November 2003
Nov. 27, 2003
(Distributed to Kansas newspapers Nov. 24, 2003)Token hush money?
Years of persistent, if low-key, attempts to compensate Kansas businesses for the cost of collecting state and local sales taxes, filling out forms and sending money to Topeka may be about to pay off for some of the state’s roughly 100,000 retailers.
A summer study committee on assessment and taxation has voted to seek introduction of a bill that would offer up to $500 for businesses which have legitimate expenses in collecting taxes under the new destination-based sourcing law.
Most in the Statehouse are figuring that about 25,000 of the state’s retailers actually will see a difference in how they operate their businesses under the new sourcing law. The rest are stores to which the law really doesn’t apply...such as liquor stores and gas stations where everything they sell goes out the door of the business, so there’s no destination involved. Some don’t deliver anything anywhere, so the destination of the sale is most accurately described as the cash register where it is rung up.
But for the roughly 25,000 retailers who are seeing some additional bookkeeping costs from having to figure out the local sales tax wherever that load of lumber or refrigerator or sofa is delivered, you’ve got to figure that the additional computation is worth something.
Then again, is $500 the right figure? Too high? Too low?
Or is $500 just a gratuity? Would handing the business owner a fishing license that he or she could share with employees have the same salutary effect that a relatively small check would have? Of course, $500 is $500, and nobody doesn’t want to get a $500 check from the state, or more likely, a $500 credit against income taxes they owe.
But for decades, while other states have compensated retailers for collecting and remitting sales taxes, Kansas has always considered complying with state law one of those costs of doing business in Kansas that is just a requirement and if retailers don’t want to do it, they should do business somewhere else.
And that’s not a bad argument, actually. Retailers require a little more in the way of services than do other businesses. You don’t hear about calls to police for suspected shoplifting from barber shops or foundries or accountants. It’s not a direct payment for services, but not allowing retailers some hold-back from the sales tax means that the sales tax goes further in providing financing for the state and for local units of government for whatever purposes the sales tax is put.
The interim tax committee’s selection of $500 is also a little questionable. The state chamber of commerce surveyed its members, and only 18 percent of its retailers figure that they could cover the additional cost of figuring out where deliveries were made, the sales tax rate at the drop-off point and then report it to the Department of Revenue, all for just $500 a year. Retailers with elaborate computer systems that will need to be updated figure it could cost thousands of additional dollars to report faithfully their destination-based tax sourcing sales.
One size isn’t going to fit all, that’s for sure. But the tax credit that will be proposed to the Legislature in January is going to be capped at $500.
And if the actual costs to a business are going to vary, so is the complexity of accounting for that additional cost. It might be as simple as a receipt for a new piece of software for the store’s computers, or it might be keeping tabs on how many additional pencils are needed to hand-figure it and additional postage on a thicker-than-usual sales tax report to the state.
The real point is, besides simply handing off $500 to retailers in the state, someone ought to figure out whether the $500 represents anything meaningful, or just $500 that legislators can say they fought to hand to businesses in the state.
If the money isn’t tied to anything specific besides inconvenience, and if there’s no good way to tell whether $500 makes a retailer whole for his or her trouble in keeping track of sales taxes, maybe money isn’t the answer.
Maybe, just maybe, it’s fishing licenses.
Nov. 20, 2003
(Distributed to Kansas newspapers Nov. 17, 2003)Simplyfying educational costs?
Something either extremely interesting or mind-numbingly dull is likely to happen this month as a legislative task force considers ways to force school districts to create, then reveal, the operating budgets of individual school buildings.
Here’s the concept: State Sen. Bill Bunten, R-Topeka, a couple years ago–before he was a senator–spent weeks parsing the Topeka Unified School District budget to see whether it was too big, we presume, because he has an ownership interest in a big office building in Topeka that pays a lot of property taxes.
At least, we figure that’s why his interest was piqued, or maybe it was just one of those intellectual challenges that people find for themselves, like Rubik’s cubes, or doing crossword puzzles in ink.
Well, Bunten parsed out the Topeka budget based on what it cost in utilities, salaries, insurance and maintenance for each building.
He says the district’s publicly available budget was so complicated that maybe the district didn’t even know the cost of everything for which it was writing checks. There’s a lot of inertia in budgets, a lot of "we’ve always done it this way" stuff and who knows? Maybe if we had budgets that showed the operating costs of each building, and added them up, they would come to a different total than the school district’s budget as a whole. Possible? Well, maybe, not likely, but possible, and in tight budget times, it probably makes sense to run out the ground balls to ensure that nothing is awry.
Bunten has been handed the chairmanship of the School-Based Budget Working Group, a legislative/civilian task force to lasso this steer.
School districts generally aren’t enthusiastic about Bunten’s quest, seeing no real good to come from it except a lot of staff time that would get diverted to this new budget format that probably isn’t going to save districts any money, cost them time and not add anything in the way of increased educational opportunities for pupils. They maybe right.
But, say Bunten gets his way, and all of a sudden next year, patrons actually know the cost of operating the elementary or junior high or high school down the street? Right down to the penny on how much it costs to wash the towels for gym class and buy the bugs that kids dissect in science class and buy the soldering irons for the shop classes.
What do people do with that information? Well, if in individual buildings it appears that money is being spent on stuff that is not necessary, we guess that the folks who live near the schools may have an interest in it. They may want the money spent on something else in their local school building. But do you think they’re going to want to have money from their neighborhood school transferred to a school across town? We’re betting not.
And, if every patron who cares–and that’s a factor to figure in, too, because not a lot of patrons are going to care–knows what’s spent in the local school building, what do the patrons do with that information? After all, the district as a whole levies the property taxes for the entire district. The rate’s the same everywhere in the district.
Hmmm...let’s think about this. Where could this information go?
Well, some neighborhoods might want more money spent on their local buildings for more teachers, French classes for second-graders, bigger libraries, maybe even those little hand-held computers so pupils don’t miss their nap times or soccer practices.
Is there a chance that building-by-building information may un-unify school districts? Could we have a district for every building, as in days of old? Maybe. Some schools’ patrons may upon seeing their buildings’ budgets want to secede from the unified district and create their own super-schools financed by the neighborhood. Some may want to super-size their local teaching staff, or find a way to pay individual teachers more than they’re getting under the unified school district’s teacher pay contracts. Or less...
Patrons may find that the attendance area for their neighborhood school has enough taxable property to run the school all by itself.
Or...not.
That’s why we’re waiting on this building-by-building budget committee to make its report. It may be nothing, but it may be something, and if it is something, we wonder where it’s going to lead.
Nov. 13, 2003
(Distributed to Kansas newspapers Nov. 10, 2003)The exclusive remedy
If there’s one tough, technical, emotional issue that will face the Kansas Legislature in the next session, count on it being the quagmire of worker compensation legislation.
It’s dull on the surface, and the global view of the issue is that employers purchase insurance to cover injuries to workers who are hurt or killed or made sick on the job.
The real skinny is that in most instances, it works out just fine. A worker is injured, maybe a drum drops off a shelf onto his or her foot, or someone falls off a roof and breaks an arm or leg.
That isn’t nice, of course, but in most cases, it is an injury that occurs during the workday, the injured employee gets medical treatment and eventually gets back to the job. The great compromise here is that in return for automatic treatment, the worker can’t sue his or her employer for damages, and the employer pays worker compensation insurance premiums to insulate the company from those damage lawsuits. The term of art is "exclusive remedy." It’s the only remedy available to injured workers, and companies are willing to provide that medical coverage in return for not being sued by injured workers. Everyone gives up something. Worker give up individual lawsuits, employers give up, well, money.
There’s big money floating around in the worker compensation industry. Premiums totaled more than $300 million in 2002. Losses paid totaled more than $180 million. So, it’s a big business, and yes, there is some air between premiums and pay-outs. That "air" belongs to insurance companies.
There are years when there is a lot of air and years when there isn’t a lot of air. Business gets good, business gets bad for insurance companies in a cycle that has more to do with the stock market than whether it is literally raining roofers.
That’s where the real problem generally lies in worker compensation–or at least in Kansas since massive worker compensation changes in 1993 that probably accurately and with good reason can be called "reform."
The battle over worker compensation, at the legislative level, almost always turns out to be over ways to reduce the cost of fixing up injured workers or compensating the families of workplace fatalities. It’s not at the level of whether insurance companies are making too much money or too little money, but whether premiums are higher than the people writing the checks would really like to be paying.
The Kansas Insurance Department sorta regulates the premiums, but it’s a fairly arms-length deal. When the stock market is roaring and companies are making a lot of money on unearned premiums, regulators tend to ratchet down rates. When the stock market isn’t roaring, it tends to allow premium increases.
Work comp insurance buyers tend to believe that if they can grind down the cost of treating injured workers, rates will surely fall. Injured workers tend to believe that there’s enough overhead in the system that just reducing their benefits isn’t really the issue. Both are probably partially right.
Which puts the Legislature in the middle. It can rewrite laws that determine who is eligible for what benefits and when, and try to smooth the process so that insurance companies’ costs are reduced. That may or may not bring down rates, which incidentally are pretty low in Kansas compared with other states.
Trial lawyers tend to believe that when a workplace is unsafe, really dangerous, on behalf of their clients they ought to be able to sue the employers outside of the work comp "exclusive remedy" bargain. Employers want none of that, of course. Neither would you.
But, there’s a flip side to that issue. If you are working in a factory or a mine or on a roof under conditions that you believe are unsafe, should you really be working there? At some point, self-interest should kick in. Employers with dangerous work places ought to find themselves with no workers because of it.
Unfortunately, that doesn’t happen in a tight economy when people need their paychecks.
That’s why the Legislature is going to be fighting over worker compensation in the upcoming session.
Nov. 6, 2003
(Distributed to Kansas newspapers Nov. 3, 2003)Don't forget the *!
You might start getting ready for a legislative session in which almost everything that happens under the Statehouse dome is geared toward either the August 2004 primary election or the November 2004 general election.
It is going to be a session where legislators submit themselves, or are forced to submit, to a wearying series of roll-call votes on issues that probably aren’t going to become law but which will be prominent in election and reelection campaigns. The series of votes on issues such as concealed-carry of pistols, abortion, pensions, gambling and worker compensation insurance is just starting to take shape.
Key, of course, is to find out whether legislators are for or against those issues. That single roll-call vote will become the fodder for newsletters, brochures, and television and radio advertisements that will seek to either elect to office or toss out of office legislators who don’t vote the way a group of their constituents wants them to vote.
Oddly, it’s not going to matter much whether the subject of that roll-call vote becomes law. It’s the single vote that will be either something that legislators proudly crow about for their constituents or keep quiet about–and wonder whether their political opponents are going to use it to hang them.
That’s probably fair.
There are some issues to some voters that are so important that no matter what else a lawmaker does during the legislative session, that is the test. Now, that tends to indicate that a voter has a fairly narrow view of the world. But most of the world pretty much takes care of itself, so maybe choosing one issue on which to decide whether to elect or defeat a legislator is as good a way as any to select leaders. Individual votes on issues that are important to people willing to make the effort to actually leave their homes and vote probably are fairly important issues.
Yet...that’s a little simplistic. There are a lot of tactical reasons why votes are made by legislators. Like sprinters who have their times qualified because the wind was at their back, there probably ought to be the possibility of putting an asterisk (*) behind the vote of some legislators on some subject. For the purposes of campaigns, explaining those roll-call votes is important. Legislators will be wanting to put asterisks on everything.
Maybe a legislator really doesn’t mind if law-abiding people, who have been scrutinized by the local sheriff, want to carry a hidden pistol to a quilting bee. That opinion might change if, for example, the roll-call vote is on a bill that allows people to carry concealed weapons to a political debate or a high school wrestling match or a kindergarten Thanksgiving pageant. Seems like an asterisk ought to be used somewhere in that list of events. Proponents of concealed-carry at all hours of the day or night and at all places won’t put an asterisk next to the name of a legislator who doesn’t want concealed-carry of weapons in the high school gym or at contested weddings...but the legislator will want a big one.
That’s the sort of sorting-out that you really won’t get a chance to do from roll-call votes on some high-emotion issues. It’s one reason why some legislators pretty much dread those roll-call votes.
A senator or representative who doesn’t much care if high-rollers from out-of-state gamble in a casino here and make the state some tax revenue might have a different opinion if welfare mothers trade their food stamps for tokens to slam into a slot machine. Is that senator or representative for or against gambling? Well, we’ll have to wait to see how it is presented to the voters next summer and fall.
Is the legislator against fleecing out–of-staters, or is the legislator not satisfied that an amendment wouldn’t deter, somehow, welfare mothers from trading infant formula coupons for chips? Or is the legislator trying to spin some outrageous, unworkable, fanciful qualification for who gets to gamble into a bill so that the roll-call vote appears to be virtuous?
We’ll see how this plays out, but the only sure bet is that by the time campaign season rolls around, you might have to hire the kid down the street to shovel the asterisks off your porch.