August 2003
Aug. 28, 2003
(Distributed to Kansas newspapers Aug. 25, 2003)Getting health-smarter
The whole outrage over health care–and its cost to individuals who buy their own health policies, employers who subsidize employee health care insurance and government which finances health care for those who are poor–may boil down to people making wrong decisions, maybe knowing better, maybe not.
It might be that many Kansans really don’t think they should have to spend a lot of time making decisions about their health, but if they did, they might spend less money on health care. A fall legislative interim committee will spend some time figuring out how to help Kansans, maybe force Kansans, to do some thinking about their health and, as a result, lower health care costs for individuals, employers and the state which foots much of the bill for the poor.
The vehicle might just be the Health Insurance Issues Working Group which has an agenda heavily pitched toward health education. Now, there’s a lot of the nuts and bolts can-we-slide-this-into-Medicaid on the mission statement of the committee, too, but it’s somewhat encouraging that before the technical stuff, the working group is going to talk about education.
Of course, everyone in the health industry talks about education. The regulators and the insurance companies and the social service agencies all have their programs that probably cover their costs and a little better, but nobody’s found the real silver bullet on health education yet. Chances are slim that the whole answer is going to come out of a study committee at the Kansas Statehouse, but the effort is worthwhile.
As usual, the issue of health care costs under the dome comes down to how to provide health care for the poor who are the state’s responsibility. And the usual tack is to try to find ways to hammer down services or prescription drug costs or home health care costs after the poor people are already sick or injured.
There’s a good realization that there are going to be poor people with us forever, but they don’t get really aggravating to state budgets until they get sick and require attention that the state and/or federal government funds from tax dollars. And, nothing quite aggravates public employees who have government-financed or partially financed health insurance who see from the papers that they are getting raises, but learn most of the raise is gobbled up by increased health insurance premiums.
The people who pay for their own health insurance out of their own pockets? They’d probably like to see a little more health education for everyone, too, if only because most in that class would like to see their cardiologist on a new car lot talking with the spouse about whether they can stretch their budget to cover the cost of upgrading from cloth to leather upholstery on their next car.
Now, it’s not going to take long for the working group to get tired of hearing about health education efforts and requesting information about whether one pamphlet or one reminder on the monthly bill or one cartoon booklet for kids is going to result in less money being spent on health care.
But for a day at least, before diving into such topics as finding a way for low wage employees to slide onto 60 percent federally paid Medicaid coverage with their employers paying the other 40 percent that the state government generally covers, there’s going to be some talk about education and whether health-smarter Kansans can reduce the cost of health care for everyone.
The answer is a no-brainer. Figuring out what, if anything, works, will be the tough part.
And if anything works to get Kansans to walk an extra flight of stairs, wear bicycle helmets, not smoke or drink excessively, the committee can claim a win.
We’ll see what develops.
Aug. 21, 2003
(Distributed to Kansas newspapers Aug. 18, 2003)Sales tax on the road
Things look a little different on this destination-based sales tax once you get out of Topeka and out from underneath the Capitol Dome where the air is a bit on the thin side...there appear to be some major problems ahead for small to medium-sized businesses in applying the new sales tax accurately...or even at all.
House Speaker Doug Mays, R-Topeka, wandered the four corners of the state the second week of August, asking questions about the sales tax regimen which requires businesses to charge the sales tax at the destination where items are shipped. Nothing changes, of course, if people carry their purchases out the door, but if shipping is required, the program gets more complicated.
Mays traveled to Parsons, Wichita, Garden City, Colby, Hays, Salina, Topeka and Lenexa, and some clear trends developed. Hawver’s Capitol Report followed Mays on his journey and attended all the meetings, too.
Under the dome, the goal was to get ready for taxing Internet sales nationwide, but nobody makes change under the dome or guarantees to ship a generator or fruit basket anywhere. Here’s what you hear on the road:
First: There are a lot of retailers who aren’t going to lose sleep over the destination-based sales tax because Revenue Secretary Joan Wagnon and Gov. Kathleen Sebelius say they aren’t going to impose any penalties on retailers who make some effort to collect sales taxes based on the destination of items. For several business people, they’re going to wait until the Department of Revenue gets serious–with penalties–before they engage in full-scale compliance. That’s not totally unexpected, and we’re guessing that if a retailer in the next few months shows even a dab of destination-based taxation, they’re going to cruise.
Second: There are a number of businesses which would like to comply, but aren’t sure how, and aren’t comfortable spending any serious money toward compliance until they know for sure that everyone is going to participate. Why spend money unnecessarily?
Third: A number of businesses believe that eventually this thing is going to be the enforced law of the land, and that at some point if they don’t comply, they’re going to get into trouble, but figure they have a few months’ breather while Revenue cooks up some realistic computer programs or at least a database that makes some effort to track destinations feasible and not too costly.
Fourth: There are some trade-center towns, such as Garden City and Hays, which are used to reaping sales taxes from all sales made in those cities, and are on the edge of their seats wondering just how much local options sales tax they’re going to lose...and whether next year, those losses are going to come back to them in the form of higher local property taxes. Look at Olathe, where 60 percent of the city’s general fund revenue comes from its local option sales tax, and rough estimates are that 30 percent of that sales tax is collected on sales that wind up outside of Olathe, likely in Missouri. Is that about a 25% reduction in general fund resources for Lenexa? Sounds like it, and practically the only way to make up that shortfall will be a sizeable property tax increase. Hmmm....
And fifth is the biggie: Sales made in Kansas but delivered to neighboring states–for probably the next few years, until everyone is logged onto the Streamlined Sales Tax so that retailers collect taxes for other states–now will be sales tax-free. No numbers yet on just how much trade is done with Missouri, Oklahoma, Colorado, Nebraska, and even Arkansas to give the state a clear trend on how much state sales tax is being lost on those delivery-sales, where loss of sales tax hits the Kansas General Fund. A big number, say $5 million a month in losses, becomes a big ticket item in cash-starved Kansas...and enough of a drag on state receipts that pure economics makes it worth considering shutting down this experiment while Kansas regroups.
Special legislative session? It looks a dab more likely after Mays’ tour of the state, but just because of losses to the state, not local units of government. The education lobby alone may be shocked by the figures in a couple of months. And then we’ll see where this special session stuff goes...
Aug. 14, 2003
(Distributed to Kansas newspapers Aug. 11, 2003)A special session?
There is an exceedingly slim chance that the Kansas Legislature will have a special legislative session this fall.
Slimmer than, say, well, does anyone remember Twiggy? Does anyone remember Stanley Laurel?
The issue that a handful of legislators want the Legislature to reconvene to consider is the Streamlined Sales Tax, specifically its destination-based tax sourcing. The idea behind the tax is that anything you can’t physically carry out of a store or have loaded on your truck is subject to the local option sales tax where you live.
If you have, say, a sofa delivered from a Hays furniture store to your home in, say, Lawrence, then the merchant should figure out what the local option sales tax is in Lawrence, and charge you the state sales tax, the Lawrence sales tax, and remit that money to the Kansas Department of Revenue. Now, if you drag the sofa to your Volkswagen in the Hays store’s parking lot, strap it onto the car and drive away with it, you pay the state sales tax, of course, and the Hays local option sales tax, and the deal is all wrapped up.
Well, finding that Lawrence sales tax may take thumbing through some charts and tables, and it’s more cumbersome than just tacking on the Hays sales tax, but, hey, someone sold a sofa.
Now, this law kicked into effect July 1, but the governor and Secretary of Revenue and the guys who run the Legislature say they’re in agreement that merchants ought to try to follow the law but nothing very serious is going to happen to merchants who don’t get the whole concept implemented until Jan. 1.
Notwithstanding all of that, businesses that do a lot of deliveries to other towns where there may be a local option sales tax are upset about having to figure out how much tax to charge and figuring out new sales tax forms to send into the state, which will distribute the taxes to destination cities and counties.
So, that’s where the special session talk kicks in. Some legislators want two-thirds of the House and Senate to vote to have a special session, come to Topeka, have lobbyists take them to lunch and dinner and buy them drinks, so that legislators can either repeal the sales tax changes or delay their effective date, or something.
The legislators who want to come back to Topeka make two points.
One is that the law took effect too quickly, nobody had time to get ready to enforce it, and delaying the starting date a year would give the Department of Revenue time to flood merchants with information to make compliance with the law easier. That doesn’t, of course, guarantee that merchants will be happy to change the way they’ve been doing things for decades sometime next year. It probably means that they can put on the snooze alarm, and start grousing again about this time next year.
Another point the special session fans make is a little better. Do we really want the governor and the Department of Revenue and the guys who run the House and Senate to all agree that they’re not going to enforce a law, or that they’re going to enforce it a little later than it says in the statute books?
That’s not a bad point, but we’re just talking about sales tax. Yet, that selective enforcement that the state is doing right now is probably not a good thing.
And what if you’ve done the right thing in collecting sales tax before you really had to? Most merchants will tell their kids that doing the right thing is its own reward, but in business some people don’t do the right thing until something bad happens when they don’t. Hey, it’s business.
There are reasons for a special session, but don’t look for one this fall. The reasons aren’t big enough.
But, golly, we’re curious about what would happen because once the Legislature convenes, it can consider anything...like property tax exemptions for Episcopal churches...
Aug. 7, 2003
(Distributed to Kansas newspapers Aug. 4, 2003)Abracadabra
Politics, like magic, is based on misdirected attention.
We’re about to see a magic show in local government in the next few weeks as cities and counties put together their budgets for their fiscal year 2004, which starts Jan. 1, 2004, right on time.
The misdirection is about to start. For a magician, the skill of misdirection focuses the audience’s attention on something other than the trick being performed. That’s why magicians joke while they’re doing tricks...because some percentage of the audience will be focusing on what the magician is saying and not what he’s doing.
Oh, and that’s also why many magicians have a beautiful and scantily clad assistant handing them stuff and jiggling around the stage–that also fuzzes up the audience’s attention to the trick.
If the misdirection is successful, the magician performs the trick, nobody knows how he does it, and the audience is entertained and amazed.
It’s a little like that in politics.
The local governments across the state are going to have to make do with about $100 million less of state aid than they were used to getting before the state budget crisis struck. (Actually, again on a statewide basis, local units of government got $50 million less from the state for the current fiscal year, but many units of government had slush funds or cash balances that they could tap to finish out this calendar year.)
So, here’s the magic trick...create local budgets for 2004 without local officials having to take any blame for cutting services that their constituents like and are used to receiving or for raising taxes or for doing a combination of both to nail together a budget that will work. That is harder than rounding up beautiful and/or scantily clad assistants to bounce around the city or county commission chambers to distract residents during budget hearings.
Here are the real options for a local unit of government: cut spending next year by the amount of state money it won’t be receiving, raise taxes to account for the loss of state funds, or cut some spending and raise taxes a little to account for not receiving state revenue-sharing money.
But don’t look for any of the above to happen quietly. Instead, look for some local government magic.
That’s misdirection, of course, from the local council chamber to the Statehouse.
Practically, if the Legislature and governor had wanted to continue sending $100 million a year to local units of government, they could have but it would have required either raising taxes on a statewide basis or cutting programs that people really like or need.
The governor and Legislature would have taken the blame while local officials could budget with more money and not have to do anything terribly unpleasant with their own hands to provide a nice range of services to their constituents. No magic there.
What you’ll see on a local level in the next few weeks is how artfully local officials can inflate the amount of money that the state’s not sending them, essentially hanging more of the local funding problem on the state than is probably right, but who’s going to know.
The key here is that if there is enough misdirection, nobody needs to know how much or little actual damage to a local budget the state is causing by not making revenue-sharing payments this year. And, because there is a local government interest in running government about they way the local officials want to run it, some commissions and councils may just blame everything they do–from raising taxes to cutting services–on the Legislature, and by magic, it just might work.
Or, someone, somewhere in every local unit of government will actually find out when the budget hearing is going to be...ask how much in dollars and cents the local unit isn’t getting in state revenue-sharing money, and ask his/her council or commission members to explain anything they are doing above that dollar amount.
Just to keep the misdirection to a minimum....