by Paul Johnson and Mary Fund

The 2017 Kansas Legislative session finally ended June 26. The State budget has been pulled out of the ditch with the passage of a modest income tax bill over the Governor’s veto. The fate of the new school funding formula – that was signed by the Governor – still rests with the Kansas Supreme Court. And now that state legislators have taken the wheel, the Governor is on his way out, courtesy of an appointment by the Trump Administration.  While his departure still depends on confirmation by the U.S. Senate, it is expected that Lt. Gov. Jeff Colyer will take over at some point by the end of the year.

The Kansas Tax Experiment, now rejected by the Legislature at the urging of everyday Kansans, stands as a cautionary tale to the rest of the country. What we have righted, the rest of the country is about to experience first hand, if the Trump Budget, filled with tax breaks and cuts to essential programs much like Kansas’ failed experiment, makes it through Congress.

But for now, Kansas has turned a corner.  The new Kansas income tax bill created three income tax brackets, eliminated the non-wage business income (LLC loophole) exemption, blocked future automatic income tax reductions, and reinstated deductions for medical expenses, mortgage deductions, property taxes and child care expenses. This bill reinstated about two-thirds of the income taxes in 2010 – $600 million versus $900 million.

There was reduction in the State’s sales tax, and Kansas still has the second highest sales tax on groceries or food in the country. There was no expansion of sales tax on ‘non-essential’ services. Fuel taxes that would have been dedicated to the highway fund, and there was no increase in the cigarette tax.

If the Kansas Supreme Court rules that school funding provided  is inadequate, a special legislative session would need to be held, and the debate over a broad range of taxes would ensue. The state budget still relies on transfers, internal borrowing for cash flow, and increased bonding. The sales tax

is still taken from the highway fund. An additional $400 million in bonds will be sold for highway maintenance. The payments to the Kansas Public Employee Retirement System (KPERS) are mostly restored. School funding is increased $300 million over two years. After nine rounds of budget cuts, it will take a few years to recoup program losses. But the adequacy of that amount is still under review by the Supreme Court.

After nine years of no salary increases for most state employees, there is a 2.5% increase for state employees with less than 5 years of service and 5% for state employees with over 5 years of service. $2.7 million is taken from special revenue funds for an on-site State Employee Health Clinic. $4.7 million is added for 20 additional beds at Osawatomie State Hospital and $2.3 million added for operational expenditures. $9.1 million is added for a 3% rate increase for providers of Home and Community Based Services. $11 million is added for Community Mental Health Centers and $1.5 million for the Senior Care Act. $1.2 million was added for the State Water Plan primarily for streambank stabilization. There was no securitization of tobacco settlement funds.

The Kansas Supreme Court ruled that the new school funding formula can go into effect July 1, so that schools could remain open. But this is not a judgment on the equity or adequacy of this act. Oral arguments were heard by the court on July 18, but our schools – already enrolling the state’s children for the fall semester – are waiting to hear whether the school formula passed provides enough dollars.

While the elected Kansas State Board of Education requested an additional $885 million over two years, this new school funding formula added only $300 million. The first year of this new school plan is $195 million and the Court may require the 2018 Kansas Legislature to allocate more funds for 2019 and beyond. There is some limit on how quickly a school district can handle significant increases in funding. The Court will continue to maintain jurisdiction over this lawsuit and monitor any additional funding.

Summary. Despite the big turnaround on the tax situation, the 2017 Legislature did not do much for Kansas in terms of the environment and our natural resources, and food or farm issues. This year’s Legislature enacted the fewest amount of laws in the last five years, with no significant legislation helping our ecological or environmental standing, nor future generations.

There was a small achievement for water (i.e. the extra $1.2 million in State Water Plan funding of which $1 million will go to streambank stabilization) but this may be at a cost to future years water plan funding. And there was no acknowledgement of climate related realities and how they are changing our world, calling for a change in policy and programs to help us react, adapt, and build for the future. While lawmakers heads were focused on taxes and budgets,  the state experienced back to back wildfires, a late season snowstorm and more manmade earthquakes across Kansas.- all evidence of a “new normal.”

The State’s Local Food and Farm Task Force presented its second report last January, once again calling for the state to invest in the research and programs to increase fruit and vegetable production in the state, and recommending that the State Department of Agriculture establish a Local Food and Farm Advisory Board. But the research and extension request was lost in the chaos of the budget/revenue struggles. No action has been taken, that we know of, by the state agriculture department. The good news is that people are organizing at the community and county level to help each other (31 counties now have local food councils and more are in progress). That grassroots effort may be best for statewide progress. However, state support is still needed to provide the kind of research and education that will enhance specialty crop production relevant to Kansas.

Beginning farmer programs and land link programs (i.e. efforts to link retiring or selling farmers to new or beginning farmers) can be found around the country, but Kansas does not have a current program in place to officially encourage land access for new farmers, such as tax credits for retiring farmers to lease or sell to a beginning farmer.

There is much to be done here in Kansas and across the country. We are far from being out of the economic woods in Kansas. Conservative power brokers who still believe that cutting taxes jump starts the economy or helps working families, and that privatization of everything from schools to health care to prisons and beyond is the right direction for the economy are regrouping for another assault. But now that we have turned a corner, we can perhaps focus on some of the critical public policy debates and opportunities ahead of us.

In the Fall issue of Rural Papers, we will cover potential 2018 Policy opportunities.

Contact Paul Johnson at pdjohnson@centurylink.net and Mary Fund at mfund@kansasruralcenter.org.