Stephen Ware, Professor at the University of Kansas Law School:
“What’s unusual about Kansas is about how little the people’s wishes matter. There are no checks and balances in the judicial selection process.”
********. It’s called a retention voted [sic]. Don’t like Justice Dan Biles? Vote him out in a year. And, hey, aren’t all professors supposed to be crazy liberals?
I asked Mr. Ware about the value of retention votes in giving a voice to the people. As it turns out, he said, no Kansas Supreme Court justice has ever lost a retention vote, and only one lower court judge has. “This is consistent with the pattern around the country, in which judges hardly ever lose retention votes. That’s mostly because there’s no rival candidate to spark a real debate.”
So it appears that in Kansas, retention votes have not been a meaningful way for voters to engage in the process of choosing their judges. However, I will trust this blogger to educate us about crazy liberals.
While it has become increasingly common for members of the U.S. Supreme Court to make news by public comments, particularly during their summer recess, Wichita Pachyderm Club members had the opportunity for Kansas federal district Judge Eric F. Melgren to quote from his judicial colleagues in a way of defending the Constitution’s concept of the separation of powers. Judge Melgren cited various appellate court rulings, particularly as they related to the largely little known Chevron decision, that damages that constitutional protection at his July 21 speech in Wichita.
Judge Melgren, a former member of this club before his selection as the U.S. attorney for Kansas that was followed by his 2008 elevation to a federal district court post, began by discussing this governmental paradox, “those who favor (government) efficiency, or inefficient, representative government,” and he quoted from three appellate decisions as well as several of Madison’s Federalist papers to make this point.
The founders feared tyrannical government and worried about this new government having too much power. That is the reason for the three separate branches where Congress writes the law, the executive branch administers the law, and the judiciary interprets it. This system of checks and balances make government very inefficient, and Melgren cited Madison’s Federalist 47.
Judge Melgren followed by quoting Supreme Court Justice Clarence Thomas’s opinion in the Department of Transportation v. American Railroads case on this point. Our progressive law has now put the power of taking a general federal statute and having a federal agency basically write the rules and regulations that are then administered by the bureaucracy, and if a dispute arises, is then settled in the agencies own administrative law courts. Congress, often the executive, and unless extensive litigation occurs, the courts are all bypassed. The Chevron decision pushed these legal disputes away from the courts and back to bureaucratic resolutions.
This creates an environment where the bureaucracy has assumed much of the law making powers, administers the law, and then has their own administrative courts to interpret it.
In theory, the bureaucracy is part of the executive branch and reports to the president. However, as U.S. attorney Melgren was reminded by his staff that they would be there after he had left that office. This also applies to the rest of the federal government’s bureaucracy.
To amplify upon this situation Melgren quoted from then federal appeals court judge Gorsuch in an immigration case that turned on the legal question of which conflicting rules from the government applied. The U.S. Supreme Court’s little known but legally controversial Chevron decision took this issue away from the federal courts and gave it to the professional bureaucracy. Gorsuch’s opinion was part of this 10th circuit (federal appellate court) case involving the U.S. justice department in 2016.
Then President Obama’s rule making authority was at issue, that created this legal problem in the realm of federal administrative law making. This was also a problem in Thomas’ opinion in the railroad case.
Justice Thomas warned about this dangerous trend. This amplified the warning Gorsuch bemoans in the weakening of the separation of powers in his appellate case. Thomas warned that too often we abrogated and allowed the power to make laws by administrative fiat. It might help make, as is often suggested, “make the trains run on time,” although Judge Melgren expressed serious doubts on this point there was no doubt about the cost to our Constitution, and the individual liberty it is supposed to protect.
Judge Melgren spoke about the Chevron decision’s impact where the courts must defer to administrative agencies. “Apply the law as it is, and not how they wish it to be,” citing Gorsuch’s opinion, this means that the separation of powers is being totally undermined by the Chevron edict. The solution is: legislation. Law writing is arduous and difficult, but this is not a bug in the system, but this difficulty is a constitutional protection.
This shift in power under Chevron would astonish the founders if they could see our current system as seen by the growth in the federal government in general. Judge Melgren pointed out that within the lifetime of some of the Pachyderm Club members the number of judges in the federal court system in Kansas had expanded from one in 1940 to six today, and that excludes a number of senior federal judges who have officially “retired,” but still on occasion hear about 1/3 of the total number of cases in the three federal courthouses (Wichita, Topeka, and K.C.) in Kansas. Melgren mentioned his late colleague Judge Brown, who was an appointee of President Kennedy and was still hearing cases while over 100 years old. Judge Brown passed away at the age of 104.
Melgren readily acknowledged that the separation of powers was not absolute. The federal court system underneath the supreme court is created by congress. The close to 1,000 federal district and appellate judges operate nationally within an organization structure created by Congress.
Melgren’s last case he quoted was from Kansas Supreme Court Justice Caleb Stegall’s opinion in the selection of district court judges, Sullivan v. Kansas. Stegall’s separation of powers argument cited Madison’s Federalist 51 concerning the concentration of power in any one government agency.
Stegall applied the warnings over the separation of powers and the direction that state law has taken going back to Kansas Supreme Court cases granting additional administrative power going back to a 1976 ruling that involved the complexity created by the separation of powers. The separation of powers was a critical constitutional concept that is a key to protecting our liberties from government expansion.
This cautionary litany of judicial rulings quoted by Judge Melgren served as a legal foundation concerning our Constitution and the separation of powers legal structure. The Chevron decision that weakens our liberty, and expands government’s powers, places a roadblock in the effort to preserve, protect and defend our liberty with this important constitutional protection of the separation of powers today.
Video of this speech is available on YouTube. Click here.
The candidates filed reports covering the period October 1, 2010 through October 13, 2010. These reports showed Pompeo raising $153,535 and Goyle $92,491 during that time frame. Ending cash balances on this report were Pompeo with $500,939 and Goyle with $133,095.
Since then, the candidates have filed several “48 hour notice” reports. The total of these reports through October 31 have Pompeo raising $141,250 and Goyle $84,101.
Dave Trabert, President of the Kansas Policy Institute, spoke at the December 12, 2014 Wichita Pachyderm Club meeting. His program was titled “Debunking False Claims about Kansas Budget and Economy and Kansas Policy Institute Budget Plan for Kansas — How to balance the state budget without service reductions or tax increases.”
View video below, or click here to view at YouTube.
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.
Of 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.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 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
Brownlee cites $7.7 billion as the shortfall or unfunded liability in KPERS. This is highly misleading. It’s true on a certain technical level, but on an economic level — meaning what really counts — it is dangerously misleading. Neither Brownlee or the KPERS Fiscal Impact Report he refers to mention $1.7 billion in asset value losses that don’t have to be included in reports. (It’s possible with recent rises in financial markets that some of theses loses have been recouped, but we don’t know that at this time.)
Additionally, the $7.7 billion figure is based on an unrealistic assumption: that KPERS investments can earn an annual return of 8.0 percent. Since most calculations involving retirement plans involve long periods of time, even a small change in the rate of return can produce some large changes in values. KPERS actuaries say that if the rate of return was 7.5 percent instead of 8.0 percent, that small change would cause an additional unfunded liability of $1.3 billion.
Adding these factors together — the reported unfunded liability, the unrecognized losses, and a more realistic rate of return — and we come up with an unfunded liability of $10.7 billion. And some would say a 7.5 percent assumed rate of return is too high, which adds even more unfunded liability. For example, the Employees Retirement Income Security Act (ERISA) recommends that private employers assume a 6.1 percent return on assets in private pension plans. And with a note of irony, in illustrations of what benefits from a defined contribution plan would look like, the KPERS report uses 7.0 percent return prior to retirement and 5.0 percent return following retirement.
Illustration of how the rate of return impacts the growth of a stream of contributions over time: Small changes in rates produce large differences in ending balances. KPERS uses 8.0 percent in its assumptions, while some authorities recommend 6.1 percent.
What we’re not facing is the fact that the KPERS unfunded liability is much larger than reported by Brownlee and by most of the other news media in Kansas.
A second problem is the largely successful attempt by state employee unions to convince Kansans that the KPERS unfunded liability can be paid off only if the present defined-benefit system is maintained. Supporters of the present system say that if a defined-contribution plan is established for new employees, it will be too expensive to pay off the unfunded liability.
But the fact is that unless the state wishes to renege on its promises, the unfunded liability must be paid off. It doesn’t matter whether it’s paid off as part of a reformed defined-benefit or new defined-contribution plan, or even if the state were to appropriate funds apart from payroll contributions. The bill must be paid.
And since the Kansas Legislature has shown itself incapable or unwilling to funding the promises it has made, its vital that we stop enrolling new employees in the present defined-benefit plan.
While the present legislature seems intent on solving the problem, it’s hard to place much faith and trust in their seriousness. Consider the motives and incentives of legislators: If legislators were to give state employees raises, that would require them to raise taxes or cut services. But granting generous retirement benefits is another matter. The bill for these benefits doesn’t come due until many years later — as we are now painfully aware. Except, of course, that the legislature should be paying, on an annual basis, the amount necessary to provide the promised benefits. The Kansas Legislature hasn’t done this for a long time, and that’s part of the reason why KPERS is in a mess.
Promises by lawmakers to behave well in the future must be discounted. The present defined-benefit retirement plan allows them to make promises they don’t have to pay for. With the discipline of a defined-contribution plan — the 401(k)-type plans that almost all private sector workers have — we don’t have to worry about present legislators heaping debt on yet another future generation.
Note: Today’s editorial by Brownlee holds this conclusion: “The state may also need to make additional reforms to limit future liabilities for new employees, such as reducing plan benefits or possibly switching to a 401(k)-like plan. Climbing out of this hole will be a struggle. But the sooner the state starts, the better. At the very least, it needs to stop digging the hole even deeper.” Canceling the defined-benefit plan for new employees is the best way to “stop digging.”
Kansas schools could receive $21 million annually in federal funds if the state had adequate information systems in place.
One of the nuggets buried in a policy brief released last week by Kansas Policy Institute is that the state is not capturing all federal funds to which it is entitled. That is, would be able to capture if the state had adequate information systems in place. Here’s a section of the policy brief:
Capture federal reimbursement of K-12 KPERS costs
States are entitled to be reimbursed by the federal government for the pension costs of school employees engaged in the delivery of federally-funded services, such as Special Education and Food Service. Kansas, however, foregoes federal reimbursement because many school districts’ payroll systems lack the ability to properly capture the necessary information. (Estimates are not permitted; the information must flow through payroll systems.) The State should require that school districts utilize a single state-provided or outsourced payroll system to capture annual federal reimbursement of $21 million.
Here is a sum of money that Kansas schools could receive if only Kansas had the necessary information systems infrastructure in place. A side benefit would likely be better management of school systems’ payroll if such a system was in place.
Is $21 million a significant sum when the state spends several billions on schools each year? The Kansas school spending establishment contends that a tax credit scholarship that might divert $10 million from the state to private schools is something that schools can’t afford. But here’s an example of twice that amount being available if Kansas school leadership had the will to obtain it.
The Kansas Policy Institute policy brief “A Five-Year Budget Plan for the State of Kansas: How to balance the budget and have healthy ending balances without tax increases or service reductions” is just ten pages in length. It may be downloaded from KPI here or alternatively from Scribd here (may work better on mobile devices). A press release from KPI announcing the policy brief is at 5 Year Budget Plan Outlines Path To Protect Essential Services and Tax Refom.
At a meeting of the South-central Kansas legislative delegation on January 5, 2010, Dave Trabert, president of the Kansas Policy Institute spoke to legislators about ways that Kansas can make it through the upcoming legislative session without raising taxes or cutting essential services. Due to the relatively short time limit given to speakers he was not able to present all his remarks, but his complete remarks are presented here.
Good evening. My name is Dave Trabert and I’m president of Kansas Policy Institute.
I can’t imagine what it must be like to be in your positions as you head to Topeka next week, facing large budget shortfalls and being pressured to raise taxes.
The situation has been framed as a choice between raising taxes or cutting essential services, neither of which are good choices.
I’m here tonight to share some good news: our research strongly indicates that neither of those bad choices is necessary.
State agencies are probably holding more than enough cash reserves to get us through the immediate crisis … and we can reduce spending without cutting services by making government operate more efficiently.
I can’t cover everything in 3 minutes, but the highlights are in your packets.
The first document is a list of unencumbered carryover cash balances held by each state agency. Not counting money set aside for unemployment, the billion in idle cash that belongs to local governments and several other funds, state agencies started this year with over $800 million in carryover cash reserves. Universities had another $300 million.
Sure, some of it might not be readily available. But no audits have been conducted to prove that they need it. Should we just take their word?
Next, tax increases. Revenues are down now because of the recession, but taxes increased 40% from 2001 to 2008 … more than double the rate of inflation.
But what about that $billion in “cuts” and “exemptions”? The Kansas Department of Revenue’s list is the 3rd document … the top 5 amounts are property tax, car tax, EIC, single income rate reductions and food sales tax rebates.
Do they really believe that these changes caused the budget crisis? Or could it be that spending grew faster than revenues in 4 of the last 5 years?
And how can you deal with school districts suing taxpayers for more money?
Well, they also have large cash reserves … not counting capital projects and debt service, they started this year with $700 million left over from prior years … and despite their protests, [Kansas Deputy Commissioner of Education] Dale Dennis says they can access that money … if they want to.
Schools are also a great example of how government can operate more efficiently.
We released a study today showing that per pupil expenditures in 2008 ranged from $9,017 to $25,240. If the high spenders had just been at median for similar sized districts, it would have saved $636 million. Legislative Post Audit also says many districts could save a lot of money, offering 80 recommendations last year.
The State has many viable options to get through this crisis without raising taxes or cutting essential services. That is really good news!
It won’t be easy, but we can come out of this recession in good shape and ready to take on the competition for jobs and economic growth.
Kansas Policy Institute stands ready to help. Thanks for your time.
Kansas schools can transfer funds? A recent legislative update by Kansas Representative Bob Brookens, a Republican from Marion, tells readers this about Kansas school finance: “Most school districts in our area braced for this possibility by taking advantage of a law passed last year by the legislature; the new provision allowed schools this one time to transfer funds from certain other areas to their contingency reserve fund, just in case the state had a budget hole in fiscal year 2011; and most of the school districts around here moved all they were allowed to.” Thing is, no one can seem to remember the law Brookens refers to. There were several such laws proposed, but none made their way through the legislature to become law.
Ranzau stand on federal funds profiled. New Sedgwick County Commission member Richard Ranzau has taken a consistent stand against accepting federal grant funds, as explained in a Wichita Eagle story. While his efforts won’t presently reduce federal spending or debt, as explained in the article by H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs at Wichita State University (“Those funds are authorized, they’re budgeted, they’re appropriated, and (a) federal agency will commit the funds elsewhere.”), someone, somewhere, has to take a stand. While we usually think about the federal — and state — spending problem requiring a solution from the top, spending can also be controlled from the bottom up. Those federal elected officials who represent Sedgwick County and are concerned about federal spending — that would be Representative Mike Pompeo and Senators Jerry Moran and Pat Roberts — need to take notice and support Ranzau. Those serving in the Kansas legislature should take notice, too.
Kansas legislative chambers don’t agree.Kansas Reporter details the problems conferees from the House of Representatives and Senate face coming to agreement on the rescission bill. Funding for special education seems the problem. The rescission bill makes cuts to spending so that the current year’s budget balances. More at House, Senate can’t agree how to fund special ed.
Citizens, not taxpayers. A column in the McPherson Sentinel argues that we should think of ourselves as “citizens,” not merely “taxpayers.” The difference, as I read the article, is that a citizen is involved in government and public policy: “It takes work, hard work, to make this system work.” Taxpayers, on the other hand, just pay and expect something back: “‘Look at how much I paid,’ these people cry. ‘Give me my money’s worth!’” The writer makes the case that government “is not a simplistic fiscal transaction” and that citizens must participate to make sure that government does good things with taxes. … The writer gets one thing right. Meeting the needs of the country is complex. Where I don’t agree with the writer is that government is the best way — or even a feasible way — to meet the needs of the country. A method already exists: people trading voluntarily in free markets, guided by profit and loss, with information conveyed by an unfettered price system. Government, with its central planning, its lack of ability to calculate profit and loss, and inevitable tendency to become captured by special interests, is not equipped for this task.
Increasing taxes not seen as solution. “Leaving aside the moral objection to tax increases, raising taxes won’t in fact solve the problem. For one thing, our public servants always seem to find something new on which to spend the additional money, and it isn’t deficit reduction. But more to the point, tax policy can go only so far, given the natural brick wall it has run into for the past fifty years. Economist Jeffrey Rogers Hummel points out that federal tax revenue ‘has bumped up against 20 percent of GDP for well over half a century. That is quite an astonishing statistic when you think about all the changes in the tax code over the intervening years. Tax rates go up, tax rates go down, and the total bite out of the economy remains relatively constant. This suggests that 20 percent is some kind of structural-political limit for federal taxes in the United States.’” From Rollback: Repealing Big Government Before the Coming Fiscal Collapse by Thomas E. Woods, Jr. Hummel’s article may be read at Why Default on U.S. Treasuries is Likely.
Illustration of how the rate of return impacts the growth of a stream of contributions over time: Small changes in rates produce large differences in ending balances. KPERS uses 8.0 percent in its assumptions, while some authorities recommend 6.1 percent.