Though details of Gov. Sam Brownback’s proposals for the coming year won’t be released until his State of the State address on Jan. 11, lawmakers already are speaking about the biggest issues that will face the legislature during the 2012 session.
Some of those major issues for Sen. Jeff Longbine include school finance reform, income tax reform, redistricting and how to fix the retirement system for state employees.
“I think we’ve got some real major issues,” Longbine said of the year ahead.
One of the major discussions that will take place in the legislature will involve the governor’s proposal to shift school funding to a more local level. Brownback wants to remove the cap on local districts’ property tax mill levy and reduce the state’s burden in funding schools. One reason for the proposed changes is to avoid the frequent lawsuits that have taken place since the current funding formula was adopted in 1992. Longbine said that on the surface the proposal looks good, but some aspects of it are worth looking at more closely.
“What happens if a district needs to build a new building or upgrade technology?” he asked. “Because there are no plans for the state to help with bonding or construction. The local level, local decisions are great as long as those boards don’t do it with huge property tax increases or that type of thing.”
Another concern is how the more rural districts will be able to keep up with those districts that have a broader tax base.
“(Rural) districts are facing a real challenge because they don’t have enough valuation locally to be able to raise property tax enough to make a difference,” Longbine said. “The removal of the property tax cap in the governor’s proposal is probably something to try to appease Johnson County districts, who have opposed the cap for a long time.”
The governor’s proposed income tax reforms also loom large on the horizon. Though details of the proposal have not yet been made clear, the governor hopes to reform the state’s income taxes to make Kansas more competitive with surrounding states.
“I know very few details on his income tax proposal,” Longbine said. “It appears that he wants to lower the tax rates on individual income tax down to a more competitive level. Which sounds great on the surface, but we need to make sure that we’re not doing that with sales tax or property tax.”
Referring to the state’s “three-legged stool” — income tax, property tax and sales tax — Longbine said legislators will need to make sure the proposal is not a tax shift and that it will afford opportunities for growth.
Problems facing KPERS, the retirement fund for state employees, also will be a much-discussed issue in the Statehouse during the session. The system is out of balance as it is, and unless it is reformed there will only be bigger problems ahead.
“There are a number of issues with KPERS,” Longbine said. “Number one is that I don’t think on the state side of it that they have fully contributed the amount that they were required to. The second thing is that I think there were some decisions made back in the 90s that were based on faulty actuarial data and some bad decisions were made.”
Perhaps the biggest problem with the retirement system is that it has been dragged down by the under-performing stock market.
“What makes KPERS challenging is that the expected rate of return that’s used is at 8 percent,” Longbine said. “Well, we all know the market hasn’t been performing at 8 percent for some time, and so every year that it doesn’t perform at 8 percent creates a bigger deficit.”