Kansas Governor Sam Brownback outlined his agenda for 2012 during his second State of the State Address Wednesday night.
Brownback began his address by saying he is “bullish” on the future. The Republican described Kansas as a state in transition both in the size and scope of government.
The governor highlighted the work of his administration during its first year. Brownback praised being able to cut spending while not raising taxes. The administration also consolidated state agencies and began reforms to health and social service programs.
Brownback also talked about the economy recovery and the renewed focus on rural Kansas. “Last session the Legislature gave our rural communities a new tool to help them reverse their population loss – and they have embraced the Rural Opportunity Zone program, offering no income tax and buying down of student loan debt to new or returning residents,” said Brownback. To date, more than 50 counties have taken advantage of some or all of the program’s incentives.
Brownback outlined his proposed changes to the state’s tax code. The governor wants to:
- Reduce the top tax rate from 6.45% to 4.9%
- Reduce the bottom bracket to 3%
- Eliminate individual state income tax on small business income
Brownback would also eliminate nearly 23 income tax credits and increase mineral severance taxes for some oil and gas producers. It also would keep the state sales tax at 6.3 percent, even though the tax is scheduled by law to drop to 5.7 percent in July 2013.
The governor promised to expand assistance to low-income Kansans. But his proposal to eliminate the earned income tax credit is likely to spark debate. The credit goes to the families of poor workers, and it often results in annual refunds, even if they don't pay taxes.
Brownback also is proposing to eliminate a tax credit for adoption expenses and one for developers who preserve historic buildings.
Revenue Secretary Nick Jordan said Wednesday that deductions for charitable contributions and mortgage interest payments would be among those eliminated under Brownback's plan. But Jordan also says the benefits of those deductions would be offset through future reductions in the overall income tax rate.
Brownback says putting more money in people’s pockets will speed up economic growth. “I firmly believe these reforms will set the stage for strong economic growth in Kansas – and will put more money into the pockets of Kansas families and businesses. Growth that will allow us to further reduce tax rates and increase our competitiveness. Growth that will see people move to Kansas instead of leaving our state.”
Brownback is asking lawmakers to limit growth in government to no more than 2 percent per year, and devote all new revenues to reductions in tax rates.
Governor Brownback says his proposed budget will put the state on a secure financial footing and continue to tackle long-term structural issues.
“My proposed Fiscal Year 2013 budget provides for an ending balance of $465 million, exceeding the 7.5% statutory requirement. This budget fully funds or increases funding for essential services while holding State General Fund expenditures below last year’s levels.”
Brownback endorsed changes to the Kansas Public Employees Retirement System or KPERS. The program faces a projected budget shortfall between $8 and $20 million.
While the shortfall does not threaten pensions of current state workers or retirees, a review found that if changes aren’t made, contributions would need to more than double to meet future obligations.
By an 8-5 vote, a commission formed by the Legislature last year recommended changing KPERS from a lifetime pension program to a 401k style program. The changes would apply to new workers beginning next year.
“Those who are currently receiving benefits or those who are vested in the current system will be fully protected," said Brownback. "The state will increase its contributions to KPERS and require more from workers to pay those benefits. But for all new employees and those not currently vested, we can and should transition to a defined contribution system - like most private sector organizations in America.”
Governor Brownback talked about his plan to reform the state’s Medicaid system. The changes were announced last November.
The new program, called KanCare, is designed to be a one stop shop for users. The realignment would impact three agencies:
- The Kansas Department of Health and Environment will remain the manager of the KanCare program.
- The Department of Aging will be renamed the Department of Aging and Human Services focusing on long-term care options.
- The Department of Social and Rehabilitation Services will be renamed the Department of Children and Families. Its focus will be on family welfare and children in the KanCare program.
Brownback insists the changes will not impact the more than 300,000 Kansans now on Medicaid. “The Lt. Governor, Dr. Jeff Colyer, and our cabinet team, with input from legislators and more than 1,800 stakeholders, have produced a measured, innovative and compassionate proposal. Unlike the current one-size-fits-all system, we will offer all Kansans a choice of plans that best fit their needs.”
Governor Brownback expanded on his plan to change school funding which he announced in December. He wants to give local school boards greater flexibility in how they spend their dollars as well as unfettered power to raise property taxes.
The school finance plan would take effect in July 2013. It would junk a two-decades-old practice of linking some of districts' spending authority to the number of students at risk of failing or the number who don't speak English well.
Brownback promises that none of the state's 283 school districts will see its overall state aid decline. Any changes must be approved by the legislature.
“The people of Kansas know what’s best for their kids. Parents know better than elected officials,” said Brownback. “Parents know better than federal bureaucrats. And parents know better than unelected judges. It is past time to get education dollars out of the courtroom and into the classroom.”
Skeptics question how the plan would promise modest increases in state aid to dozens of rural districts with fewer than 500 students while providing no additional dollars to the state's largest districts. They think it locks in inadequate funding.
*Information from The Associated Press was used in this report.