July 2007

July 26, 2007
(Distributed to Kansas newspapers July 23, 2007)

Broadway, here we come!

The Kansas Legislature next month starts its “off Broadway” season with little-publicized interim committee hearings where committees explore issues that may or may not get traction during the 2008 Legislature and where proponents and opponents of issues try to shape them to their best advantage.

The big show, of course, is during the legislative session where those topics might become objects of debate, or even make their way into law. But the interims are where those proposals get road-tested, to see just who likes them, who doesn’t, and what their enactment into law might mean for the affected parties and the state as a whole.

Some pretty dull topics will be studied. Who’s going to show up this summer, for example, to testify about ramifications of the Kansas Administrative Procedures Act and the Act for Judicial Review of Agency Actions? Yes, that dull.

But there are going to be some fairly interesting topics, too, and while the interim committees essentially consider issues and may forward those issues to the full Legislature next session, the interims are where the parties of interest identify their friends and enemies and prepare for the session.
One interesting little scrap may be between the state’s bankers and the state’s credit unions. It’s a fight over money, of course, and it may yield some of the more interesting combat of the fall and probably next session.

The issue: Whether the state’s regulator of credit unions is allowing those credit unions to expand their “field of membership”—that’s a term of art—to include customers who don’t have a clearly defined “common bond.”

See, credit unions are nonprofit organizations, and the key is that people with a “common bond” put money into their credit unions, which then loan the money out to those within the “field of membership” at interest. It’s almost like a bank, except that the lending and depositing are supposed to be done within that field of membership. Sorta like a private club, where members loan each other money.
The credit unions like it, their members like it, but bankers generally think that the state regulators have allowed credit unions to add members without any solid “common bond.”

If the bankers are right—or persuasive—that means, essentially, that credit unions are poaching business that might otherwise go to banks. Credit unions say they are a small part of the state’s financial community, serving a small niche of people. Bankers say credit unions are an awful lot like banks, except that they are considered nonprofit organizations that don’t pay taxes that banks pay, giving them an unfair advantage.

Now, for most Kansans, the bank-credit union fight isn’t going to be a major source of entertainment. But within the Statehouse, the scrap is likely to be a thriller.

We’re dealing with well-dressed people who work with money and are fighting about it. What could be more entertaining for legislators?

It’s probably worth mentioning that both bankers and credit union administrators have been known to make campaign contributions. Next session will be an election-year session for members of the House and Senate.

So, while the interim committee will be an off-Broadway production, it’s one that is likely headed for the big time next session, and therefore probably worth watching.

Yes, we amuse easily in the Statehouse…

July 19, 2007
(Distributed to Kansas newspapers July 16, 2007)

The tax man cometh

While Kansans in Kiowa County are still clearing their lots of storm debris from the May tornado and residents in several southeast Kansas counties are still assessing just what they’ve lost from flooding and what of their losses are covered by insurance, legislators are starting to wonder what happens to local units of government.

It might not make the heart-rending photographs of disaster survivors holding their damaged wedding pictures or searching around for military discharge papers but the part of the disasters that most aren’t thinking about yet is what happens to the tax base of local governments.

Because those cities and counties and school districts are still going to have to provide services…maybe more, maybe less…they do need a tax base against which to levy property taxes.
For example, the second payment deadline for those who pay property taxes in December and May came just days after the Kiowa County tornado.

Anyone think those tornado victims were planning a trip to the county courthouse to pay those taxes when their homes were reduced to rubble? Probably not, but the taxes were based on the value of those properties last year…well before the skies darkened during the tornado.

Another surprise? The taxes for the year that will start Jan. 1, 2008, that the county commissioners in southeast Kansas and in Kiowa County will discuss this summer in assembling their budgets are based on the condition of homes and businesses this spring, before anything was damaged.

Just doesn’t seem fair, does it? But it’s the law, and by and large, there’s nothing wrong with that law.
Legislators this summer are going to consider just how to keep local units of government fiscally alive while not punishing people who have already sustained dramatic losses from disasters.

The issue is, of course, that while residents are rebuilding their homes and businesses are getting put back together so they can provide income for their owners and jobs for their employees, there are still roads to be repaired, sheriff’s officers and firefighters and police and school teachers and city employees to be paid, and most of that depends on property taxes.

The problem this summer is that amid cleanup operations in disaster-stricken counties, local leaders are going to be putting together budgets for the year starting Jan. 1, 2008, and there’s lots to be done and not as much property against which to levy taxes to finance it. Now, they’ll be using valuation numbers from pre-disaster appraisals but it’s not likely they are going to have the heart, or the political will, to sharply increase property tax mill levies to compensate for having less property to tax. That’s just not feasible, practically or politically.

What’s the Legislature going to consider this summer and fall during its interim committee on Assessment and Taxation? A proposal to allow—where both the governor and president have declared a disaster area and where at least 50 percent of the tax base has been destroyed—the state to adjust valuations down in the disaster areas. Another possibility? The state making up the difference between pre-disaster and post-disaster valuations against which property taxes are levied. 

It’s not going to be easy to figure how to help areas get back on their feet. It’s going to cost a lot of money but practically, there must be government and government services in disaster areas. Just figuring out how to pay for it without further punishing already disaster-stricken citizens and local government is going to be the tough problem.

July 12, 2007
(Distributed to Kansas newspapers July 8, 2007)

After the disasters

The numbers aren’t all in yet, but the devastation from flooding in southeast Kansas will be dramatic—the loss figure and number of lives impacted likely will be greater than from the damage wrought by the tornado in Greensburg that galvanized the state and its media for weeks…until the next disaster came along.

For the Kansas Legislature, the one-two punch of the tornado and the floods presents a tricky situation that requires different levels of response from the state due to differing levels of damage and clean-up required.

It’s going to be a test both of the compassion of the government and the practical side of how to help, and how much and whom.

Don’t forget, either, that while the Greensburg/Kiowa County tornado of May 4 devastated a town and resulted in 10 deaths, that damage was pretty well-confined to one House district and one Senate district, while the flooding in southeast Kansas will involve a handful of Senate districts and more than a dozen House districts. That’s the not-very-pretty mathematics of disaster recovery.

Oh, and don’t forget, either, that while most houses that are insured—and that’s virtually every house on which there is a mortgage or loan outstanding—have tornado coverage, only a small percentage of homes have flood insurance…and the out-of-pocket repair costs are likely to be far greater in the flood region than in the tornado disaster.

What’s that mean for the Kansas Legislature? Well, the initial question is whether there needs to be a special session of the Legislature to pass bills that will help the flood disaster clean-up. Kiowa County is already taken care of, largely because that disaster struck at a relatively opportune time…just before the Legislature reconvened for a usually ceremonial sine die final adjournment for the year. Lawmakers had the time to provide more than $25 million for Kiowa County clean-up.

It is unfortunately becoming clear that the flood damage across a handful of counties in southeast Kansas is going to require more state assistance than is targeted for Kiowa County.

The flooding comes at a time when the state is relatively well-off. Revenues are above estimates, there is cash in the bank—most of it already spoken for to handle general government expenses—but there is cash on hand…just not a dedicated system to get that cash to flood victims who will need it.

There is also the inexorable movement of the calendar. There are probably ways to get relief to flood victims this summer to help them scour oil and icky biological contamination from their homes, rebuilding when necessary, redesigning flood control structures and repositioning houses. Those costs can be met with what is referred to as a supplemental bill passed in the first days of next year’s legislative session.

But by January, there will have been more accounting, more time to examine just what was spent by state agencies on what, and you can expect that the flooding response expenditures will be most closely scrutinized than the money dedicated to the tornado clean-up work.

It gets politically ugly when the Legislature has to respond to two disasters. Lawmakers responded quickly, efficiently and generously for the tornado, but the scope of the flooding damage is likely to be greater, more public infrastructure destroyed, and more individuals and families and businesses are likely to be without the resources to clean up and rebuild in southeast Kansas.

It’s going to, eventually, come down to measuring per capita what was spent in Greensburg and what is going to be spent in southeast Kansas. It’s not going to be pretty, and it is going to stretch resources and legislative compassion.

It’s a test…

July 5, 2007
(Distributed to Kansas newspapers July 1, 2007)

TMI?

It’s going to be interesting to see just what happens now that Kansas legislators broadly know that they can look into the still-simmering budgets that state agencies will turn in to the Division of Budget as early as Sept. 15.

Those are the first-try budgets, subject to intensive review by the administration’s budget specialists before they are ready for presentation to the governor for her consideration.

For most legislators, that Sept. 15—or maybe Oct. 1 if they’re a little late—peek into rafts of budget information that they’ve never seen before means there is time for scrutiny, time for target-shooting at the budget and individual expenditure requests before they are even shown to the governor.

It would be a little like demanding to see the kitchen in a restaurant before ordering a meal. There are surely things in there that we don’t want to see and there are surely things in there that look wasteful…before we get served the meal.

The early peek—and count on it, there will be legislators who want to do a little pre-emptive surveillance of the budgets of social service agencies, maybe highways and agriculture—long before the governor delivers the State of the State address in January, when her budget is formally released, holds the possibility of flooding legislators with information.

Oh, and don’t forget, next March 1, the public is scheduled to have more information from a state-supported website than it’s ever had before.

Which means, we presume, that after a trip deep into the budget woods this fall on their own initiative, legislators will later be inundated with citizen-generated questions about nearly every dime that the state government spends.

That much information comes at a political price.

How much information is too much information for a part-time Legislature? How many legislators will face post-card campaigns based on some narrow sliver of state spending that some group doesn’t like? Or, maybe the group doesn’t mind the sliver of spending, just wishes that it got a similar sliver for its own niche program.

These legislators? Well, remember they spend about four months in Topeka considering the governor’s budget. Generally about 95 percent of what the governor proposes in her budget becomes law. It’s the simple things: the light and heat and salaries and payments that are already promised by state law and which for that reason just have to be paid.

There’s plenty of fight in the Legislature over those must-dos that are presented to lawmakers every January in the budget. Now, besides the Legislature internally generating its own list of spending to be scrutinized, there will be the public’s list of things to be scrutinized.

This happens, of course, during an election year cycle in which the House and Senate members all stand for reelection. Members are going to be on their best behavior for their voters.

Information, well, it’s priceless, of course, and this appears to be a year that it is going to be flooding over the Legislature.

Just how they handle it, that’s going to be the interesting deal this fall and next legislative session and heading into the campaign season.

We’ll be watching, and there is a good chance that a lot of others are going to be watching, too…