November 2004
Nov. 25, 2004
(Distributed to Kansas newspapers Nov. 22, 2004)A moral obligation
The Kansas Legislature, coming up to a session where there may be just a dab of new money available to spend without raising taxes, is facing one of those pesky but important little moral obligations to nearly a quarter-million public employees at the state, school and local level.
This isn’t going to be pleasant.
There are flashier places to spend maybe $50 million a year, but for right now it appears that if the Legislature doesn’t spend about that amount on funding the death and disability program that the Kansas Public Employees Retirement System operates for public employees, the D&D program is going to go broke and benefits are going to have to be slashed.
How did the state get into the problem? Well, about three years ago, when revenues were down and the state was scrapping around for nickels and dimes, it discovered that it could stop making contributions of about $30 million a year to the death and disability fund for public employees.
There was enough money in the trust fund to continue the program for a year, then two years, and now it’s going on three years.
Now, the fund is nearly broke, and by sometime next year, even if the Legislature restarts making contributions of .6 percent of payroll, the D&D program is going to have to be sharply reduced.
How sharply reduced? How about eliminating the death benefit, paid to survivors of state or government employees who die. The 1.5 times annual salary benefit would be the first to go. While that sounds like quite a bit of money, it really isn’t when you consider that most state or local government employees have families up and running with just a lump sum to begin working from while essentially starting their lives again without a breadwinner.
After the death benefit comes reduction in payments for those with disabilities.
The D&D program is just one of those little nooks and crannies in state government that have suffered during the economic downturn from which the state is finally emerging.
It’s one of those programs that needs to be put on sound footing again and it is one of those programs that isn’t going to get headlines during the upcoming session.
It’s not like school finance, it isn’t like more state aid to colleges, it’s not like a state employee pay raise or even a contribution to the cost of prescription drugs for Kansans. It’s one of those quiet programs that represents the right thing for an employer to do for its employees. If the program isn’t put on a sound financial footing, nobody’s going to notice until there just isn’t money available to make a death and disability payment to someone who manages the junior high school cafeteria or opens the tax payment envelopes that come into the Department of Revenue or inspects the nursing homes to make sure that conditions there are healthy for the elderly.
Just because the program isn’t one of those that immediately springs to mind for most state legislators doesn’t mean that it isn’t a bit of a character test for both returning lawmakers who saw the cessation of payments as a source of free money the past two years and a challenge for newly elected legislators who probably throughout their campaigns for the Legislature never heard the issue mentioned on a doorstep or at a public appearance.
Chances are good that the program will never return as a robust operation with reserves on hand in case there is an emergency, like a building collapse or a bus crash that would instantly turn it into a headline event and send it to the top of the Legislature’s to-do list.
It’s a program that will siphon off money that a lot of legislators would rather spend on something else. It’s a program that isn’t going to garner a lot of enthusiasm from legislators. But this is something that needs to be done.
Nov. 18, 2004
(Distributed to Kansas newspapers Nov. 15, 2004)Politics of health care
If you talk to the candidates who came off the trail this year and got elected to the Legislature, probably a majority of them are going to tell you that on doorstep after doorstep, voters voiced the most concern about health care issues.
The successful candidates will tell you that the people on the inside of the screen door asked either about the cost of health care, availability of health care, or the rising cost of health insurance and prescription drugs.
Now, maybe those people were actually concerned about the above, or maybe they just were too timid to ask candidates whether they would vote to put an amendment banning gay marriage on the ballot. But somewhere in the mix among major concerns of voters who are interrupted at dinner or caught out raking leaves is health care.
Very practically, the Kansas Legislature can’t do a lot about health care costs, but that’s no reason that the Legislature can’t work around the edges of the problem.
Democratic Gov. Kathleen Sebelius and Republican Insurance Commissioner Sandy Praeger believe they have a way to work on those edges, but that doesn’t mean that it’s going to work, or that the incoming Kansas Legislature is going to allow it to work.
And, practically, this whole effort gets tagged as the "governor’s health plan" because Praeger doesn’t work in the Statehouse and she’s out of the political line of fire for most aspects of this issue.
The "boogeymen" in the governor’s plan that the Legislature is going to fear anything that looks like government meddling in health care and the estimated $50 million cost of the plan, which Sebelius would like smokers to pay through higher taxes on cigarettes and nearly anything else that contains tobacco. She can do a lot of good stuff for a lot of people with $50 million, but real problem is deeper...that many people just don’t have enough money to buy their own insurance or pay for prescription drugs.
It is really just that simple.
There are jobs in Kansas, that no matter how well they are done, just don’t in the worldwide economic climate, command wages high enough to allow people to buy health insurance. And there are employers in industries where margins are low and cutting costs to remain competitive to provide even those low-wage jobs just pushes health insurance out of the equation. Employers can either offer low wages, or health insurance and even lower wages. That’s not a very interesting range of options.
So how does this play out? Interestingly for a number of players:
Proponents of health care for the poor have some good hooks to use here, Sebelius is taking providing health insurance for children in poor families, and providing coverage for some 30,000 low-wage working parents. That presumably means the children are in better health, parents don’t have to miss work to stay home with them and businesses get to work at full speed and efficiency.
Low-wage state employees get assistance with health insurance, which is good for them, but makes low-wage private employers look either stingy or as employers-of-last-resort. Not what business is after, we’re sure, scrapping around for workers who can get health care through a state job and inevitably driving up the cost of labor for non-government employers.
Anti-taxers have the 50-cent a pack cigarette tax to fight on behalf of smokers. Err, well, not exactly on behalf of smokers. For them, the taxes matter, of course, but it is more or less a testosterone battle. They spent a lot of money in the elections encouraging lawmakers who will promise not to raise taxes on anything for anything. To make their point, they have to hold their ground, or who will give them money in two years to campaign for legislative candidates who promise not to raise taxes on anything for anything? It’s a different take on the issue, but there are people in nice suits who don’t really have to think much about health care, just taxes.
There is a lot of politicking ahead and a lot of reasons to be for, or against this health plan. Some deal with health, some don’t.
Nov. 11, 2004
(Distributed to Kansas newspapers Nov. 8, 2004)More bang for the bucks?
Anyone who believes that the newly elected Kansas Legislature is going to come to Topeka in early January and pass a bunch of new taxes to put more money into the elementary and secondary school system hasn’t been paying attention.
The new Legislature is going to be more fiscally conservative than the one that just left town, and it’s not going to willingly raise taxes and send more money to schools. Count on that.
The Legislature is probably not going to be able to muster the votes to reduce the $2.3 billion-plus that the state pumps into the complicated system of financing public schools, but it is going to be looking for ways to get more bang for its bucks–this is the Legislature that was elected at least partly on the slogans about "putting more money into the classrooms."
That phrase has a nice ring to it, everyone wants to see adequate materials for pupils to use to learn, and everyone wants schoolteachers to make a reasonable salary and be able to afford health insurance. Talk to those elected in last week’s voting, and you don’t hear a lot of the old mantra that schoolteacher salaries are low "but they only work nine months a year..."
There is the buzz, of course, about the Kansas Supreme Court’s imminent decision on the constitutionality of the state school finance formula. The court can’t raise taxes and direct them to schools, but it can decree that the money is misdirected and a new formula is necessary. (But it might not even go that far in its decision.)
Well, amid all the concern about education, most legislators will tell you that there is a decent chance that the state is now spending enough money to provide a top-shelf education to schoolchildren but that local school districts are not spending the money efficiently. Too much is spent on administrators, on overhead, on stuff that reduces the amount of money that districts can put in classrooms and in schoolteachers’ checks, they’ll say.
So how do you make the money go further? Legislators have been looking at two ways. One is putting together a strict list of subjects that comprise for legal purposes a "suitable education," which means the state will help finance stuff that is suitable but not whatever isn’t on the list. That’s tricky, because who knows what suitable is? Legislators? Probably not. But they know that they don’t want districts spending state money on esoteric subjects that they don’t believe are necessary.
Another way, which strikes many legislators as sensible, but probably isn’t, is to have school districts prepare an elaborate budget document so taxpayers see how money is being spent. There’s this perception that if the school budget arrives in the mail the same day as your "Field & Stream" or "Road & Track" or "Pots & Pans" magazine that people are going to read the budget. Sure.
Then there’s the governor’s new plan to have accountants who have surveyed school spending nationwide to be directed to scrutinize local school district budgets and come up with a list of "best practices" for spending money in a school district. The best practices are surely going to recommend minimum administration expenses and more money going to the classroom.
The best practices might indicate a district really needs only a handful of administrators or fewer assistant or associate principals per head of pupil. It might even conclude a full-time paymaster is profligate, what with Internet and e-mail available so that paychecks can be written in Topeka, or maybe even in India. (Oh, there might be savings possible on the light bill or gas bill, or in the cafeteria, but the clear indication is that it’s salaries of workers who aren’t actually in the classrooms that are going to be in the gun sights of the auditors.)
The governor’s plan is a different way to go in reducing costs, which would make current spending levels appear to be adequate, just misdirected by local school boards.
Will it work? Will it divert the Legislature from deciding it isn’t "suitable" for fourth-graders to be taught French? It just might. And that shifts the focus of school finance from the state and the Legislature to, well, to anyone else. Which probably is the real objective here...
Nov. 4, 2004
(Distributed to Kansas newspapers Nov. 1, 2004)Wanna dance?
We’re going to get to watch some interesting toe dancing in the Kansas Legislature next session about "tax clearances."
A clearance is basically the Kansas Department of Revenue checking to make sure that you’ve paid your taxes–and any taxes that you collect on behalf of the state or others, like sales taxes, liquor taxes, withholding taxes on employees and such.
The concept is fairly straightforward and it even has a good feel to it. If you are in a business that does business with the state, or hold a state-issued license, then you really ought to have paid your taxes and those taxes that you collect on behalf of the state. That’s just fair. Businesses and people who are licensed to ply their professions by the state ought to be paying their taxes.
In recent years, the Legislature has gotten tough on some businesses that collect taxes and don’t forward them to the state.
First targets for "tax clearances" were liquor stores, private clubs, auto dealers and folks who have Lottery machines. Those targets were the easy ones. Liquor stores, clubs and gambling were singled out initially because they are "sin" industries and nobody much cares if you get strict about their licenses. There’s always another liquor store or club or Lottery machine close by if one gets shut down for nonpayment of taxes.
Auto dealers sought the strict tax clearances on their own industry, laudable, but also smart business. If a car dealership doesn’t pay its taxes, the owner either makes more money or can cut prices and sell more cars. And, there’s that side issue that nobody talks about: intelligence. You have to be fairly bright to operate a car dealership profitably and pay your taxes, but if you collect state taxes and don’t forward that money to the state–just keep it–even a dumb guy can do well in the car business...
Broadening that strict tax clearance policy to other industries and professions is where the rub is going to occur next session. Now we’re messing with doctors, lawyers, landscape architects and nearly every other individual who is allowed to practice his or her trade by virtue of a state license.
The state has even broadened the tax clearances to vendors who do business with the state and newly hired state employees. If you don’t pay your state taxes, the state isn’t going to buy your copiers or hire you to build bridges or highways or fix the air conditioners or work for the state at all. That’s serious stuff, but it doesn’t sound wrong to people who pay their taxes.
Watch for the sliding around by doctors and lawyers next session.
If a doctor doesn’t pay his or her taxes or forward the payroll taxes for his bookkeepers, nurses, aides and such, the doctor and those employees would be out of business. If a lawyer doesn’t pay his or her taxes, his/her secretaries, researchers, paralegals and such would be out of work. So, failure of a doctor of lawyer to pay taxes means sick people don’t get treated and the accused don’t get represented–at least by those non-taxpaying doctors and lawyers.
The doctors and lawyers, and even the Chamber of Commerce, are antsy about the possibility of treating those learned professionals like, well, like liquor store owners.
Are you still looking for the difference between liquor store owners and doctors and lawyers? Have you put your finger on the reason that doctors and lawyers should be treated differently by the state?
The doctors are going to be using the patients they treat to beat the state into some special sort of tax treatment, not that doctors don’t want fellow doctors to pay their taxes, but because they don’t want anything very inconvenient to happen to those who don’t.
The lawyers are going to tout the constitutional right of an accused person to be represented by counsel, not that lawyers don’t want their fellow member of the bar to pay their taxes, but they don’t want anything too distressing to happen to lawyers who don’t.
Starting to see why this might be interesting to watch next session?