Jim McLean: GOP Rejection Of Gov. Kelly's Pension Refinancing A Show Of Strength Ahead Of Tax Fight
Republicans in the Kansas Legislature handed Democratic Gov. Laura Kelly her first defeat this week.
On Valentine’s Day, no less.
They soundly rejected her plan to extend the timetable for covering the unfunded liability of the state pension system, KPERS.
Kelly hoped to lower the state’s annual payments by extending the timetable for amassing 80 percent of the dollars needed to pay all future retirement benefits.
Eyeing a long list of immediate needs throughout state government and a possible recession on the horizon, Kelly saw it as a way to free up some much-needed cash in the short term while also making the annual payments more manageable.
“I don’t need the reamortization (the technical term for what she wanted to do) to pay for items in the budget this year,” Kelly said. “What we need reamortization for is the long-term stability of KPERS and the state budget.”
Republican leaders didn’t see it that way. They quickly fixated on the cost of extending the payoff timetable, a whopping $7.4 billion.
To demonstrate just how opposed they were, Republicans rushed the governor’s refinancing bill to the House floor and shouted “no” in unison when called on to vote. They then demanded a roll call vote and rolled up the score against the governor, 87 to 36.
Kelly saw it coming. At a news conference later in the day, she reacted calmly and predicted Republicans would come around at some point. If not next year, maybe the year after.
“I can guarantee you that reamortization will happen. If not now, in the near future,” she said. “States do this all the time. It’s a sound fiscal tool.”
Some saw the defeat of the governor’s plan as a shot across the bow. A signal by Republicans of their intention to thwart Kelly’s proposals to increase public school funding by enough to end years of litigation and to expand Medicaid coverage to an additional 150,000 low-income Kansans.
But Republican Rep. Kristey Williams, from Augusta, said her “no” vote signaled nothing more than her opposition to the refinancing scheme.
“I’m with Gov. Kelly on many of the items in her budget,” Williams said. “But at the end of the day, you cannot trade $146 million annually for a few years for $7 billion.”
A better indicator of competing priorities is the tax-relief bill that Republicans — backed by the lobbying muscle of Kansas Chamber — recently pushed through the Senate and will start working next week in the House. They say it’s urgently needed to avoid imposing an unintended tax increase on Kansans who claim income tax deductions and on the global earnings of some Kansas-based companies.
Cost estimates vary significantly, but Kansas Department of Revenue officials say the tax changes proposed in the bill could reduce revenues by more than $400 million over three years.
Kelly declined to say when asked the other day whether she would veto the bill. But her answer reinforced the widely held belief that’s her intention.
“We have to balance the books,” she said. “We cannot reinvest in our state at the same time we’re proposing reckless tax plans.”
However, whether Kelly rejects the bill could depend on exactly what lawmakers send her. If the Senate version lands on her desk, a veto is all but certain. But if Republican Rep. Steven Johnson, the chair of the House tax committee, shrinks the bill to deal only with the itemization issue, it could force negotiations with the Senate that result in a compromise with a much smaller price tag.
Kelly would have a harder time justifying a veto of a bill like that.
So, be watching the House tax committee. If it gives the bill a thorough working over, that would signal Republican intentions to deal with the governor.
But if the panel makes few if any changes in the bill it sends to the floor, that would signal a desire for a showdown with Kelly. One that could force a veto and, Republicans believe, give them some potent postcard material for the next election.
Jim McLean is the senior correspondent for the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. You can reach him on Twitter @jmcleanks.
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