Category Archives: Kansas state government

Explaining the Kansas budget, in a way

A video explaining the Kansas budget is accurate in many aspects, but portrays a false and harmful myth regarding school spending.

A popular video explaining the Kansas budget deserves scrutiny for some of the data presented. The video is available at the Facebook page of Loud Light.

The presentation makes a few good points. For example, the video is correct in that the sales tax is a regressive tax, affecting low-income households in greater proportion. During the capaign for a Wichita city sales tax in 2014 I analyzed Census Bureau data and found that the lowest income class of families experience an increase nearly four times the magnitude as do the highest income families, as a percentage of after-tax income.1 2

The video also rightly notes that Kansas is now, and it has in the past under other legislatures and governors, inadequately funding KPERS, the state employee pension plan.

Interestingly, the video praises Kansas for its early adoption of “progressive economics.” I think the narrator meant “progressive taxation,” as the video shows Kansas adopting an income tax in 1933. How has that worked for Kansas? There are a variety of ways to look at the progress of Kansas compared to the nation, but here’s a startling fact: For the 73rd Congress (1933 to 1935) Kansas had seven members in the U.S. House of Representatives. (It had eight in the previous session.) Today Kansas has four members, and may be on the verge of losing one after the next census. This is an indication of the growth of Kansas in comparison to the nation.

Kansas Department of Transportation Funding, partial. Click for larger.
The narrator states, “Kansas Department of Transportation is mostly funded by restricted revenue like fuel tax.” This was true at one time. But starting in 2011 KDOT has received more funding from sales tax than motor fuel tax.3 The gap is getting wider, as can be seen in the nearby chart. (By the way, there are proposals to increase the motor fuel tax. This tax is just like the sales tax, affecting low-income households greatest.)

School spending

The greatest problem in this video is its explanation of state spending on K through 12 schools. This is important, as the video correctly notes that this spending is half of the general fund budget. In introducing this section, the narrator notes “budget report gamesmanship that’s created a rhetorical paradox,” conceding it is “technically” true that education spending is at record levels.

The video then shows a chart titled “State Aid Per Pupil.” The chart starts with a value a little over $6,000 in 1993, declining to about $4,000 in 2013, then staying at that level. The citation is “Governor’s Budget Report” from the Kansas Division of Budget, and at the end of the video there is the explanation, “All financial data in this video is inflation adjusted to January 2017.”

A more accurate title for the chart is “Base State Aid Per Pupil.” That’s the actual name for the component of school spending that the video displays. This is important because base state aid is only the starting point for determining spending. Actual state aid to schools is much higher.

Kansas school spending, showing base state aid and total state aid. See article for notes about 2015. Click for larger.
Base state aid per pupil — the statistic the video presents — is an important number.4 It’s the starting point for the Kansas school finance formula used before the 2015-2016 (fiscal 2016) school year, and something like it may be used in a new formula. 5

Base state aid, however, is not the only important number. To calculate the funding a school district receives, weightings are added. If students fall into certain categories, weightings for that category are added to determine a weighted enrollment. That is multiplied by base state aid to determine total state aid to the district. 6

While this may seem like a technical discussion that doesn’t make a difference, it’s very important. Some of the weightings are large and have increased by large amounts. The at-risk weighting, intended to cover the additional costs of teaching students from low-income families, started at five percent in 1993. In other words, for every student in this category, a school district received an extra five percent of base state aid. The value of this weighting has risen by a factor of nine, reaching 45.6 percent starting with the 2008-2009 school year.7

So in the nearby chart that I prepared using data adjusted for inflation in 2016, we see base state aid per pupil on a downward trend, just as the video shows. But I also plotted total state aid per pupil, which includes weightings. This number is on a mostly upward trend.

Kansas school spending, showing ratio of total state aid to base state aid. See article for notes about 2015. Click for larger.
Kansas school spending. See article for notes about 2015. Click for larger.
The weightings have a large effect on school funding. For example: During the 2004-2005 school year, base state aid was $3,863 and the at-risk weighting was ten percent. An at-risk student, therefore, generated $4,249 in state funding. (Other weightings might also apply.)

Ten years later base state aid was $3,852 — almost exactly the same — and the at-risk weighting was up to 45.6 percent. This generates funding of $5,609. For a district that qualified for the maximum high-density at-risk weighting, an additional $404 in funding was generated. (These numbers are not adjusted for inflation.)

So even though base state aid remained (almost) unchanged, funding targeted at certain students rose, and by a large amount.

Over time, values for the various weightings grew until by 2014 they added 85 percent to base state aid. A nearby chart shows the growth of total state aid as compared to base state aid. (Starting in fiscal 2015 the state changed the way local tax dollars are counted. That accounts for the large rise for the last year of data in the chart. For school years 2016 and 2017, block grants have replaced the funding formula, so base aid and weightings do not apply in the same way.)

All this determines state aid to schools only. There is also local aid and federal aid.

The questions Kansans should ask are these: Why doesn’t this video explain that “base state aid per pupil” is not the same as “state aid per pupil?” And why not explain that total state aid per pupil is much higher than base state aid, and has been rising over the long term?


Notes

  1. Weeks, Bob. Wichita sales tax hike would hit low income families hardest. Analysis of household expenditure data shows that a proposed sales tax in Wichita affects low income families in greatest proportion, confirming the regressive nature of sales taxes. Available at https://wichitaliberty.org/wichita-government/wichita-sales-tax-hike-hit-low-income-families-hardest/.
  2. Weeks, Bob. Kansas sales tax has disproportionate harmful effects. Kansas legislative and executive leaders must realize that a shift to consumption taxes must be accompanied by relief from its disproportionate harm to low-income households. https://wichitaliberty.org/taxation/kansas-sales-tax-has-disproportionate-harmful-effects/.
  3. Kansas Department of Transportation. Comprehensive Annual Financial Report for 2016.
  4. Weeks, Bob. Kansas school weightings and effects on state aid. In making the case for more Kansas school spending, the focus on base state aid per pupil leaves out important considerations. https://wichitaliberty.org/wichita-kansas-schools/kansas-school-weightings-and-effects-on-state-aid/.
  5. For the fiscal 2016 and 2017 school years, the formula was replaced by block grants.
  6. Amendments to the 1992 School District Finance And Quality Performance Act and the 1992 School District Capital Improvements State Aid Program (Finance Formula Components), Kansas Legislative Research Department, May 20, 2014
    http://ksde.org/Portals/0/School%20Finance/amends_to_sdfandqpa_2015.pdf
  7. There’s also the high-density at-risk weighting. Starting with the 2006-2007 school year districts with a high concentration of at-risk students could receive an extra weighting of four percent or eight percent. Two years later the weightings were raised to six percent and ten percent. (This formula was revised again in 2012 in a way that may have slightly increased the weightings.)

Medicaid expansion survey in Kansas

Should Kansans accept the results of a public opinion poll when little is known about it?

Recently American Cancer Society Cancer Action Network released results of a poll regarding Medicaid expansion in Kansas. What ACS CAN wants us to know is that 82 percent of Kansans favor expansion.

But before we accept these results, we need to know that ACS CAN will not release the full results of the survey, as other organizations have done.

In particular, last year Kansas Hospital Association conducted a poll on the topic of Medicaid expansion, and it released the complete poll and results.1

This year Kansas Center for Economic Growth conducted a poll. It released the full results.2 From this release, we learned that one of the questions was so vague as to be open to many different interpretations.3

Kansas Policy Institute conducts many polls and releases the full results.4

Sample results from the poll. Click for the full chart.
ACS CAN produced a short press release.5 Upon request, I received the text of one question and a chart of results.6

But ACS CAN, despite multiple requests to several contacts, will not release the full results of the poll, as other public policy advocacy groups have done.

It would be unfair to conclude that ACS CAN has something to hide, or that the poll was constructed in a way to be misleading. Conversely, it is not wise to give much weight to this poll when we know so little about it.


Notes

  1. Kansas Hospital Association. Public Opinion Poll: Medicaid Expansion and Access to Health Care in Kansas. Available at http://www.kha-net.org/communications/mediareleases/public-opinion-poll-medicaid-expansion-and-access-to-health-care-in-kansas_102768.aspx.
  2. Kansas Center for Economic Growth. Results of Kansas statewide poll. Available at http://realprosperityks.com/wp-content/uploads/2017/03/TSPolling_KCEG_KansasStatewide_PublicReleasePacket_2017.03.30-final-1.pdf.
  3. Weeks, Bob. Kansans are concerned about the level of state spending on schools. A public opinion poll asks whether Kansans are concerned about school spending, but leaves us wondering why they are concerned. Available at https://wichitaliberty.org/kansas-government/kansans-concerned-level-state-spending-schools/.
  4. See, for example Kansans say no to more taxes at https://wichitaliberty.org/kansas-government/kansans-say-no-taxes/, Poll: Wichitans don’t want sales tax increase8 at https://wichitaliberty.org/wichita-government/poll-wichitans-dont-want-sales-tax-increase/, and *New survey: Kansans remain misinformed regarding k-12 finance at https://kansaspolicy.org/new-survey-kansans-remain-misinformed-regarding-k-12-finance/.
  5. American Cancer Society Cancer Action Network. Poll: Kansas Voters Overwhelmingly Support Medicaid Expansion. Available at https://www.acscan.org/releases/poll-kansas-voters-overwhelmingly-support-medicaid-expansion.
  6. “Uninsured Kansans earning less than sixteen thousand dollars a year do not have access to any affordable healthcare coverage options. Kansas lawmakers are considering taking action that would provide these low?income residents access to coverage that would include primary care, preventive screenings, diagnostic testing, and cancer treatment services through the state’s KanCare program. The federal government would cover most of the cost to cover these state residents. Do you favor or oppose Kansas accepting the federal funds to increase access to healthcare coverage for thousands of hardworking Kansans through the state’s KanCare program?” Results at https://wichitaliberty.org/wp-content/uploads/2017/05/ACS-Kansas-Medicaid-poll-2017-exp-poll.pdf.

Breaking the statehouse budget deadlock

By Karl Peterjohn

The budget deadlock has begun at the Kansas statehouse. The legislature cannot leave Topeka until they have approved the next biennial state budget that will begin July 1. Usually, this includes the governor’s signature on that legislation. That might not happen this year. That’s the issue.

Governor Brownback is not willing to fund a multi-year, multi-billion spending bill demanded by the liberal legislative majorities in both houses. Earlier this year he vetoed a record-breaking income tax hike scheme. So far, the governor has been successful in having his vetoes sustained.

The pressure is going to be applied for the governor’s fiscally responsible Republican allies opposed to income tax hikes.

The powerful government employee spending lobbies, headed by arguably, the most powerful lobby in this state, the KNEA teachers’ union, that spending priorities for the reliably liberal Democrats in the legislature along with a large number of other self-described, “progressives,” or “moderates,” big spending Republicans now hold sizable majorities in both houses of the Kansas legislature. However, the bi-partisan spending factions are short of the two-thirds majorities required to override Governor Brownback’s repeated vetoes. The spending lobbies have come close, and did override the governor’s pass a record-breaking income tax hike proposal in the Kansas house, but that override effort ultimately failed by three votes in the senate.

The other powerful spending lobbies among the road contractors, hospitals, and the most powerful appointed body: ethically flawed and disciplined Chief Justice of the Kansas Supreme Court, Lawton Nuss, and his fellow band of black-robed lawyers on the Kansas Supreme Court continue to try and force massive state spending hikes. Several members of this court, including Nuss, represented school districts and school finance litigation issues before joining the court.

Massive tax hikes will be required to fund this spending spree. Spending estimates indicate the increases proposed would be $2.25 billion over five years according to State Representative John Whitmer. Expanding Obamacare under the guise of Medicaid expansion could be even more expensive after the first few years.

What is different with earlier Kansas budget battles besides another zero on the cost? In this digital age we are in, everything seems to have moved digitally into a win/lose, up/down, on/off configuration.

The lawyers on Kansas’ top court with their school funding edicts, will all be providing pressure and using the leftstream Kansas news media to try and push a handful of Republican legislators to shift their votes, so everyone can go home with a huge income tax hike. Sadly, this destructive tax hike is unlikely to be successful in funding all of the proposed state spending proposals.

This is the big spenders’ dream scenario for the next state budget.

The scenario for fiscally responsible legislators and Governor Brownback is less clear. In the analog days of the 20th century, when people looked for win-win, instead of zero-sum games where every winner means there must be a loser, compromise was the answer.

To his credit, Governor Brownback has expressed a willingness to compromise. Brownback has supported and signed smaller excise tax hike bills in recent years. He continues to be blasted by liberal media critics in the editorial pages across the state. These tax hikes tried to reach a legislative compromise that allowed a continued growth in state spending. This spending growth was being driven by the perpetual school finance lawsuits.

There is another solution if the legislative deadlock continues, and there is a recent and nearby example for Kansas elected officials to consider: let the people decide. The Kansas Constitution has a provision that, “…all political power in this state is inherent in the people.” This is in the Kansas Constitution’s Bill of Rights.

How would empowering Kansans work?

In 2016, in our neighboring state to the south, Oklahoma, the state spending lobbies convinced the legislature to place a one cent sales tax hike on the statewide ballot. In November 2016 Oklahoma voters decided the fate of this sales tax hike. It was rejected by the voters.

A compromise between Governor Brownback and his fiscally conservative GOP legislative allies on one side could be reached with the larger number of Democrat and Republican tax hike advocates in the legislature using this “let the people decide,“ approach. Kansas taxpayers need to have a say in the massive new spending schemes appearing at the statehouse.

The tax hike advocates can place their proposal for raising state taxes/spending on either the August or preferably the November 2017 election ballot where a statewide referendum could be held. Both sides could make their case to voters. All political power is inherent in the people, and letting the voters decide would certainly be preferable to having appointed lawyers in black robes setting state fiscal policy with big-spending legislators as their willing accomplices.

Karl Peterjohn is a former journalist and served two terms as a Sedgwick County commissioner between 2009-17. He advocated on behalf of Kansas taxpayers as the executive director of the Kansas Taxpayers Network between 1992-2009.

Shocking News about Kansas Education!

By Paul Waggoner. This column first appeared in the Hutchinson News.

Listening too often to Topeka politicians and administrators can leave a normal person feeling rather jaded, even used. Or maybe it’s the reporting, sometimes I just don’t know.

Such was the case Tuesday reading the News report of Kansas Dept of Education Deputy commissioner Dale Dennis speech to the local Rotary club (Hutchinson News, April 18, “Ed Official: Fund Gap numbers shocking”). His talk was filled with boilerplate and themes typical of the education establishment.

Mr. Dennis made multiple comparisons and statements of fact to prove his points. In the article by the News own Mary Clarkin, Mr. Dennis set up a paradigm of school under-funding by noting that “in 1992 base state aid per pupil was $3,600”, while now it is only $ 3,852. If the amount had just been adjusted for inflation “it would be $6001.12”. Those cheapskate legislators!

These disheartening numbers for funding over the last 25 years, Mr. Dennis told the crowd, “are shocking, shocking”. Then he went on to tout House Bill 2410 that would raise base state aid to $4,006 next year and $4,800 per pupil by 2021. The total cost of this bill would come to $750 million. Which, Ms. Clarkin summarizes, would get us “back to where the state should have been in 2015-16”’.

I am not an educator, but I am a business person and I am conversant with state budget and spending numbers. Mr. Dennis, I hope to show, should be embarrassed by his comments; but even more, the News should be embarrassed by their article.

The data on Kansas K-12 spending is easily accessible at the Kansas Dept of Education website ksde.org. Going back 20 years to Gov. Graves and 1997 you see total state funding of $1,815 million, rising to $3,950 million in 2016, a 117 percent increase! But the inflation rate during this period was only 47 percent, and the student count was up just three percent. Surprised?

Total spending (state/federal/local) is the best indicator of overall education financing. Plus you avoid disputes over how KPERS should be counted (whether state or local) and you get a genuine bottom dollar cost.

Many News readers need to let these numbers sink in. This is not spin, this is official data, Total spending went from $6,828 to $12,188 per pupil in barely 10 years.

Now Mr. Dennis was giving you a “fact” on base state aid, but he avoided telling our esteemed Rotarians that in the 1990s “base state aid” was 90 percent of the money Kansas provided our schools, but by 2005 it was only 65 percent of Kansas school funding, and in 2015 it was barely 50 percent. The ksde.org website listed over 25 different avenues state money now flows to local schools.

Ms. Clarkin of the News is an intelligent women and if some Department of Commerce representative came touting “shocking” job growth numbers in Kansas she surely would have noted evidence or context to the contrary. But Mr. Dennis utter factual inaccuracies go unchallenged.

Many seem to think it is “anti-education” to point out the real spending numbers. But to ignore the context of the 12 years prior to Brownback and the 80% increase in state K-12 spending is insane. Does any genuine public servant think that spending trajectory was sustainable?

The actual K-12 spending information is just a few clicks away from us for any school district or the state as a whole. The Rotarians of 2017 are a sensible group and will (I trust) rotate their minds with the actual data and judge accordingly.

But I, for one, am forever shocked (shocked!) by how disingenuous Topeka bureaucrats and our Kansas news media continue to be. And in that I expect I will have plenty of company as this legislative year moves forward.

Paul Waggoner is a Hutchinson resident and business owner. He can be reached with comments at [email protected]

Rich States, Poor States, 2107 edition

In Rich States, Poor States, Kansas improves its middle-of-the-pack performance, but continues with a mediocre forward-looking forecast.

In the 2017 edition of Rich States, Poor States, Utah continues its streak at the top of Economic Outlook Ranking, meaning that the state is poised for growth and prosperity. Kansas continues with middle-of-the-pack performance rankings, and after falling sharply in the forward-looking forecast, continues at the same level.

Rich States, Poor States is produced by American Legislative Exchange Council. The authors are economist Dr. Arthur B. Laffer, Stephen Moore, who is Distinguished Visiting Fellow, Project for Economic Growth at The Heritage Foundation, and Jonathan Williams, who is vice president for the Center for State Fiscal Reform at ALEC.

In addition to the printed and pdf versions of Rich States, Poor States there is now an interactive web site at www.richstatespoorstates.org.

Rich States, Poor States computes two measures for each state. The first is the Economic Performance Ranking, described as “a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment — all of which are highly influenced by state policy.” The process looks at the past ten years.

Looking forward, there is the Economic Outlook Ranking, “a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs, and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”

Economic outlook ranking for Kansas and nearby states. Click for larger.
For economic performance (the backward-looking measure), Kansas ranks twentieth. That’s up from twenty-seventh last year.

In this year’s compilation for economic outlook, Kansas ranks twenty-sixth, up one position from the previous year, but down from eighteenth and fifteenth the years before. In 2008, the first year for this measure, Kansas was twenty-ninth.

Kansas compared to other states

A nearby chart shows the Economic Outlook Ranking for Kansas and some nearby states, shown as a trend over time since 2008. The peak of Kansas in 2013 is evident, as is the decline since then.

Why Kansas fell

Kansas fell in the Economic Outlook Ranking from 2013 to 2016 and moved by just one position in 2017. To investigate why, I gathered data for Kansas from 2008 to 2017. The nearby table shows the results for 2017 and the rank among the states, with the trend since 2008 shown. A rank of one is the best ranking. For the trend lines, an upward slope means a decline in ranking, meaning the state is performing worse.

There are several areas that account for the difference.

The most notable change is in the measure “Recently Legislated Tax Changes (per $1,000 of personal income)” Kansas fell four positions in rank. By this measure, Kansas added $2.66 in taxes per $1,000 of personal income, which ranked forty-sixth among the states. This is a large change in a negative direction, as Kansas had ranked seventh two years before.

For the state liability system, Kansas ranks nineteenth, when it was fifth two years ago.

Kansas remains one of the states with the most public employees, with 669.8 full-time equivalent employees per 10,000 population. This ranks forty-eighth among the states.

Kansas has no tax and spending limits, which is a disadvantage compared to other states. These limitations could be in the form of an expenditure limit, laws requiring voter approval of tax increases, or supermajority requirements in the legislature to pass tax increases.

How valuable is the ranking?

Correlation of ALEC-Laffer state policy ranks and state economic performance
Correlation of ALEC-Laffer state policy ranks and state economic performance
After the 2012 rankings were computed, ALEC looked retrospectively at rankings compared to actual performance. The nearby chart shows the correlation of ALEC-Laffer state policy ranks and state economic performance. In its discussion, ALEC concluded:

There is a distinctly positive relationship between the Rich States, Poor States’ economic outlook rankings and current and subsequent state economic health.

The formal correlation is not perfect (i.e., it is not equal to 100 percent) because there are other factors that affect a state’s economic prospects. All economists would concede this obvious point. However, the ALEC-Laffer rankings alone have a 25 to 40 percent correlation with state performance rankings. This is a very high percentage for a single variable considering the multiplicity of idiosyncratic factors that affect growth in each state — resource endowments, access to transportation, ports and other marketplaces, etc.

Rich States, Poor States compilation for Kansas. Click for larger version.

Which Kansas governor?

In Kansas, a governor is proud of savings and efficiencies.

Can you guess which Kansas governor and administration did these things?

  • Looked for future highway projects “where it seemed the amount of money set aside exceeded the need, or where the scope of individual projects had changed,” and took credit for $278 million in savings.

  • Took credit for saving $67 million by adjusting the inflation rates used in estimating future project costs.

  • Took credit for $306 million in savings by spending reserve funds, deciding that money wasn’t needed just “sitting in the bank.”

  • Refinanced bonds so that payments would be lower for a few years, but higher afterwards.

If you guessed Kathleen Sebelius, you’re correct.

Sources are: Hanna, John. $1 billion claim falls on KDOT — Analysis: Governors’ savings often readjustments. Topeka Capital-Journal, January 30, 2006. Available at http://cjonline.com/stories/013006/kan_onebil.shtml#.WP4Z__krLWW.
Moon, Chris. New ad claims huge savings — $1 billion a focal point of Sebelius’ re-election bid despite skeptics. Topeka Capital-Journal, August 07, 2006. Available at http://cjonline.com/stories/080706/leg_govad.shtml#.WP4bvvkrLWU.

Kansas House voting on Medicaid expansion

Here’s a table of the three votes taken in the Kansas House of Representatives in February and April on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

Vote 3 on April 3 was to override the governor’s veto. 84 votes are required for a successful override.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Kansans are concerned about the level of state spending on schools

A public opinion poll asks whether Kansans are concerned about school spending, but leaves us wondering why they are concerned.

A public opinion poll commissioned by Kansas Center for Economic Growth asks questions so vague that the results could be interpreted in many ways.

The March 30, 2017 press release on the poll announced: “Nearly all Kansas voters are worried the state is not investing enough public education. Eighty-five percent of Kansas voters feel concerned about the state’s level of spending on public education.”1

Here’s the question asked in the survey:2

“Q.5 Would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”

(The reported results are: Very concerned 63%, Somewhat concerned 20%, A little concerned 5%, Not at all concerned 8%, (Don’t know/refused) 3%)

Let me ask you: Are you concerned about the level of spending on public education? I am. And there might be many reasons why Kansans are concerned.

  • Some people think the state spends too much
  • Some people think the state spends too little
  • Many people know that school spending is a large portion of the state’s budget, so naturally they are concerned, no matter if their opinion is that spending is too high or too low
  • Some people are concerned that state spending is misdirected and inefficient

There could be other reasons why people are concerned about the level of state spending on education. But this question does not give any guidance as to why people are concerned.

Later in the survey another question was asked: “Q.12 As you may know, the Kansas Supreme Court recently ruled, unanimously, that the state’s spending on public education was unconstitutionally low and needed to be fixed by June 30th. With this in mind, would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”

Still, the question did not ask whether people are concerned because spending is too high or too low. As a result, the answers to the survey questions can be used to advance nearly any agenda.


Notes

  1. Kansas Center for Economic Growth. New statewide poll shows overwhelming support for rollback of Brownback tax plan. http://realprosperityks.com/media/press-releases/new-statewide-poll-shows-overwhelming-support-roll-back-brownback-tax-plan/.
  2. Kansas Center for Economic Growth. Results of Kansas statewide poll. http://realprosperityks.com/wp-content/uploads/2017/03/TSPolling_KCEG_KansasStatewide_PublicReleasePacket_2017.03.30-final-1.pdf.

Kansas House voting on Medicaid expansion

There has been another vote on this bill, and the table has been updated. Click here.

Here’s a table of the two votes taken in the Kansas House of Representatives in February on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Kansas Senate voting on Medicaid expansion

Here’s a table of the two votes taken in the Kansas Senate this week on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

Reporting on this issue from The Sentinel is at Senate Advances Medicaid Expansion Proposal.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Highway budget cuts and sweeps in Kansas

A public interest group makes claims about Kansas roads and highways that are not supported by data. It’s not even close.

Excerpt from fundraising email. Click for larger.
A fundraising email sent by Save Kansas Coalition makes claims about Kansas roads and highways that readers will recognize as a few of the standard complaints common among Kansas spending and taxation advocates. It’s charitable, though, to call them complaints, because they are actually outright lies.

“Budget cuts and sweeps from the Bank of KDOT have decimated our state’s transportation infrastructure investments.” Decimate means “to reduce drastically” or “to cause great destruction or harm to.”1

Total spending on major road programs in Kansas. Click for larger.
Spending on major road programs in Kansas. Click for larger.
Reading that, you might think that spending has been cut by — how much? 10 percent? That doesn’t sound like decimating. 50 percent? 75 percent? That’s more like what decimating means.

So what is the story on Kansas Department of Transportation spending? Nearby is a chart. It shows amounts of money actually spent on road and highway programs, according to KDOT’s annual financial reports. SKC is correct, partially. There have been sweeps from KDOT to the general fund. Those are not a good idea, even though they’ve been practiced for many years. But as shown nearby and in more detail at Spending on roads in Kansas spending has not declined. It been up and down a little, but is higher than it was in 2007 and 2008, before the recession.

In particular, spending on maintenance has been fairly level until dipping a bit in 2016. Spending on preservation rose rapidly until dipping, also in 2016. It’s still twice as high as in the pre-recession years of 2007 and 2008.

Does this sound like spending has been decimated?

Transfers from sales tax to Kansas highway fund. Click for larger.
By the way, there are sweeps from sales tax to the highway fund. Nearby is another chart showing how much sales tax was transferred to the highway fund. In 2006 the transfer was $98,914. In 2016 it was $517,698, an increase of $418,784 or 423 percent.

SKC also writes: “Whereas we formerly maintained 1200 miles of roadway each year, the state now can only afford 200 miles of upkeep. That means road repair once every 50 years!”

Each year KDOT publishes a list of the road projects underway. I’ve obtained this data in machine-readable form for five years, and I present the relevant data in a nearby table.

(A few definitions: According to KDOT, “The Preservation program protects the public’s investment in its highway system by maintaining the ‘as built’ condition of roads and bridges. Projects in this group range from roadway surfacing rehabilitation and bridge repairs to pavement and bridge replacement.”2 For Modernization, KDOT says “Projects under this program are designed to enhance safety and/or improve roadways by adding shoulders, flattening hills, straightening curves and upgrading intersections on already existing roadways.”3)

While SKC isn’t specific in what it means by “maintained” or “upkeep,” it’s possible it is referring to the category “Non-Interstate Resurfacing (PMS 1R).” As you can see in the table, the number of miles in the program has risen for the past three years, and is far above the 200 miles SKC claims we can afford.

The claims made by Save Kansas Coalition don’t add up. Ironically, SKC’s website promises “A willingness to engage in meaningful discussion, in-depth research and critical analysis is vital to the health of the Kansas economy.” But nothing in the record of relevant data supports these claims — unless SKC has secret data it isn’t willing to share.

Sum of KDOT projects, selected categories, measured in miles. Click for larger.


Notes

  1. Merriam-Webster. https://www.merriam-webster.com/dictionary/decimate.
  2. Appendix to the Kansas Department of Transportation’s 2016 Annual Report.
  3. ibid

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 during 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 the periods 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 the 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.


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.

In Kansas, the war on property rights

John Todd makes an appearance on The Voice of Reason with Andy Hooser to talk about proposed legislation in Kansas that would be harmful to private property rights. View below, or click here to view on YouTube. Recorded on March 16, 2017.

For more information on this important issue, see In Kansas, the war on blight continues: Kansas governments are trying — again — to expand their powers to take property to the detriment of one of the fundamental rights of citizens: private property rights.

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. I’ve gathered these figures present them in an interactive visualization. In the visualization, there are these available tabs:

Table: A table of data. For each month the two data items supplied by the state are the actual value and the estimated value. 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 the 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).

Since July 2014, individual income tax collections have been relatively flat. Corporate income tax collections are on a slight downward trajectory.

Retail sales tax and compensating use tax have been mostly rising. 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 rose rapidly since July 2015 when higher tax rates on these products took effect. After peaking, collections are declining.

Severance taxes — tax collected on natural gas and oil as it is extracted from the ground — have been on a downward trend since July 2014 as prices for these products have fallen. This is a sizable tax. In June 2014 collections of this tax were running at about $143 million per year. For February 2017, the rate is $32 million annually.

Click here to use the visualization.

Source of data is Kansas Division of the Budget.

Lessons from Kansas tax reform

What can the rest of the nation learn from our experience in Kansas? Come to think of it, why haven’t we learned much?

Economists from American Legislative Exchange Council have looked at Kansas and derived some lessons from our state’s struggle with tax reform. The document is titled Lessons from Kansas: A Behind the Scenes Look at America’s Most Discussed Tax Reform Effort. A few remarks and quotations:

It may be difficult for us in Kansas to see how the rest of the country views our state. But it’s all about the struggle between those who want more government, and those who want more private sector activity: “… it is clear to most observers of state policy at this point Kansas was, and continues to be, a flashpoint in debates about state tax policy. That flashpoint has served as something of a proxy war between big government advocates and those who would prefer to shrink the size and scope of state government.”

While taxes were cut, the state failed to make the other needed reform: “Spending reductions necessary to implement the plan were eschewed in favor of other tax increases, making any honest judgement of the original plan’s success or failure impossible.”

On the 2012 plan, was it all for business pass-throughs, or for everyone? “Enacted an estimated $4.5 billion in tax relief over five years, about 80 percent of which was for individuals and 20 percent for business pass-through income.”

We have to remember the failure of the legislative process in 2012 and the next year: “It is important to note at this point that the revenue increasing offsets included in the 2013 tax plan were nowhere near as comprehensive as the revenue raising offsets in Governor Brownback’s original 2012 tax reform proposal. It was this discrepancy in revenue raising offsets and the failure to rein in state spending that would ultimately lead to revenue problems for Kansas down the road.”

Credit downgrades are a sign of a mismatch between revenues and expenses. Those who want more spending say the downgrades are caused by a lack of revenue, but we could have cured the mismatch by reforming spending, too: “Contrary to this popularly reported narrative, Moody’s cited much more than just recent tax cuts as the rationale for a downgrade, specifically failure to reduce spending to offset tax cuts, pension liabilities and state debt.

The purpose of tax cuts? Let us keep more resources in the productive private sector: “It is certainly true that in the years following the tax reductions, Kansas did experience lower revenue collections, even lower than what had been projected. But, part of the goal of the Kansas tax reform was to reduce the amount of money taken in by state government and enhance the resources available to the private sector. Importantly, however, was the resistance to any meaningful spending reductions. Even as the 2012 tax reductions were projected to let Kansans keep $4.5 billion more of their own money, the state increased spending in 2012 by $432 million.”

Would more taxes help the Kansas economy? “In a late 2012 literature review on this topic, William McBride, former Chief Economist for the Tax Foundation, found that of 26 peer-reviewed academic studies since 1983, only three fail to find a negative effect on economic growth from taxes.”

The 2015 legislative session: “A block of legislators held out for reductions in the cost of government rather than tax increases but they were unable to get a majority. … The final plan that passed both houses and was signed by Governor Brownback included two main tax increases. The state raised the cigarette tax by 50 cents per pack and increased the sales tax rate from 6.15 percent to 6.5 percent. The two tax increase proposals added up to $384 million in new state revenue and were bolstered by $50 million in spending cuts, although there was still a net increase in spending.”

Our legislature failed the people of Kansas: “The first lesson to glean from the Kansas experience is that politics affects policy. The final reforms that passed in 2012 were not the reforms that anybody wanted. Specific tax reform ideas are easily diluted and changed, and without the political will to fix imperfect reforms, unintended consequences can be difficult to avoid.”

Then, politicians should be so boastful. Don’t overpromise. (Ask Barack Obama about that. He said if we don’t pass the ARRA stimulus bill, the unemployment rate would rise above a certain level. Well, the stimulus passed, the unemployment rate went above that level, and it was several years before it fell below. In other words, unemployment was worse with the stimulus than Obama said it would be without the stimulus.) “The second important lesson that can be learned from the Kansas experience is economic growth resulting from bold tax reductions takes time. Governor Brownback’s previous comments about the Kansas tax reforms being ‘a shot of adrenaline’ to the state’s economy continued to hound him throughout the ups and downs of revenue and economic reports. Setting expectations too high or too early can make pushing forward with future reforms nearly impossible, while setting unrealistic expectations can lead to the unwinding of sound economic reforms.”

Finally: “Even though the tax reductions improved economic growth, the lack of commensurate spending reductions led to trouble for the state’s budget. Budget shortfalls and tough negotiations about possible tax increases mean uncertainty for businesses and families, which can hamper some of the positive economic effects of decreasing taxes.”

Kansas manufacturing and oil not recovering

While total employment in Kansas is growing, two industries are the exception.

Kansas employment, seasonally adjusted, selected series. Click for larger.
Newly revised data from the Bureau of Labor Statistics lets us examine Kansas employment. This data comes from the Current Employment Statistics, which is a monthly survey of employers.1 I’ve gathered this data and have presented it in an interactive visualization. The accompanying charts are derived from that.

The first chart shows the relative change in jobs for each series, using seasonally adjusted values. Total private sector employment is growing. Employment in mining and logging, which is dominated in Kansas by the oil and gas industry, has cratered since its peak in 2014. Manufacturing employment has remained steady since 2010, but at a lower level than in the past.

Kansas manufacturing employment, not seasonally adjusted, selected series. Click for larger.
Looking at manufacturing in more detail, we see that aerospace manufacturing has been on a long downwards trend at the time total manufacturing has remained relatively level. (Aerospace employment is available only as unadjusted data, so it’s shown in a separate chart with unadjusted manufacturing.)

You can access the visualization and create your own examples through the article Kansas employment by industry.


Notes

  1. Bureau of Labor Statistics. Current Employment Statistics data and their contributions as key economic indicators. www.bls.gov/opub/mlr/2016/article/current-employment-statistics-data-and-their-contributions-as-key-economic-indicators.htm.

Kansas employment by industry

An interactive visualization of Kansas employment by industry.

The Bureau of Labor Statistics is an agency of the United States Department of Labor. It describes its mission as: “The Bureau of Labor Statistics of the U.S. Department of Labor is the principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy. Its mission is to collect, analyze, and disseminate essential economic information to support public and private decision-making. As an independent statistical agency, BLS serves its diverse user communities by providing products and services that are objective, timely, accurate, and relevant.”1

BLS provides monthly employment statistics. It has just updated revised numbers for 2016. I’ve gathered these for Kansas and present them in an interactive visualization.

This data comes from the Current Employment Statistics, which is a monthly survey of employers.2

The tabs along the top of the visualization hold different views of the data. Employment figures are in thousands. You may view seasonally adjusted or unadjusted data. Some views display the number of jobs, while others display the change in jobs by industry since the first year or month that is selected. When using the charts that display annual averages, be aware that using a time selection with a partial year will not provide accurate results.

Two “industries” that are closely followed are “Total Nonfarm” and “Total Private.” These, obviously, are not industries in themselves, but are sums of other industries. There are other examples like this.

Click here to access the visualization. The visualization was created by myself using Tableau Public.

Example from the visualization, showing points of control. Click for larger.


Notes

  1. Bureau of Labor statistics. About BLS. https://www.bls.gov/bls/infohome.htm.
  2. Bureau of Labor Statistics. Current Employment Statistics data and their contributions as key economic indicators. www.bls.gov/opub/mlr/2016/article/current-employment-statistics-data-and-their-contributions-as-key-economic-indicators.htm.

For some, the Kansas tax increase wasn’t big enough

Some Kansas Senators were refreshingly honest about a recent tax bill: They’re coming back for more.

On February 17, 2107, the Kansas Senate voted to pass HB 2178, titled “Substitute for HB 2178 – Concerning income taxation; relating to determination of Kansas adjusted gross income, rates, itemized deductions.” The effect of the bill was to increase taxes.

The vote prevailed 22 to 18. Governor Brownback vetoed the bill. The House overrode the veto, but the Senate did not, with 24 senators voting to override the veto. Two-thirds, or 27 votes, were required.

In explanations of the February 17 vote, some Kansas Senators were honest about their beliefs and their future plans. Which are: First, the bill didn’t raise enough money to suit them. Second: Despite the passage of the bill, they’re coming back for more. (These remarks were made before the Governor’s veto.) Here’s Lynn Rogers, joined by two other senators (emphasis added):

Mr Vice President: This bill does not solve Kansas’ budget problem. It is the best start we have seen in 4 years. But it does not address our borrowing from the Bank of KDOT or KPERS, nor does it address our school finance needs. I appreciate adding the 3rd bracket and closing the LLC loophole. However, the weight of the bill is still on the backs of middle class families. Many of us campaigned on a platform of “fixing Topeka.” Kansans overwhelmingly asked us to work together. I was sorely disappointed in yesterday’s behavior. I am willing to support this as the best we have today. But I warn us all, we will have to return to this chamber to readdress our fiscal state. — LYNN ROGERS
Senators Faust-Goudeau and Francisco request the record to show they concur with the “Explanation of Vote” offered by Senator Rogers on Sub HB 2178.

Also, Marci Francisco, again joined by two others (emphasis added):

Mr. Vice President: I initially voted “Pass” but change my vote to “AYE” on Sub HB 2178. I appreciate the work done in the House to craft a tax bill to eliminate the non-wage income “loophole”, repeal the future formulaic income tax reductions, and second tier for married individuals filing jointly and earning over $30,000 at 5.25%, higher than the current rate of 4.6%. It sets the third tier for married individuals earning over $100,000 at 5.45%, only .2% higher and a full percentage point less than it was in 2012, putting more of the burden on low and middle income Kansans. It continues to make our Kansas tax form complicated because it does not reinstate the deductions for mortgage interest and property tax allowed for on the federal tax form. The bill does not raise enough revenue to balance the current budget. None the less, I vote “AYE” to support this as a first step in this legislative session. I also pledge to continue to work on proposals to bring fairness to the Kansas tax structure and an appropriate amount of revenue to the state. — MARCI FRANCISCO
Senators Kelly and Pettey request the record to show they concur with the “Explanation of Vote” offered by Senator Francisco on Sub HB 2178.

Vote-switching in the Kansas House of Representatives

A look at voting behavior in the Kansas House of Representatives regarding an important tax bill.

Recently the Kansas House of Representatives held a series of votes on HB 2178, titled “Substitute for HB 2178 – Concerning income taxation; relating to determination of Kansas adjusted gross income, rates, itemized deductions.” The effect of the bill was to increase taxes.

There were three recorded votes on this bill. On February 15, 2017, the House, acting as Committee of the Whole, passed the bill on a vote of 83 to 39. 63 votes are required for passage. This is one step a bill takes as it becomes law.

On the next day, February 16, the House passed the bill on final action by a vote of 76 to 48. This is the final step the House needs to take to pass a bill into law. (On the next day, the Senate also passed the bill, sending it to the governor.)

The governor vetoed the bill. On February 22, the House considered a motion to pass the bill notwithstanding the governor’s veto. A two-thirds majority — 84 votes — are required to override a veto. This motion passed by a vote of 85 to 40, thereby overriding the governor’s veto. (The Senate also considered an override motion, but it did not pass, so the veto was upheld and this bill did not become law.)

Of interest is the vote-switching in the House as the bill passed through three rounds of votes. In all cases a vote of “Yea” was a vote in favor of making the bill into law. (This is not always the case.) In the nearby table, I’ve shaded the instances where members switched votes.