March 2002

March 28, 2002
(Distributed to Kansas newspapers March 25, 2002)

Thinking ahead...

The reliable platitudes about "stepping up to the plate" and "being part of the solution, not the problem" are already littering the Kansas Statehouse over the issue of finding a way to put together a budget for the state's spending in the fiscal year 2003, which starts July 1.

From a distance, those reliable platitudes are encouraging. If they were directed at an action as natural and instinctive as throwing your arm across the seat to keep a bag of groceries from tipping when you brake your car, we'd universally accept them as common-sense and laudable.

But putting the budget to bed this year isn't going to be instinctive, isn't going to be simple. It is going to have so many unintended consequences that the sort of pep talk from the coach that we're starting to hear now that Gov. Bill Graves has delivered Budget III probably isn't worth spending a lot of time repeating.

Get ready for several weeks of real hardball political debate. It won't make immediate sense to people with real lives to pursue, and some of the hang-ups in the process will seem to be over items so obscure that many will wonder what the problem is under the dome, where, yes, the air is thin.

Money's tight, and there are going to be significant reductions in the amount of money that the Legislature has to spend this year. There may--almost certainly will--be taxes levied that most Kansans would rather not have levied at all.

There are also going to be cuts, sharp cuts, in spending by the state. Some of those cuts probably ought to have been made even in good times but certainly will be made now that the state's wallet is running on empty. And, to his credit, Graves has proposed most of those cuts and then some.

But this deal isn't done by a long shot yet, and there are some reasons to consider that aren't immediately apparent to folks who don't hang out at the Statehouse.

Start, for example, with Graves' proposal to tap two sensitive tax sources--income tax and sales tax--for brief, three-year, increases. Now, that sounds reasonable from afar. If the state needs money, get it from the taxpayers, and when the state's need for new revenues falls, "sunset" or automatically repeal those taxes.

Except that a quick tax-and-quit scheme means literally that there is no bauble hanging out there for legislators to use for good stuff when those taxes expire in three years. The $114 million annually that a .3 percent sales tax will raise and the $104 million a year that a 5 percent income tax surcharge will yield for three years aren't big enough to cause much of a ripple when they expire.

Who's going to get to take credit for the expiration of those taxes? Well, at this point, a guy who isn't even going to be living in Kansas when the by-then imperceptible reductions in taxes take place. After three years of slightly higher taxes nobody's going to get up a parade when they fade away.

But a larger single permanent tax...well, that's a different story. Instead of "sunsetting" a big permanent tax increase, let's say there's a sizable sales tax hike which legislators then could take an active role in either repealing or spending its proceeds on something laudable. That would give lawmakers something they could be proud about, put on their reelection brochures, and ballyhoo in two or three years.

Say instead of letting two minor tax increases disappear with no real political advantage, legislators could tout eliminating the sales tax on food bought at grocery stores. Now, taking the tax off food would be almost as toutable as taking the tax off tea (once a big deal, if you recall American history). Politically, especially for those with constituents who spend a relatively large portion of their money on groceries, it would be a real election-year bonus. Or, alternatively, it would allow legislators to proudly proclaim they've cut a tax, a sizable tax.

But...that's not how Graves has structured the tax-raising portion of Budget III, and yes, there are legislators who are looking past the next month or two and into the future, and seeing that while they're being asked to "step up to the plate" to get the state past its immediate budget hole, there's no chance to do anything politically nice a couple years down the road as a reward.

That's why there won't be bills introduced and passed quickly to do the governor's plan. There is still tweaking to be done, and there are several weeks to do it, and legislators are going to be looking not only at this year, but the future, as one would imagine they would, being generally grown-ups and grown-ups generally think ahead at least some distance.

We'll see just how far ahead the Legislature is willing to think in the next few weeks.

March 21, 2002
(Distributed to Kansas newspapers March 18, 2002)

Waxing the floor too often?

If there's one thing you can count on a legislator making part of his or her campaign stump speech, it is maintaining local control of schools.

Sure, there are those national tests that students have to take, and, yes, there are the tornado drills in each school building in the spring, but when it comes to running the local school district, legislators want local control.

...That is, just until they find a neat, businesslike way to wrest that local control from districts under the guise of equality of educational opportunity.

Well, they've found that way, and already, school district lobbyists and school district board members are starting to feel the hand of the Legislature on their districts.

The tool is accounting. The state's 300-plus school districts will have all their budgets submitted on identical forms to the State Department of Education in a manner that allows some giant computer spreadsheet to compare, say, cost per square foot of floor space that is maintained by the district, school lunch costs, and even the dollars of teaching resources dedicated to each school building.

That means smart people in Topeka will be able to compare school districts from border to border to see what the state's aid to elementary and secondary education is financing...and how.

Is there a problem that the Legislature is trying to fix? Well, yes. It is that the state keeps spending more money on aid to K-12 schools and legislators are wondering why. Where's the money going?

Are some school districts waxing the gymnasium floor too often? Are portions in school lunches too big? Has a district decided it wants all the senior, experienced teachers it can find to teach its pupils, driving up costs?

Those used to be, and actually currently are, decisions that school boards make locally, right in the district at public school board meetings.

Watch those local decisions come under the microscope--no, make that telescope--of Topeka when all school district budgets must be submitted in identical formats, so that the cost to bus children in Johnson City can be compared to the costs in Johnson County; or the pupil-to-teacher ratio in Colby can be compared to that in Columbus.

And, then watch those dreaded words that nobody wants to see attached to their local public schools: statewide average.

Is a new budget format that is now ginning up strength in the Legislature a bad thing? Not really. Nobody wants to read about a school district that spends money on frivolous stuff. Kansans on the average probably don't want to read about cashmere band uniforms or sunroofs on superintendents' cars.

But somewhere, for purely local reasons, there are going to be districts that spend more on this and less on that because that is exactly where the taxpayers and the patrons and the parents of pupils in individual districts want their money spent.

So, some uniform way of tracking district expenditures probably isn't an all bad thing; it is just the logical next step that is a little frightening.

It is a short step from sending out state money to local school districts to be spent the way that local school districts by tradition and by the politics of the district want to adding a provision to appropriations bills reading "except that no school district receiving state monies shall wax the basketball court more than four times per year," or some such nonsense that sounds logical on the 3rd floor of the Statehouse where the House and Senate meet.

And, maybe it would be interesting to know whether districts save money by buying school buses or leasing school buses, or whether the luncheon portions are too large in the middle school cafeteria.

But the real test of the coming new accounting system is going to be whether the Legislature can resist the temptation to ask some computer-savvy staffer to take that system and press the "average" button, and use that average as some sort of golden mean.

This will be interesting...it will just take two or three years to get that way.

March 14, 2002
(Distributed to Kansas newspapers March 11, 2002)

165 conga dancers

Most often, when you hear a strange noise in the night, the best thing to do is to lie still for a minute to gather your wits about you before reaching for the loaded pistol on the night stand.

The Kansas Legislature probably ought to be doing that, just lying still for a week or so, while it figures out just what the newly deepened $680 million "hole" in its revenue picture really means.

Luckily, taking a little time for reflection is a natural process in the Kansas Legislature, where for years the majority of lawmakers learned just enough about the state's $4 billion-plus in taxes budget to know how their districts would get by, leaving the details to the boys and girls on the appropriations and ways and means committees.

First reactions, of course, to the need to craft a new budget are divergent.

Some immediately believe they have to raise taxes substantially. Some believe they have to slash spending to meet the lower estimates of revenue that the state will have available to spend.

The answer is likely to be somewhere in the middle. There will be some spending cuts, some programs eliminated or trimmed sharply. There will be some revenue-raising measures needed, whether it is a general tax or some buttonhole measure that extracts money from a selected group of victims.

But there are also vast piles of what legislators and the governor call "one-time money" scattered throughout the state. The question is whether this economic problem is big enough that lawmakers ought to plumb for that "one-time money" to fill a general budget hole.

What are those piles of money? Well, there's a senior citizens trust fund. That is comprised of money that clever workers at the Kansas Department of Aging figured out how to euchre from the federal government a few years ago. It is now used to finance programs that otherwise would have been paid for from the state's general tax revenues.

There is the frequently renamed trust fund that receives tobacco settlement money and is earmarked for programs for children and youth that the state probably would have enacted anyway and paid for from general tax revenues. That trust fund is "one-time" money.

And, then there's the concept of "monetizing" the tobacco settlement, selling off the revenues that are expected over the next 10 years or so for cash in hand right now. That would produce a chunk of money, maybe $100 million, right now, when the state is in a financial crunch.

But don't forget what legislators call accounting tricks, such as renaming expenditures from the state general fund as "revenue transfers" that are made for the sole purpose of reducing the amount of money that actually gets into the state's general fund.

That "transferred" money isn't sapped by 7.5 percent due to the state's law that requires 7.5 percent of the amount spent by the state from its general fund has to be held in reserve for a rainy day. It's raining.

Accounting tricks have been getting a bad rap in the media of late because of Enron's bankruptcy...but the government of the State of Kansas isn't a for-profit enterprise that is selling shares around the world. If Kansas doesn't make money, but just manages to keep afloat for a year or two until the economy rebounds, nobody has been defrauded or inconvenienced.

It is times like this that demonstrate that all the politicians who for years have been saying that the State of Kansas ought "to be run like a business" have not really understood the difference between a government and a business, making us wonder about their businesses.

The Legislature is essentially a 165 dancer-long conga line. With a line that long, there's a good chance that the last dancers won't have worked out an agreeable position for their hands on the person in front of them before the first song is ended.
As long as legislators don't reach for that loaded pistol...we may have an interesting dance ahead of us.

March 7, 2002
(Distributed to Kansas newspapers March 4, 2002)

Taxes & K-12

The Kansas Statehouse is the only building in the state where the statement "Let's not increase taxes" is immediately met with a reporter--nearly every reporter--asking "do you want to hurt public education?" or a similar question.

The simplified equation in the Kansas Statehouse this year is that if legislators aren't interested in raising taxes, then the state's K-12 education industry, which gets more than half of all dollars that the state raises in taxes and fees, is going to see some reduction in funding. And nobody really wants that.

Whether it is because every parent wants his or her children to be smarter than he or she is, or every thoughtful Kansan knows that the Kansas economy booms when smart people are doing good jobs well, or that we just want smart young people to stay here after school instead of heading for a coast, nobody seriously wants the state's public education system damaged.

That is the reason that nobody talks about a cigarette tax increase for, say, meat inspection programs or state employee health insurance premiums or new and more efficient computer software programs for the worker compensation division. No, in the Statehouse, the talk is money for education. And it stops there.

But in coffee shops, restaurants, probably around breakfast and dinner tables in the state, the concept of not raising taxes doesn't necessarily equate to the crumbling of the state's public education system, of a whole year's worth of 3rd graders not being able to write in cursive or do long division.

Outside the Statehouse, the prospect of someone not wanting to raises taxes is probably more closely tied to whether people made much money last year, and whether they believe they'll be able to make more money next year. Where there's been a layoff or a failed crop or a packing plant fire or a telecommunications downsizing, there are people who are going to have less money to support themselves and their families than last year.

And even from the rarefied air of the Statehouse, we're betting that raising taxes doesn't sound like a good alternative to those folks.

Nope, that's just in the Statehouse.

Friday, legislators get some interesting news--just how much money they are going to have to spend in the upcoming (starts July 1) fiscal year, and how much money they are expected to receive in the next few months to close out the current fiscal year, which ends June 30.

That news actually starts the serious work of the Kansas Legislature this year. It will tell lawmakers whether there is enough money coming in to the state from taxes and fees and the like to finish out the fiscal year with a little balance left in the checking account (the prospects are good, but a slim balance) and what is available to spend on everything from restaurant inspections to meals for elderly shut-ins to, yes, school districts next fiscal year.

Look for those revenue estimates--they are just estimates but they set the hard ceilings on spending--to be disappointing. Look for the state to have maybe $550 million to $600 million less to spend than legislators had been hoping for, based on earlier revenue estimates.

This is the Statehouse after all, and just because there is likely to be a small increase in dollars received over the amount actually received last year doesn't mean the news is good. The Statehouse is a building built on and maintained by rising expectations. And it is expectations, not the hard year-over-year dollar receipts, that are important in this building.

Now, does that make any sense? If the state actually takes in a few million more dollars in the next fiscal year than the last fiscal year, you'd figure that's good. Well, the state may even see an actual dollar increase in revenues and still be in bad shape because prices have gone up.

Kansas can actually take in more money and be in bad shape because insurance premiums are rising, more people need welfare, prescription drug prices are rising, almost everything that we expect the state to handle is going to cost more to do.
And, when the state manages to hold prices steady, it usually has to provide more of the services, so it still costs more.

What's that have to do with K-12 education? When there's more money to spend, the Legislature spends more on K-12.

What happens when there's less money to spend? We have an idea...