Archive for Sunday, March 29, 2015

Kansas officials hope budget puzzle pieces drop into place

March 29, 2015

— Republican Gov. Sam Brownback hopes the GOP-controlled Kansas Legislature wraps up several key budget issues this week, though he's not pushing lawmakers to finish a spending blueprint for state government that also erases a projected shortfall of nearly $600 million.

The Senate has approved a $15.5 billion budget for the fiscal year beginning July 1 that won't balance without tax increases. The House's Republican leaders aren't sure whether the chamber will vote on a spending plan before the Legislature begins its annual spring break Saturday.

State officials and university economists plan to meet April 20 to issue a new forecast for state revenues through June 2016. Republican leaders plan to have lawmakers consider proposed tax increases after they return from their break April 29 to wrap up business for the year.

But several bills aside from the budget would affect the spending plan. One deals with public pensions, another with tapping health insurers for additional fees, and a third with controlling the costs of mental health drugs under the state's Medicaid program.

"These pieces are important to get through now," Brownback said during an Associated Press interview. "These are big parts of your puzzle."

The following is a look at major budget issues:

Closing the gap

The projected shortfall arose after Brownback successfully pushed lawmakers in 2012 and 2013 to aggressively cut personal income taxes to stimulate the economy. Legislative researchers estimate that the Senate's budget would require about $140 million in general tax increases.

House Appropriations Committee Chairman Ron Ryckman Jr., an Olathe Republican, said the aim is to finish enough budget work to give the House and Senate tax committees a revenue-raising target.

Revenue picture

Tax collections rebounded in February but are still $38 million, or 1.9 percent, short of expectations since the current fiscal year began in July 2014. Preliminary figures for March are due Tuesday from the Department of Revenue.

Some Republican lawmakers also hope the new revenue forecast in April is more optimistic than the existing one.

"They're treading water right now, waiting for better news," said Rep. Jerry Henry of Atchison, the ranking Democrat on the House Appropriations Committee.

School funding

Brownback said a big piece of the budget is settled because legislators approved a law earlier this month to overhaul how the state distributes $4.1 billion in aid to public schools. The bill jettisons the current, per-student aid formula — which led to unanticipated increases in spending — and replaces it with predictable "block grants" for the state's 286 school districts.

The governor signed the bill into law last week, but four school districts are asking a three-judge panel in Shawnee County District Court to block it from taking effect.

Public pensions

Brownback has proposed issuing $1.5 billion in bonds to bolster the short-term financial health of the Kansas Public Employees Retirement System. His plan also would give KPERS another 10 years, until 2043, to close a projected $9.8 billion gap between its anticipated long-term revenues and benefits for retired teachers and government workers.

KPERS already is set to erase the gap by 2033 under laws enacted in recent years, but those laws require increasing payments by the state to the pension system, and Brownback contends they're straining the budget.

The governor's plan would reduce the state's pension payments by $40 million during the next fiscal year.

The Senate approved a bill in February to authorize $1 billion in bonds. The House approved a bill last week for $1.5 billion in bonds. Legislative negotiators meet this week.

Tapping health insurers

Kansas charges managed health care companies a 1 percent privilege fee, and almost all of the $24 million raised annually comes from the three companies managing the state's $3 billion-a-year Medicaid program for the needy and disabled. Brownback wants to boost the fee to 5 percent.

Raising the money also would allow the state to draw down additional federal funds for social services, resulting in a net gain of $80 million a year.

The Senate last week unanimously approved a bill containing Brownback's plan.

Mental health drugs

The Senate unanimously approved a bill requiring a review of prescriptions for treating mental illness among Medicaid participants. The measure also creates an advisory committee to draft guidelines on the use of mental health drugs.

Brownback's administration believes it can save more than $8 million a year by better managing mental health drugs. A 2002 law blocks restrictions, such as a preferred-drug list or a requirement for prior approval from the Medicaid program before prescriptions are made.


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