LEGISLATIVE UPDATE #39 -- November 6, 2007
For Kansas, the 2008 legislative Session that begins in just two months could be one of the most challenging in years. The agencies are expected to be coming to the budget committees requesting more spending for their operations. As you all know I serve as Vice-Chairman on the Agricultural Budget Committee and as such we expect many requests for “enhancements”. The Consensus Revenue Estimating Group this past week reported $160 Million higher-than-expected revenues through the end of the current fiscal year, but pre-committed spending restricts this increase. For the upcoming fiscal year, FY 09, for which the governor is preparing her budget, it’s predicted she’ll have $6.684 billion in revenues to manage. According to our fiscal analyst in Legislative Research, with an estimate on income for FY 08 and already approved spending, there should be $542 million in the bank on June 30th, 2008. We project $6.142 billion in revenue during FY 09 so when you add those two numbers you get $6.684 billion. Pre-committed spending for FY 08 is $6.34 billion, which leaves a balance, with no new spending, of $338 million. That $338 million is 5.3% for State General Fund (SGF) receipts, missing by almost $140 million the state required 7.5% ending balance. My economists tell me if you do not have it, do not spend it. What already is committed and diverted from the SGF; $120 million from this fiscal year and next for the KDOT highway program, “slider” money paid to local municipalities for lost property tax income due to the exemption of manufacturing machinery and equipment from the property tax, total unknown, and there is an additional $123 million from the SGF for the third year of school finance, that money is there but is already committed. What does all this mean? That 7.5% ending balance is pretty impossible to achieve without sizable new taxes or dramatic spending cuts. Even the most conservative of us are going to find it difficult to find enough money to pull out of the budget to come up with a workable ending balance. I would think K-12 spending increase is going to be limited to the already set aside $123 million. I had the honor today of spending an hour or so with the Life Enrichment group at Butler Community College. There were close to 70 members there and what an active and engaged group they are. We discussed some pending legislation; some proposed legislation and I left there with a good feel for what they think are important issues. These include; smoking in public places, immigration, cell phone use in public, personal property tax relief, young drivers, alternative sources of energy, and health issues. *Kansas has a low wage trap and I will try to explain it without charts and graphs. If we take a single mother of two, and she does not work, and stays at home she will receive assistance for Medicaid, child-care, food stamps, WIC, SCHIP, this total has a value of close to $21,000. *Now if she goes to work and earns minimum wage, and still receives “welfare” for a year she is close to $33,000 income. She now loses $5,000 of those earnings to taxes, loses $28,000 of Medicaid, SCHIP, and other benefits, she pays a marginal effective tax rate of 100%, and now she has no financial incentive to get an education or otherwise climb the economic ladder. Result? Stay on Welfare. *If we expand Medicaid or SCHIP we would deepen the low-wage trap and pull more families into it. This mother has to earn close to $21.00 an hour to start climbing out of this trap and start coming out ahead. There is a huge gap between welfare subsidies and $21 an hour income. *CATO institute, 1000 Massachusetts Ave. N.W., Washington D.C. 20001, www.cato.org I read a revealing article in the Wichita Eagle on Sunday, Nov. 4th. The headline was “Teachers, bosses say today’s work ethic needs work”. Is that ever true! In many industries they hire for attitude, train for aptitude. Many skilled jobs go unfilled because of unwillingness of workers to show up, work hard, express critical problem solving skills. This is sad and maybe you do not see it, maybe you do, if so what are you doing to correct it? A majority of our young today seem to lose sight on what it takes to get a good paying job. In China there are more students studying engineering, chemistry, and physics, than there are college students in the US. The world economy is rapidly changing, perhaps no more than when we were all young and “bullet proof”. There are 80- million baby boomers retiring with around 60 million workers to replace us. I ask, if they are to pay our social security, who will pay theirs? I would love to know what you think. I consider it an honor and privilege to be your Representative in Topeka and I want to know what you think. I am still looking for an Intern for 2008. Contact me at johng@carlisleinc.net, www.johngrange.net, home 1115 Rim Rock Road, El Dorado, Kansas 67042, 316-321-2087

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