Newsletter - Turnaround

We have finally reached Turnaround!

I hope everyone has been able to plow themselves out of the two bouts of snow we had! The weather 10 days ago caused the postponement of regular legislative business on February 21 and 22, pushing those items into this past week. With “Turnaround” happening on Friday – the midpoint of the session in which most bills must be passed out of their house of origin, this past week was quite busy, even though we had some weather delays on Tuesday, as well.

With all that in mind, however, I do have quite a bit of news to report. This newsletter is going to be quite comprehensive, covering the myriad of votes we took over the last three weeks, focusing on major legislation. As always, if you have any questions, don’t hesitate to contact me.

School Finance - SCR 1608

In my previous newsletters, I wrote quite a bit about education in Kansas. For more than 40 years, particularly the last 20, the issue of school finance has been a difficult one to solve on a long term basis, with solutions being hard to come by due to a mix of competing legislative interests and the continuous cycle of litigation.

The most recent instances of this cycle were in 2005 in the Montoy decision and also just last month in the Gannon decision. Though the latter is on appeal, what these rulings essentially did was force the legislature to spend a specific amount of money on one aspect of the entire school finance equation – base state aid per pupil, and they make it illegal to have any real long term reform which would also help our local schools – such as lifting the local option budget.

To put an end to this costly line of litigation which does nothing but exacerbate the flawed formula, the Kansas Senate adopted, by a vote of 27-13, SCR 1608, which would amend the Kansas Constitution by adding “The financing of the educational interests of the state is exclusively a legislative power.” This reinforces the Legislature, not the courts, as having the sole responsibility of appropriating taxpayer dollars”. Upon passage in the House, this measure would go to the voters in August of 2014.

The legislature, not the courts, is the people’s voice on educational interests, and needs to be the entity to tackle the school finance issue with creative, long-term solutions that bring together competing interest and carves out a future for our education system that is focused on children, not on meeting the various elements of a complicated court-imposed formula.

Taxes

The effort to reduce the state income tax and provide long term economic growth to Kansas proceeded this week when the tax committee passed out HB2059 as amended. The committee amended SB 78, the Governor’s tax reform proposal, into the bill and the full Senate is expected to debate the proposal early next week.

I have discussed the Governor’s tax plan in previous newsletters – and the key element is to understand that the effort is part of an overall glide path towards eventually eliminating the income tax altogether. Though there are some intermediate steps we must take to get us towards that goal, I believe the evidence overwhelmingly shows that states with a low or zero income tax have demonstrated the most positive economic growth.

With several states in our vicinity also discussing similar measures, it is important that Kansas remain on this path if we are to be economically competitive. When considering tax cuts that have the greatest economic growth, studies show income tax rates have the greatest effect of growing jobs and the economy.

In that regard, it’s important to note that the Kansas Department of Revenue says that for six-tenths of a cent on sales tax, we can provide a 16% bottom bracket rate cut in 2014, another 24% bottom bracket rate cut in 2016, and a 28% upper bracket rate cut in 2017.

Adult Stem Cell Center

I was happy to join with my colleague, Senator Mary PIlcher-Cook, and 21 other co-sponsors in introducing SB 199, a bill that would create the Midwest Stem Cell Therapy Center at the University of Kansas Medical Center. SB 199 would establish a center that would conduct extensive research on adult stem cells, opposed too embryonic. It would offer medical treatments using adult stem cells, cord blood, and other non-embryonic stem cells, advancing the treatment options for patients across the country. The legislation requires a director and a 13-member advisory board to oversee the center. SB 199 is an exciting piece of legislation that will make Kansas a worldwide leader in stem cell research, as it will be one of the few stem cell research centers in the country.

Senate Bill 199 passed 33-7 this past week and I was proud to vote Yes.

Kansas Joins Dodd-Frank Lawsuit

The week before last, Attorney General Derek Schmidt announced that the state has signed onto a multi-state lawsuit challenging a key provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Kansas joined 10 other states on the lawsuit pending before the U.S. District Court of the District of Columbia.

The Dodd-Frank bill gives the secretary of the Treasury the ability to order the liquidation of financial institutions deemed “too big to fail.” In filing the lawsuit, the attorney general noted that such authority undermines the property rights of shareholders of any such institutions, including holdings of the Kansas Public Employees Retirement System (KPERS). This is not to mention the fact that such action by the Treasury would leave the Kansas taxpayer responsible for the tab.

Attorney General Schmidt also observed that the new power granted to the Treasury allows the federal government to pick winners and losers among investors in large institutions. This is done while circumventing state bankruptcy laws and, consequently, without any meaningful court supervision.

Medicaid Expansion

On Friday, February 8, the Kansas Department of Health and Environment (KDHE) released the results of an independent analysis, done by Aon Hewitt, on the potential enrollment and budget impact of the Affordable Care Act’s (ACA) implementation to the state Medicaid/Children’s Health Insurance Program (CHIP).

Assuming that moderate statewide population growth will continue and using CY2010 Medicaid/CHIP enrollment as a base, the study estimates that if the state chooses not to expand Medicaid, the Medicaid/CHIP enrollment will increase by 20,563 in CY2014, ramping up to 41,538 (23,740 for Medicaid and 17,798 for CHIP) by CY2016, when the ACA is expected to be fully implemented. The anticipated 10-year (CY2014-CY2023) state general fund (SGF) increase for no expansion will be $513 million.

If the state chooses to expand Medicaid, Medicaid/CHIP enrollment will increase by 111,880 in CY2014, ramping up to 226,003 (25,416 from currently eligible Medicaid, 49,384 from currently eligible CHIP, and 151, 203 from those newly eligible for Medicaid in CY2016, once the ACA is fully implemented. The anticipated 10-year (CY2014-CY2023) SGF increase with expansion compared to no ACA will be $1.1 billion.

Undoubtedly, an increase of $1.1 billion over ten years to state expenditures is a very significant increase that would have an impact on the state’s ability to fund its other core responsibilities, such as education. If the state expands Medicaid, the ACA does state that the federal government will pay 100 percent of the cost of the expansion for the first 3 years and then 90 percent after that. However, if the federal government, which is currently running trillion dollar deficits, is not able to make good on its offer, then the impact on the state budget would be even greater.

Governor Brownback has not yet announced a decision on whether or not the state will expand Medicaid, but in my view it is unlikely that the legislature would ever approve it and I don’t see it reaching that point. The Supreme Court gave us the ability to opt out, and I believe this would be the wisest course.

Kansas renewable energy portfolio standard (SB 82)

One disappointing vote this week came when SB 82 failed by a narrow vote of 17-23, where I voted yes.

SB 82 would have amended the state’s renewable energy portfolio standards, also known as RPS. Current RPS requires utilities to generate or purchase electricity generated from renewable energy resources. The utilities are required to meet a specific percentage of demand with renewable generation capacity as specified in current statue. SB 82 would amend the years 2016 and 2020 to 2018 and 2014 for the period that renewable energy credits could be used to meet a portion of RPS requirements.

The bill would have adjusted the time frame in which a utility is required to use a certain percentage of renewable energy as part of the RPS requirement. It would also have allowed the Kanas Corporation Commission (KCC) the ability to delay a utility company’s RPS requirement for a specified period of time if the company provided good cause to do so.

During the debate on the Senate floor, an amendment was offered by Senator Forrest Knox (R) to further define excessive costs to retail electric customers, adding clarification. The amendment also instructed the KCC to enact a study to determine the projected retail rate impact for utility companies, and examine electric rates of neighboring states and the impact federal regulations and taxes have on utility rates.

It is my hope this issue will continue to be reviewed and that perhaps we will have the opportunity to vote on similar legislation in the future.

Removing the statute of limitations (SB 167)
One of the more important items we voted on this week was a bill that would eliminate the statute of limitations for the crimes of rape or aggravated criminal sodomy. This change in current statue would permit the prosecution of extremely violent sex offenders to occur at any time. The bill also extends the reportable time period for underage victims of sexual assault that do not rise to the level of rape until the victim turns 28. SB 167 increases the statute of limitations for such sexual assault on adult victims from five to ten years. The bill preserves current law, which enables the prosecution of sex offenders any time law enforcement uncovers new DNA evidence linking a suspect to the sexual assault. On Thursday, February 28th the Senate passed SB 167 by a vote of 40 to 0.

Drug testing for welfare and unemployment recipients (SB 149)

It is very important than when receiving government cash assistance, that people are behaving in a way that will lead to employment and a productive life – SB 149 helps achieve that.

SB 149 requires recipients of Temporary Assistance for Needy Families (TANF) and unemployment payments to undergo drug testing if there is reasonable suspicion they are using illegal substances. The bill prohibits individuals who fail a drug test from receiving state TANF benefits until they have completed drug treatment and job skill training programs provided by the Kansas Department of Family and Children (DCF). A second failed drug test would result in additional treatment and training program completion and prohibit the recipient from receiving benefits for one year. Recipients who fail a third drug test are permanently suspended from receiving state taxpayer assistance.

Existing federal TANF funds would cover the treatment programs required for recipients in SB 149. Neither the Kansas general fund, nor individuals who test positive for the use of illegal substances would pay for the cost of treatment.

Children are not at risk as a result, because although individuals who fail the drug test would not qualify to receive state government assistance until the completion of this treatment program, a drug-free third-party would be able to receive and administer TANF funds for qualifying children.

SB 149 would also require potential employers who have a job applicant fail or refuse to take a drug test as part of the hiring process to report the outcome to the Kansas Department of Labor. Failure or refusal by a job applicant to take a drug test would result in the individual loss of their unemployment benefits until they complete drug treatment and job skills training programs.

On Thursday, February 28th, 2013 the Kansas Senate passed SB 149 by a vote of 31 to 8. I voted yes.

Other Legislation

The Senate adopted SB 73, a technical fix and update to worker’s compensation law. Proposed changes under SB 73 include raising the amount an injured employee could claim from $120,000 to $130,000 for temporary injuries, and from $250,000 to $300,000 for more permanent injury. The legislation passed 32-8.

Additionally, the Senate passed SB 141, which prohibits the practice of gender-specific abortion. This means mothers or families that seek an abortion solely because of the gender of the unborn child would be denied, and practitioners discovered to practice this would be penalized. Receiving bipartisan support, the measure passed out of the Senate with a vote of 37-2. Another notable piece of legislation to pass out of the Senate is SB 27, which is a proposal that would provide veterans the opportunity to take part of the Military Service Scholarship Program. Currently the scholarship is only available to veterans who served in specifically named countries. SB27 amended the definition of “qualified student” to include future students who may be in combat operations in countries that are not listed in current law. Our Military service men and women deserve to have the opportunity to qualify for this scholarship regardless of where they served. The Senate is proud to have passed the legislation unanimously.

Finally, as the Affordable Care Act is set for implementation next January, the Health and Welfare Committee introduced SB 163, also known as ‘mandate lite’ legislation. The measure would allow insurance companies to provide products for healthy individuals and families who plan on resisting the ACA’s requirement. Insurance companies would be able to sell medical policies that could exclude coverage of mental health, pharmacy, or chiropractic treatments to individuals who wouldn’t use them and don’t want to pay for them. The legislation will bring more certainty to the marketplace and provide Kansans with a safety net if their employer decided to drop their coverage. The legislation passed the Senate 38-1.

Conclusion
Thank you for taking time to read this week’s newsletter. Please let me know if you have any questions. We return to session on Wednesday, after a four day break. Thank you.

Senator Jeff Melcher
Phone: 785-296-7301
Email: Jeff.Melcher@senate.ks.gov


Paid for by Melcher for Senate; Daniel Kjergaard, Treasurer