Business lobbying organization’s political roadmap conflicts with governor’s plans
BY: TIM CARPENTERKansas Reflector
TOPEKA — The Kansas Chamber released a legislative policy agenda Thursday endorsing a proposed single rate state income tax, opposing expansion of Medicaid health coverage to 150,000 low-income Kansans and supporting investment of state tax dollars in private K-12 education.
These issues are poised to receive plenty of attention during the 2024 legislative session convening Monday, but it’s not clear the business lobbying organization and conservative Republican allies can push through the tax reform vetoed last year by Gov. Laura Kelly.
Nor is it known whether the Democratic governor could complete a six-year campaign as governor to broaden Medicaid eligibility to the working poor. Or, whether enough members of the House and Senate were willing to advance the cause of school choice by shifting hundreds of millions of dollars in public school funding to finance vouchers for private school students.
Alan Cobb, president and CEO of the Kansas Chamber, said the projected $2.5 billion cash surplus in the state treasury was sufficient to implement tax reductions. The 2023 version of the 5.15% single-rate approach would slice as much as $330 million annually from state revenue. It would deliver a $250 per month benefit to Kansans earning $250,000 per year, but $8 per month for people making $75,000 annually.
“Lots of states, including blue states, are moving — some rushing — to a single-rate tax,” Cobb said. “It’s partly keeping Kansas competitive. And, it is a tax reduction for everyone.”
Eric Stafford, vice president of government affairs for the influential business lobbying organization, said Kansas would be “very, very competitive” with neighboring states if it dropped the single-rate personal income tax closer to 4%. He said Kansas had the highest individual income tax rate in the region.
Under Kansas law, the state income tax obligation of a single person or a married individual filing separately or as head of a household would be 3.1% on the first $15,000 of taxable income, 5.25% on the next $15,000 and at 5.7% on all income above $30,000.
In an interview, Kelly compared the push for a massive personal income tax cut to the law signed in 2012 by GOP Gov. Sam Brownback that aggressively diminished state income tax collections. His approach led to years of extreme budget problems and eventually to a substantial increase in the state’s sales tax. The Brownback agenda, which centered on gradually eliminating the state income tax in Kansas, was repealed by bipartisan action in 2017 over his objections.
Kelly ran successful campaigns for governor in 2018 and 2022 that relentlessly pointed to financial lessons learned from the Brownback-style income tax cuts. The former state senator from Topeka urged Republican legislators not to repeat that taxation misstep.
“Flat tax will ultimately have the same impact as Brownback’s tax experiment. Just won’t be quite as abrupt and quite as deep, but over time it would have the same impact,” Kelly said.
Health care: Medicaid
The Kansas Chamber, which operates a political action committee to influence elections, released its 2024 agenda during a news conference in Topeka. The document touched on taxes, workforce development, legal and regulatory reform, energy policy, education, government efficiency and health care.
Cobb said the Kansas Chamber would join House Speaker Dan Hawkins, R-Wichita, and Senate President Ty Masterson, R-Andover, to block the governor’s call for expansion of Medicaid.
Kelly conducted a statewide tour last fall to promote expansion and vowed to include her sixth plan for expansion in next week’s State of the State speech. Forty states and the four states surrounding Kansas have expanded Medicaid eligibility under a federal law in which the U.S. government pays 90% of expansion costs and states cover 10%.
“There is a cost. It’s not free,” Cobb said. “I think we’ve made the better fiscal argument. You look at the cost overruns that in some states have been astronomical.”
Stafford said approximately half of 150,000 people who would benefit from Medicaid expansion in Kansas had some form of private health insurance. It would be imprudent to remove those Kansans from the private marketplace in favor of a government program, he said.
In a twist, Kelly has sought to win over GOP lawmakers in 2024 by including a work requirement for individuals who would benefit from Medicaid expansion. A work mandate has been among the GOP’s frequent demands in terms of Medicaid reform.
“I think we’ve got an honest shot at it,” the governor said. “Most people who are eligible for Medicaid expansion, I think it’s 73% or 75% of them, are working. I would rather propose this, even though I’ve never been a fan of the work requirements, I’d rather do this and get Medicaid expansion out.”
School choice: Vouchers
The Kansas Chamber said it would lobby on behalf of legislation that would earmark state tax dollars to private schools or homeschools. In the 2023 legislative session, there were insufficient votes to advance a bill that would have provided $5,000 to state support to every private school student in Kansas.
Critics said it was unfair to strip public schools of state aid. They argued transfer of cash would primarily benefit existing parochial or homeschooled students, not draw at-risk children to those alternatives. And, skeptics said, private schools weren’t held accountable in terms of student achievement. Also, they said the Kansas Constitution mandated the state deliver a suitable education to public school students — not students who choose to enroll in private schools.
“We’re all of the above, whether it’s public school, homeschool, private school,” Cobb said. “Some of the educational attainments, looking at test scores, seem to be dropping. Kansas isn’t alone. That’s across the country. Declining math and reading scores is not a good thing. I think 20% of Kansas high school graduates are considered prepared for academic higher education.”
In October, the Kansas Department of Education reported Kansas state assessment results for math were the highest since 2017. The 2023 math assessment indicated 10% of all students assessed scored at Level 4, which was an increase from 8.6% in 2022. Overall, more students in Kansas scored at proficient levels in math and English in 2023 than they did last year, state officials said.
Kelly said she would veto school voucher legislation as she had in the past. She asserted Democrats were solidly opposed to additional school choice funding and rural Republicans had their own doubts about the value of private school vouchers. In urban areas where Kansas’ private schools congregate, she said, there was no evidence those schools would be dedicated to welcoming at-risk students.
“Rural school districts really don’t want this. They don’t have any private schools,” Kelly said. “I think there’s been so much more evidence coming from states that have done vouchers, that these aren’t impacting those at-risk kids.”