The 2016 legislative session convened with several issues to resolve before we can see final adjournment. The wrap-up was short with the goal to adjourn before any additional court decisions come forward.
By this time in the session we mostly vote on non-controversial conference committee reports. However, we also vote on a budget and some of the conference reports were controversial and were sent back several times to be fixed.
While the break was fairly quiet, the one big event was release of the new revenue estimates. Total revenues collected are up marginally over last year, but balancing the budget is still difficult. The reason we continue to have these budget challenges is partly because of increasing costs that are out of our control and because revenues were decreased too drastically, all at one time.
Increased costs for Medicaid are one of the primary drivers of the increased costs. Most Federal programs have a State match with increased costs that must be met. Because of the reduced and flat revenue expectations due to the 2012 tax cuts, meeting these increased requirements consume nearly all the revenue increases, leaving little for any other state program.
As we look at the overall revenue forecast, the outlook for the current fiscal year which ends June 30 shows the revenues needed to meet the budget were short by $140M. That is quite a lot of money to find in two months and the only place to go in the short time frame is mainly found in KDOT and KPERS. Then the 2017 fiscal year shows another shortfall of $151M before we even begin the budget year.
In the end what happened was that all of the $520M KDOT receives from sales taxes will be transferred to the general fund and other funds for both 2016 and 2017, causing several road projects to be delayed or cancelled. A portion of the transfer of funds to KPERS will also be delayed until 2018. With nothing else changing, I wonder how the ‘loan’ will be repaid in 2018. The State does not have the revenue to make the payment now and likely will not have the revenue when the bill is due in 2018. An attempt to reverse the so-called LLC exemption failed, so even the 2017 budget remains out of balance, leaving the Governor to make the final cuts to the budget.
The next big issue is to wait and see what the courts do regarding the school equity bill quickly passed before regular session ended a month ago. There is a chance the Courts may determine the equity criterion has been met sufficiently, but if not the Governor may call us back for special session to try another fix. Special sessions in election years are not popular because of the campaigning necessity.
We voted on many conference reports but the most controversial one was regarding step therapy. What that means is that Kancare will begin treatment with drugs using the lowest cost drug first and then stepping up to more expensive drugs if the lower cost does not work effectively. That went back several times for revision and was one of the last to be voted on.
The budget is typically the last item up for vote. I had told leadership earlier I would not vote for the budget as it did not balance and there was not a clear path out of the predicament we are in. As it turns out, I missed the last seven votes, instead taking a trip to the emergency room with a kidney stone. I’m feeling fine now. So we finished the 2016 session. I simply do not like leaving town with the budget unbalanced. The budget is the primary job of the Legislature, even if it is an election year.