ever have been reviewed by the Supreme Court.) If we’re relying on our state’s bar to select competent judges, we’re making a mistake.

  1. Ware, Stephen J., Selection to the Kansas Supreme Court. Fed-soc.org. Available at: http://www.fed-soc.org/publications/detail/selection-to-the-kansas-supreme-court.
  2. Ware, Stephen J., The Bar’s Extraordinarily Powerful Role in Selecting the Kansas Supreme Court (September 25, 2009). Kansas Journal of Law & Pubic Policy, Vol. 18, No. 3, p. 392, 2009. Available at SSRN: http://ssrn.com/abstract=1478660.
  3. Ware, Stephen J., Originalism, Balanced Legal Realism and Judicial Selection: A Case Study (August 3, 2012). Available at SSRN: http://ssrn.com/abstract=2129265.

Kansas construction employment

Tip to the Wichita Eagle editorial board: When a lobbying group feeds you statistics, try to learn what they really mean.

When investigating the claims of a lobbying group, Kansas Policy Institute found that the statistics — when examined closely — do not support the narrative the group promotes. Unfortunately, the Wichita Eagle editorial board did not examine the group’s claims closely enough to determine their validity.

Kansas Construction Employment, 12-Month Moving Average. Click for larger.
Kansas Construction Employment, 12-Month Moving Average. Click for larger.

At issue is the claim that transfers from the Kansas highway fund have lead to the loss of highway construction jobs. It’s repeated not only by the state’s highway construction lobbyists, but also by others. The statistics that are cited deserve further investigation, which is what KPI did on its article Media and highway contractors mislead again. KPI’s Dave Trabert found:

Had the Eagle bothered to examine Mr. Totten’s claim, they would have learned that only 2 percent of the construction job decline was attributable to highway construction and that the loss of 100 jobs is less than 1 percent of total highway jobs.

In addition to learning that Mr. Totten was grossly exaggerating, they would have learned that employment for construction of new homes and non-residential buildings showed very nice growth and the real problem is in specialty trade contractors for non-highway projects.

Trabert is referring to the Wichita Eagle editorial board citing figures from a self-interested lobbying group — in this case, Bob Totten, executive vice president of the Kansas Contractors Association — without investigating the true nature of the figures.

KDOT spending on major road programs. Click for larger version.
KDOT spending on major road programs. Click for larger version.
I’ve taken the same numbers from the Bureau of Labor Statistics. Because these values are available only in not seasonally adjusted form, I’ve created a chart using the moving average of the past 12 months. A second chart shows the change from the same month of the previous year. The charts confirm what KPI found, which is employment in the “Heavy and Civil” category is not responsible for the decline in Kansas construction jobs. In fact, employment in this category is on an upward trend over the past 18 months. It is employment in the category “Specialty Trade” that has fallen. This isn’t related to highway construction.

This data is available in an interactive visualization which you may access here. For more information on highway spending in Kansas, see Kansas highway spending.

Kansas Construction Employment, Change From Year Before. Click for larger.
Kansas Construction Employment, Change From Year Before. Click for larger.

From Pachyderm: Martin Hawver on Kansas Politics

Voice for Liberty radio logo square 02 155x116From the Wichita Pachyderm Club this week: Martin Hawver briefed members and guests on the state of Kansas politics. Judge Phil Journey provided the introduction. Recorded August 19, 2016.

Hawver is the dean of Kansas Statehouse press corps, having covered the beat longer than any current Statehouse reporter — first for 17 years as a Statehouse reporter for the Topeka Capital-Journal and since 1993 for Hawver’s Capitol Report, for which he is the primary reporter/writer. He also writes a column syndicated to Kansas newspapers, is interviewed about Kansas government and politics on TV and radio shows, and is a speaker for seminars and conventions.

Hawver’s Capitol Report is owned by Martin and his wife Vickie Griffith Hawver, who met and married while both worked at the Topeka Capital-Journal newspaper. Their website is havernews.com.

Kansas tax receipts

Kansas tax receipts by category, presented in an interactive visualization.

The Kansas Division of the Budget publishes monthly statistics regarding tax collections. These figures have been gathered and are presented in an interactive visualization.

Example from the visualization.
Example from the visualization.
For the past two years, individual income tax collections have been relatively flat. There are variations each month, but overall the trend is slightly up. Corporate income tax collections are on a slight downward trajectory.

Retail sales tax and compensating use tax have been rising for two years. A higher sales tax rate took effect on July 1, 2015, with the rate rising from 6.15 percent to 6.50 percent.

Cigarette taxes have risen rapidly since July 2015 when higher tax rates on these products took effect. The same trend is present in the tobacco products tax.

Severance taxes — tax collected on natural gas and oil as it is extracted from the ground — have been on a downward trend as prices for these produces have fallen. This is a sizable tax. In June 2014 collections of this tax were running at about $143 million per year. Two year later the rate is $28 million annually.

Click here to use the visualization.

Source of data is Kansas Division of the Budget.

Which Kansas Governor made these proposals?

Cutting spending for higher education, holding K through 12 public school spending steady, sweeping highway money to the general fund, reducing aid to local governments, spending down state reserves, and a huge projected budget gap. Who and when is the following newspaper report referencing?

Under _____ budget for fiscal _____, public schools would continue to receive $3,863 per student in state aid, and higher education would lose only $5 million in general tax dollars, mostly in the central Board of Regents office.

But _____ would take $165 million from highway projects and eliminate $86 million in aid to local governments — on top of the $95 million _____ withheld from highway projects and $48 million _____ kept from cities and counties.

_____ also made a campaign promise to build all projects promised under the state’s 10-year, $13.5 billion transportation program. _____ proposals didn’t say how the Department of Transportation would deal with the loss of funds.

_____ budget also would allow the Kansas Highway Patrol to hire 70 new troopers, give state employees a 1.5 percent pay raise, and prevent the closings of four minimum-security prison units and two inmate boot camps.

Under _____ proposals, total spending in fiscal _____ would decrease about $31 million, or 0.4 percent.

But that figure didn’t convey the seriousness of the state’s budget problems, which some officials have said are the worst since the Great Depression. The gap between expected general tax revenues and spending commitments during the next 18 months is more than $1 billion.

_____ also proposed to help eliminate the gap by spending some $313 million — all but $500,000 — that otherwise would be set aside as emergency cash reserves.

This is coverage from John Hanna of the State of the State Address from Governor Kathleen Sebelius in 2003, where she revealed plans for the fiscal 2004 budget. (Except the blank in “on top of the $95 million _____ withheld from highway projects” refers to her predecessor Bill Graves.) The original article is here.

A National Perspective on Kansas Fiscal Policy

Jonathan Williams, Vice President in charge of the Center for State Fiscal Reform at the American Legislative Exchange Council (ALEC), addressed a luncheon gathering of the Wichita Pachyderm Club on July 22, 2016, presenting “A National Perspective on Kansas Fiscal Policy.” View below, or click here to view at YouTube. Videography by Paul Soutar.

From Pachyderm: Kansas Senate Candidates

From the Wichita Pachyderm Club this week: Republican primary candidates for Kansas Senate were invited to participate in a forum. Candidates invited were:

  • In Kansas Senate District 25: William Eveland and Jim Price. (map)
  • In Kansas Senate District 26: Byron C. Dunlavy and Dan Kerschen. Dunlavy did not attend. (map)
  • In Kansas Senate District 28: Jo L. Hillman and Mike Petersen. Hillman did not attend. (map)

This is an audio presentation recorded on July 15, 2016.

Kansas Supreme Court: Making law, part 3

Do the justices on the Kansas Supreme Court make new law? Yes, and here is another example.

A paper by Kansas University School of Law Professor Stephen J. Ware explains the problem with the undemocratic method of judicial selection process used in Kansas.1

The question is whether judges are simply arbitrators of the law, or do they actually participate in the lawmaking process? In his paper, Ware presents eleven examples of judges on the two highest Kansas courts engaging in lawmaking. Here, Ware explains one case:2

May a convicted criminal defendant pursue a legal malpractice action against this criminal-defense attorney without first obtaining any post-conviction relief? No, he may not, the Kansas Supreme Court held in Canaan v. Bartee, adopting what is known as the “exoneration rule.” In so holding, the Kansas Supreme Court acknowledged that it was making law. The Canaan court said that “Whether a plaintiff must be exonerated in postconviction proceedings before bringing a legal malpractice action against his criminal defense attorney is an issue of first impression in Kansas.” The court discussed earlier Kansas cases and concluded that they did not resolve the issue: “Thus, we are left to decide whether we will apply the exoneration rule in legal malpractice actions in Kansas.”

The Canaan court reviewed decisions from courts around the country and noted that most adopted the exoneration rule but some did not. The court also summarized what it candidly called “Policy Reasons Behind the Exoneration Rule.” The Canaan court’s punchline was: “After consideration of these authorities, the varying policy justifications, and the shortcomings of the various approaches, we find the majority view persuasive. We hold that before Canaan may sue his attorneys for legal malpractice he must obtain postconviction relief.”

Who considered “varying policy justifications” in deciding what Kansas law should be? Was it the Kansas Legislature? No, it was the judges on the Kansas Supreme Court did. As in all the examples discussed above, when it comes to the exoneration rule Kansas law is what it is because high court judges chose for that to be law based on what they considered “persuasive.” (emphasis added)

For more on this topic, see As lawmakers, Kansas judges should be selected democratically: While many believe that judges should not “legislate from the bench,” the reality is that lawmaking is a judicial function. In a democracy, lawmakers should be elected under the principle of “one person, one vote.” But Kansas, which uses the Missouri Plan for judicial selection to its highest court, violates this principle.


Notes

  1. Ware, Stephen J. Originalism, Balanced Legal Realism and Judicial Selection: A Case Study. Available at papers.ssrn.com/sol3/papers.cfm?abstract_id=2129265.
  2. Id. at 31.