Flatter, simpler and fairer.
Those were the adjectives used by Governor Sam Brownback to describe changes he intends to push for the state’s economic policy during the 2012 legislative session. Brownback stopped by The Gazette office to meet with staff and editors Wednesday afternoon to answer questions about his agenda for the upcoming year. His stop was one of a series of trips the governor is taking to talk with news organizations about the year ahead.
While details of a new income tax policy will not be released until later, Brownback said that issue will be a big one in the upcoming session of the Kansas Legislature. With federal money — a quarter of the state’s budget — dropping, the governor said his proposed plan will position the state to grow economically.
The state started this year about $500 million in the hole and ended up $100 million in the black, he said. Going forward, he intends to continue to encourage changes to the state’s income tax policy.
“We want to get a more growth-oriented tax policy,” Brownback said. “It’s going to be a flatter, simpler, fairer income tax policy.”
Using statistics from the Internal Revenue Service, he showed that, among states in the region, Kansas has the highest taxes of all except Nebraska. From 2004 to 2009, the numbers show the state has lost population to every surrounding state except Nebraska.
“It’s not necessarily a direct correlation, but it does seem that we get people from higher tax states and we lose people to lower tax states,” he said.
The governor believes that the proposed changes should bring in roughly the same revenue, he said.
“We’re going to change it, and we believe we’re going to grow with a different policy,” he said.
Brownback will announce the specifics of his tax proposal during his State of the State address on Jan. 11.
Legislators will have a chance to hold hearings on the issue during the 2012 session.
School finance will be another major focus for legislators in 2012. This year, Brownback’s office has gradually rolled out possible changes in funding for K-12 schools, which make up half the state’s general fund budget.
“I said during the campaign that the formula is broken and I thought it needed to be fixed,” he said.
The school funding formula hasn’t been revised since 1992. Brownback believes the issue needs to be revisited at least every five years.
“I’m tired of the litigation,” he said. “I want us to deal with this in the legislature.”
School funding consists of three parts: Base state aid, the building fund and KPERS for teachers. One possibility would be to combine the building fund with base state aid.
“You literally have school districts building buildings and laying teachers off,” Brownback said.
He noted that although last year saw a cut in base state aid per student, the amount of money put into K-12 education actually increased.
Other possibilities for changes to the funding formula include reducing the state-mandated 20-mill property tax levy, which will allow school districts to raise or cut local levies. Another possibility is to allow counties to use a sales tax option to fund schools.
To better help control costs, Brownback will propose changes to Medicaid, putting everyone into an integrated care system. The system, called KanCare, is intended to reign in costs without affecting benefits. In KanCare, the various agencies within the Medicaid system will be realigned for efficiency.
“So Health and Environment will be the Medicaid agency, along with environment and the other things,” he said. “SRS will transition to a family and children’s agency, and then moving the state hospitals under aging and disability services or something like that. So you get more alignment of your structure with your costs.”
Another proposed change will affect the Kansas Public Employees Retirement System, shifting it to something similar to a 401(k).
“I’d like to see us go to a defined contribution for new hires in the state,” Brownback said.
Looking ahead to the coming legislative session, Brownback said it’s hard to predict how supportive of his initiatives the legislature will be.
“Everybody has an idea on tax policy, and everybody’s got an idea on school finance,” he said. “You’ve got a lot of moving parts here. They know what they’ve got now and everybody complains about it. ... It just can’t keep going this course.”