(Syndicated to Kansas newspapers Aug. 31, 2015)
There’s a cute little way for governors to boost the state bank account by taking money that professionals pay into state regulatory agencies to, well, regulate certain professions.
The clever name: Fee sweeps.
The concept is that regulatory agencies or agencies that are specifically designed to do the public some good—say, making sure that workers can get worker compensation for workplace injuries—collect fees from those in the industry to make sure that injured workers can get treated, cared-for and rejoin the labor force. Sounds good.
Well, the fees that those regulatory agencies collect have been, for years, tapped by governors and lawmakers to bolster the state budget. That’s the “sweep” they talk about, sweeping those fee fund agencies’ money into the State General Fund, requiring those swept agencies to raise fees to make sure they can do what they are required by law to do.
So, if making sure worker compensation benefits are available is an important enough public service that the Legislature assigned an agency to do it—and allowed the Insurance Department to charge fees to those in the industry to be able to afford to do it—well, should the state siphon off those fees?
The fee-payers don’t think so.
Because those agencies which have been swept of money for a specific purpose have to raise fees to do what they have been created to do, the folks who pay those fees to those agencies see their fees go up.
Not hard to figure out…but the question is whether companies should pay higher fees because of that sweep. Doesn’t really sound right, does it?
Well, a district court essentially threw out a challenge of the sweeps, and last week the Kansas Supreme Court said, no, let’s take another look.
The high court said that just because those industry fees are sent to the state treasury—where all payments to the state are sent before they are parceled out to agencies—doesn’t necessarily make them “sweepable” by a low-on-cash state government.
And, the Supreme Court said that the regulated members of industries paying fee funds have standing to file a lawsuit demanding relief from those sweeps that cause higher fees.
The rehearing of the lawsuit is probably months away, but the issue is one that has some legislature-watchers intrigued.
If the governor or legislators can’t sweep that fee money, then where does the money for everything else in state government come from? Well, how about taxes?
Oops, nobody in the Statehouse likes that alternative.
Sweeping those fees just allows lawmakers to raise the money they need for state operations without having to use that three-letter word, and everyone who doesn’t pay higher fees to state agencies to make up for those sweeps doesn’t even notice. Could it be better for politicians? Not unless cash just fell out of the sky onto the Statehouse lawn.
The case is one that probably won’t make headlines, but if sweeping fee accounts means that there won’t be a general tax increase—or if legislators and the governor don’t reduce spending on something or other to get along without the sweep—the case might just change how business is done in the Statehouse.
Oh, and of course, there is the chance a decision might be that the state has to refund those swept fees—another little problem in a cash-tight state budget.
A little issue overall, but one that might inconvenience the Statehouse crowd.