Dear , 

The first week of the legislative session is now complete.  There is much to report - including the State of the State address, the efficiency study and Governor Brownback's budget proposals.  These three items provide a foundation on which to proceed, as we work towards a balanced budget and continue to implement reforms that reduce the size of government while providing better service on behalf of all Kansans.   
State of the State Address
 
Tuesday evening, Governor Sam Brownback delivered his 6th State of the State address to the Legislature.  He indicated his support for several legislative initiatives, as well as reporting on the success our state has experienced under his leadership the past five years.  I encourage you to read the full transcript of his remarks, which you can do by clicking here.

Executive Orders
 
Governor Brownback issued two key executive orders:
 
Syrian Refugees
In November the governor joined over 30 other Democrat and Republican governors across the country in issuing an executive order halting the relocation of Syrian refugees to our state. This week he expanded that executive order:
 
"...no department, commission, board or agency of the government of the State of Kansas shall aid, cooperate with, or assist in any way the relocation of refugees that present a safety and security risk to the State of Kansas, until such time as an adequate vetting process is in place with adequate assurances to the state."

There was a request for the vetting process and information on refugees being sent to Kansas from the Obama administration and there has not been a response.  

The first priority of state government is ensuring the safety of all Kansans. 

We have all seen the news reports about terrorists disguising themselves as refugees to enter countries of the free world.  While we are very proud of the history of Kansans giving shelter to those seeking help, but we cannot allow terrorists to take advantage of our compassion.  A proper vetting system must first be put into place.
 
Planned Parenthood Funding
Gov. Brownback ordered the termination of funding to Planned Parenthood from all Medicaid and KanCare programs within the state.  Many Americans have risen up against Planned Parenthood and argued it should be stripped of all taxpayer funding.  I agree with this direction and support the action taken by our governor.
The Governor's Budget
 
The governor's budget director, Secretary Shawn Sullivan, released a proposal to a joint committee of House Appropriations and Senate Ways and Means Committee members.

Director Sullivan revealed the trends of state spending going back 50 years under several governors of both parties.  See the chart below.  Through this graph, you can see how decades of spending contributed towards creating a bloated government.  Over the past few years, the Legislature has taken steps to reduce spending and bring about the end of big government - a desire Kansans have consistently expressed at the ballot box the past three election cycles.

Please note that state spending since 2011 has increased an average of 1.8% annually, which is below the rate of inflation.  Past administrations increased state spending by an average of over 10% annually.  Household budgets cannot increase at such a rate to provide the tax dollars needed for such unsustainable government spending. Please see the chart below to get an overall historical picture.

In the past few legislative sessions, much has been done to control state spending, despite massive federal regulations from the EPA, Obamacare, increases in Medicaid caseloads and the additional funding for K-12 education.  Here is a chart describing the broader areas where state spending goes:



Here are some of the recommendations from the Governor's Budget:

Kansas Department of Transportation - The governor's budget proposal includes transferring $25.0 million from the department of transportation to the general fund.  The budget director reports that this will not result in the cancellation of any previously announced road projects.  Some good news - significant savings have been realized due to construction projects coming in under original cost estimates.  Kansas can and will continue to have the best roads in the country.  A robust maintenance plan that continues to be in place.
 
Children's Initiative Fund - The budget proposal shifts the Children's Initiative Fund (CIF) to the general fund. The CIF has numerous programs for children including; the Children's Mental Health Initiative, the Children's Cabinet, the Child Care Quality Initiative, Early Childhood Block Grants, Kansas Reads to Succeed, and Early Head Start.  This proposal does not eliminate CIF.  Every program will continue to be funded by the state.

In the past, CIF has not been considered part of the state general fund and has been "off budget."  This transfer brings more transparency to the budgetary process by ensuring expenditures are fully accounted for.

The budget proposal also moved the "Children's Cabinet" to the Department of Education, making it easier to coordinate early childhood education programs across the state. The Kansas Department of Education supports this change.

Other recommendations include means testing the Parents As Teachers program (PAT), which allows taxpayer dollars to be targeted for those who need it most.

Kansas Bioscience Authority - The Kansas Bioscience Authority (KBA) voted to move towards privatization in its December meeting and the governor proposed legislation to authorize it. The sale would add an estimated $25 million in revenue to the FY 2017 budget, but it would also allow the KBA to continue its mission of stimulating economic growth throughout the bioscience industry. 

The Revenue Report for Fiscal Year 2016

There are those who often cite revenue reports to push the idea that Kansas tax cuts have failed and want to justify a demand to return to the era of bloated government and higher taxes of Kathleen Sebelius.  However, Kansas is not an island.  It is part of a national and global economy, impacted by many things that run contrary to the positive things we are doing in Kansas.  That reality was reflected in the revenue report the Legislature received for the fiscal year.

Individual income taxes for December came in below estimates due to a lower than expected amount from withholdings.  However, January is trending upward due to that fact.  Sales tax came in 0.9% below estimates.  This is a trend seen throughout the country.  December marked the weakest year in retail sales for the U.S. since 2009.  There are speculations lower retail sales is caused by a decrease in discretionary income due to higher health tax premiums, higher deductibles and higher out-of-pocket costs due to Obamacare.
 
The Midwest region - Iowa, Arkansas, Oklahoma, Texas, and Nebraska - all brought in sales tax revenue 1-2% below expectations. Lower oil and gas prices, coupled with declining agricultural commodities added to missed projections.  It's important to keep in mind all the factors holding back our economy. 


Efficiency Study

Perhaps the most important news of the week regarding the fiscal health of our state was an efficiency study received this week. Last year the Legislature approved hiring an audit consulting firm after receiving bids from multiple companies.  Alvarez & Marsal (A&M) won the bidding process and spent the past several months looking at state spending and developing suggestions for efficiency purposes.
 
The study's recommendations proposed around $200 million in proposed cuts for this fiscal year, and around $2 billion over the next ten years.  The Legislature will carefully go through and analyze all of the proposals.

You can read the full report here.

Below is a sampling of some of the recommendations:

Insurance:
The report included a plan to centralize risk management for the state. The move would change the way the state purchases and administers insurance policies.  It recommends establishing a Department of Administration office of Risk Management which would create a single point of contact for state insurance issues. This would result in a $170 million saving to taxpayers over the next five years.

Education:
The report suggested the state put a cap on education cash carryover balances.  Currently, 92 school districts carryover between 15-20% of their budget every year. The study recommends that schools be required to carryover 10% of their annual budget but no more than 15%. Those with an excess balance would go back into education funding. They also suggested moving schools onto the state's health insurance plans, saving the state $360 million over five years. Furthermore, the study calls for the state to establish a new grant and foundation program within the department of education, so that it will be easier to apply and process additional education funds, and centralize information technology functions within the department. The total savings from education is estimated at $609 million over the next five years.

Department of Revenue:
A&M recommended that the Department of Revenue fill 54 revenue officer positions and 14 auditor positions. The state currently has a shortage of these positions, which has resulted in a backlog of taxes that need to be paid to the state. This could bring $321 million new tax dollars into the state's coffers. They also recommend that the state extend invoice payments to a 30-day payment cycle instead of the current 10 days. This will allow state finances to be spent with more flexibility, saving the state $3 million dollars a year.
Medicaid:

According to A&M, Kansas has the highest Medicaid eligibility error rate in the country. Therefore, the state could be paying for services that patients are not eligible for. Kansas eligibility error rate is 4 times the national average. A&W recommends the state outsource all eligibility responsibility to a third party vendor. This could save the state more than $136 million over the next five years. 


IMPORTANT TO NOTE - PROPERTY TAX LID

Last year, the 2015 tax bill (HB 2109) included a provision which would require city and county governments, beginning in 2018, to obtain voter approval prior to any property tax increase exceeding the rate of inflation.  It seems in preparation, some Johnson County commissioners were successful in increasing property taxes this year.
 
Therefore, this year, SB 316 aims to move up the effective date of last year's legislation from 2018 to July 2016. This provision is anticipated to save Kansas property owners roughly $2 billion over ten years and will be a very high priority to get passed. The total amount of property tax revenues collected by Kansas cities and counties has increased from $859.4 million in 1999 to over $1.6 billion in 2013 (total increase of over 90% during this time period). 

Kansas Republican Caucus - March 5th

The Shawnee-area location for the Kansas Caucus on March 5th has been announced:

Rhein Benninghoven Elementary School
6720 Caenen
Shawnee, KS 66213
 
The time of the Caucus is from 10:00 a.m. to 2:00 p.m.   If you can't make it to this location, you may want to attend any of the eight locations in Johnson County.  There will be over 100 places in the state of Kansas.

If you're interested in volunteering, please contact Mike Pirner at mike@pilchercook.com.  He is my Campaign Executive Director and is also the captain for the Shawnee Caucus site.  It is imperative we receive 20-30 volunteers who can perform various tasks.  
In Conclusion

Thank you for reading this week's newsletter.   As always, if you have any questions or concerns, feel free to e-mail me.

In honor of your liberty,

 
Mary Pilcher-Cook

Mary Pilcher Cook
913-396-9306
mary@pilchercook.com

Facebook:
http://www.facebook.com/imwithmary

Working in honor of your liberty.
Contact me today!