The Legislature returned to Topeka after three weeks off. Nothing has been resolved in the time the Legislature was away except that the new revenue estimates are in and we can finish up the budget based on those numbers. Several issues remain. Most of them are relatively simple and need to be finished or refined, but the big issues are revenues, school finance and then finishing the budget based on what happens with revenue and school finance. The plan seems to be address the school finance issue first, then revenue, but even that is up for discussion. The budget is the last thing every session as the finishing touches cannot be done until the end as some of the final legislation may have a budget impact.
The Tax Committee met our first day back. The discussion in committee centered around what committee members wanted included in the tax package. After the committee met, there was a tax conference committee where Senate and House members put together a proposal similar to HB 2178 that passed both the House and Senate but was successfully vetoed by the Governor. The House will vote first, but that was delayed for some reason. If it passes the House, then it goes to the Senate for a vote. If it passes and is vetoed, the Senate will get the first try to override.
As for the K-12 school funding formula, that bill remains in the K-12 Budget committee. An attorney was hired to review the bill for an opinion as to whether or not the proposal, known as HB 2410, meets the requirements set out by the Supreme Court. As it stands now, HB 2410 would add about $750M cumulative over a five-year period. While some are saying that is not enough, there are those that think the amount is too high. So, does that mean the amount is actually about right? Time will tell as 2410 is brought out of committee and voted on.
As stated earlier, after these issues are resolved the budget will be considered. The budget as it currently stands is about $120M underwater. I need to qualify that by saying that the $120M number reflects that the last quarterly payments for KPERS will not be made and transfers from KDOT to the general fund will continue to be made. If the full KPERS payment would be made, another $140M would be added to the deficit, and if extraordinary transfers were not made from KDOT that would add $288M for 2018, making the real deficit number more in the neighborhood of $550M. Obviously that is a large number between what could be considered a structurally balanced budget and where we currently stand. That number does not include approximately $150M in additional funding that would be required for schools, so work needs to be done on that as well. In scouring the budget, there are very few places within the existing budget to find several hundred million to cut. One of the most vulnerable areas appears to be higher education. As we finish the budget, we will certainly find out what the priorities of the Legislature are.
Many are guessing how long it will take to finish veto session. I’m thinking it will take at least two weeks, but no one really knows. Much of that depends on the Governor’s office as well. The Governor has ten days after a proposal is on his desk to decide what he will do, so that is a time frame that may need to be considered as well.
Just to be clear, none of what I have discussed has occurred yet, but the expectation is we will be debating and voting on all of those issues. Next week could be full and busy. Whatever happens, the Legislature will be here for the long haul, if necessary.