November 2009

Nov. 26, 2009
(Syndicated to Kansas newspapers Nov. 22, 2009)

Turning a phrase?

It’s just getting started at the Statehouse as the state faces its most harrowing budget crisis in recent memory, but some insiders—you’ll figure out whom pretty quickly—have coined a new phrase: tax expenditure.

Tax expenditure; it sounds a little different than “tax cut” or “tax exemption,” and it sounds different for a reason. Lawmakers and some policymakers who favor increasing state revenues and closing some exemptions to raise more money for the state like the term.

The concept is relatively simple. Every tax cut, those wished for by groups and those already in effect, are very frankly expenditures by the state. It’s giving away money that, without the exemption, the state would receive. It amounts to an expenditure, doesn’t it?

Exempting, say, churches and charitable organizations from sales tax on things they buy and sell sounds like a reasonable idea, and Kansas exempts those outfits from sales tax. That’s an easy vote if you are a member of the Legislature.

But, let’s say instead of an exemption, the state had those churches and charities pay sales tax on things they buy and collect sales tax on things they sell—just like the corner grocery store.

Now, consider this “tax expenditure” business. Instead of not having them collect taxes and pay taxes, let’s say that the state just appropriates money to the churches and charities. It works out the same, dollar-wise, but it is a whole different deal when it comes to an appropriations bill that includes a line item to send thousands of dollars to every church in the state or every charitable organization.

Sending taxpayer money to churches and charities is something that we just don’t do. It just doesn’t feel right, does it?

Well, that’s what a tax exemption does, essentially. It’s simpler, and the nice thing about it is that because it is a tax exemption, it is private. Notice that your name is never in the newspaper showing how much money you made and how much taxes you paid? It’s confidentiality that we all enjoy. So, if you put an exemption in the tax system, it’s a lot more confidential than making an appropriation to the Nazarenes or the Baptists or the Catholics or the Girl Scouts or the local animal shelter.

Anyone think that there would be less revenue foregone by the state if lawmakers had to vote to appropriate money to charities and churches? Now, how about the exemption from sales taxes for legal services and accounting services, even medical care? Hold up your hand up high if you think lawmakers will vote to make state appropriations, by name, to lawyers and accountants and doctors. Not much shade, is there?

It’s interesting what a change in phraseology can do, isn’t it? 

Nov. 19, 2009
(Syndicated to Kansas newspapers Nov. 16, 2009)

Making the cuts…

Sure, you’ve read the stories, the guesses mostly, about state budget cuts, about tax increases, about state employee layoffs and all the usual things that can be done to assemble a budget for the coming fiscal year.

Well, that’s all next year and the governor and Legislature will hammer out that budget in the upcoming legislative session which starts Jan. 11.

The most immediate interest of Statehouse old-timers—who admittedly have relatively short attention spans—is how Gov. Mark Parkinson gets the state’s budget through the current fiscal year, which is nearly five months old, which means that any spending cuts he imposes have to be compressed into just seven months of state operations.

The raw numbers indicate that the governor—if he took the politically problematic, simple long-division option—would have to make across-the-board budget cuts of nearly 8 percent to every dime that the state spends, or planned to spend, this fiscal year, which ends June 30. That simplistic approach means that compressed into the seven months left this fiscal year, the cuts would be well over 10 percent. That’s a lot to cut in a short period of time.

Nobody is looking for that arithmetic solution that would virtually gut state government.

So, we’re all waiting—along with you—to see what Parkinson proposes—virtually orders be done to get through this fiscal year. There are estimates that the governor would need to cut $460 million in just seven months if he buys into what the Legislature decided to spend last year.

There is no reason to believe that he is going to do that.

So, we’re going to see strong cuts in some areas, some more minor cuts in others, and we’re going to see what is essentially reshaping the state by Parkinson, an ugly job that he has agreed to perform.

This might be the most expansive use of the governor’s authority at making cuts—called allotments—in recent memory. He’ll be deciding what agencies remain, what they can do, what they can’t do, and he’s going to have to do it very quickly. The effects of cuts will radiate from the Statehouse to cities, counties, school districts, virtually every level of government in Kansas.

Because of the late start and the compression of cuts needed, there is going to be virtually no time for agencies to respond or for the Kansans who deal with those agencies and programs to respond.

It’s going to be the most dramatic change we’ve seen in years. It’s going to happen quickly, either this week or maybe next week. If Parkinson has one advantage, it is that the cuts will be so dramatic that few lawmakers are going to want to prevent them. They have a new budget coming up…

Nov. 12, 2009
(Syndicated to Kansas newspapers Nov. 9, 2009)

Mellow, man…

If there was a surprise last week when Statehouse insiders leaned of the daunting $235 million revenue shortfall for the remainder of this state fiscal year, it was probably the calm, measured response by the guy who says he’ll fix it—Gov. Mark Parkinson.

It sounded almost like something from the ‘60s, probably from someone with long hair in a tie-dyed T-shirt.

It is part of a move by Parkinson to mellow out rhetoric from the Statehouse, to take a minute to choose words carefully, and to deal with government problems in a measured, civil, respectful way.

“Today, we confirmed that the state will take in less money in fiscal year 2010 than we had planned. As concerning as this news is, alarmists rarely make good decisions; therefore, we must maintain a calm and measured approach to balancing this budget within our existing means. These deficit numbers are challenging, but they are manageable,” Parkinson said in a press release after the state’s semi-annual revenue projection was made public.

This clearly is not the voice of an excited, frantic guy (who before some audiences says he “Forrest Gumped” his way to the governorship) who seems overwhelmed by the task ahead—cutting at least $235 million from the state budget this year before starting to assemble next year’s budget.

He’s talking about calmly doing the work ahead, and urging lawmakers and their leaders to ratchet-down the political rancor that tends to be the argot of the Statehouse.

“I understand that in today’s political climate, the challenges of governing are dominated by sound bites and slogans – but we have an opportunity to change this.
“To legislators across Kansas, I say this: In the coming weeks, I will take whatever steps are necessary to balance the 2010 budget before the Legislature returns; that is a promise I have made, and it is a promise I will keep. In return, I only ask that we rise above the normal partisan bickering that prevents us from moving forward, and find a higher ground to build a better state and future.  We have avoided the political degeneration that has caused gridlock in Washington D.C., and I appreciate that, but we can only continue to meet these challenges by acting like civil adults and working together,” Parkinson said.

Sound a little mellow coming from the Statehouse? Like someone is telling the kids to calm down? Sure does.

We’ll see how well it works once lawmakers get the list of where Parkinson will make budget cuts…

Nov. 5, 2009
(Syndicated to Kansas newspapers Nov. 2, 2009)

The curious world of eco-devo

This economic development business is getting curiouser and curiouser.

The big deal now, of course, is Cerner Corp., which wants state assistance to bring a giant office complex to Kansas City’s Village West development in Wyandotte County. Cerner currently is located on the Missouri side of the Kansas City area.

But what started out as just a “how can we help” from Kansas has grown exponentially in complexity and in political criticism.

First, nobody’s against 4,500 high-paying jobs coming to Kansas. That’s for sure. But the negotiation for those jobs has gotten complex because the state has made its final, take-it or leave-it offer to Cerner, and apparently was putting together that offer while Kansas Secretary of Commerce David Kerr was being considered for Missouri’s top eco-devo job, which we learned last week that he got.

Immediately, conservative House legislative leaders—the same ones who were virtually disarmed last session by moderate Republicans  and Democrats—roared without any proof that Kerr may not have used his best efforts on behalf of the state that he will be leaving.

Gov. Mark Parkinson defends Kerr, says that he, Kerr and Secretary of Revenue Joan Wagnon put together the best offer Kansas can make for the Cerner deal. The whole point of economic development, of course, is to grow the Kansas economy, and you can’t do that if you offer a developer more money than the jobs are worth. That just makes sense.

But, this Cerner deal is complicated by Cerner officials’ ownership of the Kansas City (Missouri) Wizards soccer team. Most of the state’s offer for Cerner is for a soccer stadium that doesn’t have anything to do with Cerner’s business of creating computerized medical records management equipment.

Because most eco devo bargaining now is if not outright extortion at least a lesser-included offense, you have to wonder why the state is contributing a dime to construction of the soccer arena. And, you probably have to wonder whether Cerner stockholders care about a soccer team owned by Cerner managers that’s not going to contribute to their dividend checks. And you probably have to wonder whether those stockholders want their company to be used as a lever to get a soccer stadium built. 

That soccer stadium is probably the key to this whole deal—it’s where most of the state’s money is pledged. Which is a little curious, isn’t it?

We don’t know yet whether Cerner is taking Kansas’ offer, but we’re certain that Kerr isn’t going to juice up a Missouri offer, having crafted the Kansas deal. Playing both sides of the state line would be unethical, and it would kill Kerr’s eco devo career.

Curious?  It sure is…