March 2010

March 25, 2010
(Syndicated to Kansas newspapers March 22, 2010)

A good idea?

Hey, here’s an idea to help balance the state budget: Let’s take all the deadbeat Kansas income taxpayers and offer them a deal to pay less than they legally owe on the presumption that they’ll pay something rather than nothing in the way of taxes.

Does that sound like a good idea to you?

It’s the same program the House Republicans believe will raise $22 million in cash for the state. Only, it’s explained more…charitably.

Here’s how it reads for those Republicans: “Provide an opportunity for taxpayers to settle with the Department of Revenue on any outstanding obligations.” Now, that sounds a little friendlier, a little less judgmental, a little blander, doesn’t it?

If you can settle out for less than you owe, well, doesn’t that make folks who pay their taxes in full and on time—or even late with the appropriate penalties—look like chumps?

That’s what the state does when it needs revenue quickly. It calls for an amnesty on paying what you owe.

Kansas did something like that last year, when major corporate income taxpayers which believed they were assessed too much in taxes and were willing to spend the time and money to battle it out for years before the Kansas Court of Tax Appeals, were offered a chance to make a deal with the Department of Revenue. That raised more than $30 million in quick settlements with those taxpayers. Maybe the state would have won its cases; maybe the state would have lost. But by agreement, a deal was reached between taxpayers and the state.

In that corporate negotiation scheme, at least both parties—the state and the taxpayer—had some skin in the game. Kansas might have spent thousands of dollars defending its tax calculation, taxpayers the same, and there was a real battle that was avoided by reaching an agreement.

That has a little different feel than just offering a tax amnesty to people who owe taxes—and in most cases figured out how much they owed—and just didn’t send in the check.

If you like the idea of letting people who don’t pay their taxes get what amounts to a tax break, doesn’t it seem fair that people who over-withhold and get tax refunds probably ought to get a little bonus check?

Nope. That’s not going to happen. And for everyone who pays their tax bill in full, well, there’s a little of that same angst. Play by the rules, get nothing, don’t pay, get a little break. Hmmm…

There’s the chance, of course, that if there is no amnesty, that people who owe the state taxes will, maybe, leave and we’re holding the bag.

We probably have to figure, though, that at some point, those who stay will work out a deal over time to get straight with the tax code.

We’ll just have to see how the debate comes out, and who gets a bonus cut in taxes just by being here when the state decides to hold a fire sale…

 

March 18, 2010
(Syndicated to Kansas newspapers March 15, 2010)

A dilemma

It’s gone on for more than a month now, this grousing about whether House Speaker Mike O’Neal, R-Hutchinson, has somehow sullied the title of Speaker.

Last week, Kansas House Democrats, after weeks of lamenting that O’Neal is representing a number of worker compensation funds maintained by Kansas businesses in a lawsuit against the state, finally filed a formal complaint against O’Neal. Upshot is that a panel of three Republicans and three Democrats are going to hold hearings to determine whether O’Neal should be reprimanded, censured or expelled from office.

It’s gotten a lot of press, Democrats have made a lot of noise, and the result is going to be that while some House members are upset, it’s unlikely two-thirds of the House will vote to punish O’Neal.

Very practically, and Kansas is a very practical state, Democrats’ complaints will come down to two issues.

One is that there is a very good basis for a lawsuit against the state of Kansas by those businesses which had their work comp funds “swept” into the State General Fund. The state took the money to spend on other things, and those businesses had to put new, fresh money into those funds to make sure that funds were there to pay for medical care for employees who suffer on-the-job injuries.

No injured workers didn’t get their medical bills paid. Their employers just had to pay twice to maintain the funds to insure their care.
Whether the funds sweep was constitutional or not, well, that’s something that courts are going to have to determine. Could go either way, we’re guessing. But one piece of this puzzle isn’t in controversy. It’s whether those businesses have the right to have their grievance decided by a court of law.

But No. 2 is whether O’Neal, who at least in this case voted against the funds sweep, should be representing those funds to ask that question. That’s the sticky one, it’s the appearance that the Speaker of the House is suing to overturn the work of the chamber he leads. It would have been nice if someone else had sued. Maybe a lawyer not as good as O’Neal or maybe just someone we’d never heard of.

At some point, you have to wonder whether this formal investigation of the complaint against O’Neal ought to be considered after the court case is decided. If O’Neal’s clients win, well, then the funds sweep was unconstitutional and a wrong has been righted. Whether it costs the state money is really not the issue. It’s whether the taking of those funds was lawful. That’s something that really ought to be decided.

If O’Neal loses, well, we know that the Legislature can sweep funds out of special purpose accounts throughout state government and no law has been broken. It opens up yet another way for the Legislature to balance the state budget without taxes being levied on the general public. Yet another tool for lawmakers to use.

If O’Neal wins, well, the state scours around for money to repay those work comp funds, and then doesn’t do it again.

As to the action against O’Neal? If the committee determines he deserves a reprimand, sanction or expulsion, it takes a two-thirds vote of  the House to do it.

March 11, 2010
(Syndicated to Kansas newspapers March 8, 2010)

A fight to the death?

Well, we’ve found our Kansas legislative bill this year that is likely to be a fight to the death over an issue that most of us don’t know anything about.

The issue is migrating natural gas that is stored in underground caverns in the state.

It is a fight worth millions of dollars to big natural gas companies and worth smaller amounts to nearby property owners who are seeing that their prospects of selling mineral rights under their land shrink or maybe just become worthless.

Here’s how it plays out: You are a giant natural gas company, and you store your natural gas in underground caverns, in naturally occurring voids thousands of feet below the land surface. To store it, you compress it both so you get more stored and to pressurize it so that it can be retrieved easily to be fed into pipelines that move it to customers in cities, in factories, nearly anywhere.

But…by compressing that natural gas underground, it tends to travel through rock formations underneath land that you don’t own the mineral rights to. And, people with natural gas wells on adjoining property pump out your stored natural gas and sell it.

Hmmm…

Something’s not right here. The big storage companies really ought not over-pressurize their gas but the formations that hold their gas aren’t perfectly sealed. There’s really no way to prevent pressurized underground gas from migrating off your land. But, it’s your gas, and you don’t want people with the right to drill in hopes of finding their own gas taking yours.

At some point, it’s like letting your cattle graze on someone else’s pasture: You get the benefit of fat cattle; your neighbor just sees his/her grass disappear to no benefit.

The answer, for those pumping natural gas into storage fields, is to just expand those fields…even if they extend underneath property that someone else owns, at some price, but at a cost that is lower than having your wandering natural gas pumped and sold by someone else.

The answer, if a natural gas storage field is spreading under your land, is relying on the “rule of capture,” which means essentially that what’s under your land becomes yours.

That’s the world of natural gas. It migrates. It’s not like cattle you can fence in or a dog on a leash.

Sound complicated? Sure is. There are lobbyists for the natural gas companies who assert that their clients’ natural gas is being essentially stolen. There are less well-heeled landowners saying that the migrating gas is destroying their chance to profit from their drilling rights, essentially letting that migrating gas set new boundaries on their property.

It’s all a long way from the pilot light on your hot water heater, isn’t it?

We’ll watch to see whether this is an issue that the Legislature can settle.

Sounds iffy, doesn’t it?

March 4, 2010
(Syndicated to Kansas newspapers March 1, 2010)

No-holds-barred

With a little-reported-by-the-media decision, the Kansas Governmental Ethics Commission may just have created the most interesting of contests in this election year.

That decision on Feb. 17 by the board was in response to a question by Supreme Court Justice Carol Beier: Is a retention election for the position of Justice of the Kansas Supreme Court governed by the Kansas Campaign Finance Act?
The answer was: No. State law regulates virtually every election contest in Kansas, but not retention elections for Supreme Court justices.

The issue probably wouldn’t have been broached—justices are routinely retained with around 70 percent of votes cast—except for an effort by Kansans for Life, a politically active antiabortion group—to “Fire Beier,” as KFL has named its campaign.

The KFL issue is about what it believes are affronts by Beier directed at antiabortion former Kansas Attorney General Phill Kline, who was defeated for reelection four years ago and has now left the state. Kline is an antiabortion icon in Kansas, but that aside, the KFL effort is now to deny retention to Beier, which would open a slot for a new governor to fill with his/her own appointee.

Retention elections, a big deal in some other states, have never really risen to the level of a political campaign in Kansas. They’re just at the bottom of the ballot, most people don’t know—and generally have little personal reason to know—just who the justices of the Supreme Court are.

There have already been some newspaper ads, some protest marches, some level of political activity by KFL against Beier’s retention.

Beier—within pretty strict rules for behavior of judges and attorneys—can now raise money, run ads, do direct mail, TV, radio, probably even robocalls for her retention.

And, there are no limits or requirements on anything: contributions, expenditures, record keeping or reporting of campaign financial operations.

This is no-holds-barred stuff. Beier can single-mindedly defend her post, while KFL’s political action committee participates in a wide range of elections. Does it tilt its expenditures to the retention race, or back candidates for the Kansas House? How does KFL keep its reportable campaign contributions and spending separate from the no-reporting Fire Beier campaign?

Looking at recent history, Kansans generally vote to retain justices, and the votes against retention are likely more a signal of frustration with someone—anyone—in government, than a specific vote against a specific justice.
This campaign could change all that. With a focus on a single justice, those picking the fight have to be confident of victory or it diminishes their political clout up and down the ballot and in the halls of the Statehouse where KFL lobbies daily on legislation.

Who knows how much money will be raised and spent, and where it will come from?

In the well-regulated world of political campaigns, Ethics with its opinion has created the VIP room of the ballot, where nobody says what goes on there…