General Legislature and Governor:
This year is the first year with the new Governor, now we have a divided government. It is unclear at this point what exactly that will mean but most think there will be some degree of gridlock until there is some sort of bargain between the legislative leaders and the Governor. School funding, taxes, KPERS, and Medicaid expansion are all going to be hotly contested. What is clear is that no faction has the votes to do anything. The Democrats have the Governors office but only about 1/3-1/4 of the votes in either chamber and the Conservative leadership have more votes but not likely a majority and certainly not enough to override a veto. This could be a long hostage negotiation.

There was a shift in the makeup of the House that has resulted in a change in leadership on that side. More conservative lawmakers control a majority of the Republican caucus. They, in turn elected more conservative leadership.

Taxes have been one of the more interesting issues this year so far, if only because they may be the only issue moving. Last year the legislature, at the 11th hour attempted to pass a tax cut package that would have squared Kansas tax policy with the Federal tax package Congress had just passed. This was commonly referred to at the “windfall” tax. The truth of the matter is this is not a simple correction of one part of the tax code. This is complicated, and frankly I cannot fully explain it to you because I do not yet fully understand it. What is clear is that there is a portion of the tax code that, if not squared with the Federal tax code will not allow certain tax payers to itemize and they will in all likelihood owe more than they would otherwise. There are other sections that deal largely with large companies and the corporate tax rate that are less popular and appear to make up the bulk of the reduction in state revenues that are far less popular. These are currently working their way through the process in one large bill that will be on the Senate floor this week.

The politics of the issue have gotten out of control. The Chair of the Senate Tax Committee was introducing these issues separately instead of in one big bill. It appears that the President of the Senate disagreed with the strategy and created a new tax committee, took all of the members of the former tax committee with the exception of the Chair and placed herself as Chair of the new committee. I have never seen this sort of move. This effectively sidelines the Chair of the Tax Committee. Now, the new committee passed the whole package out together. This promises to have some level of conflict on the floor of the Senate in the coming days.

What is clear is that the state is digging out of a hole. Kansas got by on the last tax plan by not paying its share into the KPERS retirement system, and not funding roads as well as gutting many of the state offices. There are essential roles of government that are simply not being fulfilled at this time. My parents always told me “when you are in a hole, stop digging” and this makes sense to me. I can understand wanting to give out a tax break to folks in the form of continuing them to itemize, but I cannot see handing out tax breaks when there is talk of reamortizing KPERS debt and the uncertainly being faced with school finance.

Medicaid Expansion
The new Governor has made it clear, expanding Medicaid is a top priority. To that end, Governor Kelly announced the formation of a working group to put together a proposal to expand Medicaid. This proposal will still need to go through the entire legislative process after this executive group puts it together. As described earlier, the legislature has changed somewhat in its composition. The House is more conservative, and elected more conservative leadership that have opposed and likely will continue to oppose expanding the program. The actual votes to pass the program are still there. The issue is that the Chairman, and the Majority Leaders in each chamber oppose expansion and they wield a great deal of power. They can choose to hold hearings or votes at all and even choose to not bring up other bills that relate to Medicaid for fear of an amendment, because they know it would pass. Getting around this will not be easy, we will still need to work and push hard.

One of the key talking points the opposition is using against expansion is that it does not help rural hospitals. While it is true that greater funding goes to urban hospitals, this is because that is where the proportion population lives. Therefore, that is where the money goes. We all know that getting some payment for patients would be better than getting no payment and that any increase in cash flows help any company. There is plenty of data out there that show that rural hospitals in non-expansion states like Kansas are many times more likely to close than a rural hospital in an expansion state. The Kansas Farmers Union and its members and partner organizations are in a unique position to assist in carrying that message. The Alliance for a Healthy Kansas will continue to work but they will need help to put these myths to rest. This is a good opportunity to talk to your legislators, let them know how you feel on this topic. Talk to board members and hospital CEOs your area, to your local chambers of commerce, local law enforcement or other organizations that care about your local rural community and urge them to raise their voices on the topic. If you have a story, about how this would effect you personally, share it. These stories are what really puts these myths to bed. I would be happy to talk with anyone to discuss how to make that happen.

There will be a bill to square the new fed law with the states on hemp. I would expect that this will make the bureaucracy of growing hemp much easier to tolerate.

Senator Tom Holland D-Baldwin City seems to be spearheading the effort for a medical Marijuana bill this year. His bill will have many of the same checks and taxation methods used in the alcoholic beverage industry and would be heavily regulated. Governor Kelly expressed interest during the campaign in a medical marijuana bill but it does not appear to be a high priority. States that have passed marijuana provisions tend to have provisions requiring processing, growing or other operations to be located within the state.

Kansas is one of the last holdouts but I think eventually this issue will turn. Colorado, Missouri and Oklahoma all have legal marijuana. With the provisions earlier described and the clear pattern of legalization this seems to be a budding opportunity for Kansas farmers. (pun intended)

Association Insurance Plans
There are a series of bills offered by the Farm Bureau and others that relate to association offering health plans to their members. The Farm Bureau’s bill defines their products as not “insurance” and removes them from Kansas Insurance Department regulation. This is a tough issue. What they are doing is removing the essential benefits and would not have to abide by the preexisting conditions rules. In other states that allow this sort of plan, they tend to charge very high rates for people that have a preexisting condition and fairly low rates to those that are otherwise healthy. They offer these plans only to members of their association. This lowers rates considerably for the people that are healthy but skews the general insurance market for everyone else including rates in the marketplace. I can clearly understand the point of the bill, to lower costs for members of the association but can also see the greater policy issue it creates for the general public.

If I can editorialize and ponder a question for a moment; I am concerned about the population that the bill proports to cover may have problems. I do not need to tell you this but, farmers have historically had a difficult time getting health insurance. You have job hazards that are difficult mathematically address and you are in an ever shrinking risk pool. Combine that with the fact that the average farmer is getting older and older and I am not sure how these plans will cover farmers if their strategy is to skew the pool and cover the healthier people.

The Governor proposed to reamortizing the unfunded liability that the state owes the KPERS retirement system. This is just like refinancing a house, it is a financial tool. The Governor is not reducing benefits to retirees or future retirees. This will cost a tremendous amount of money over paying at the current rate. The issue is there is little appetite for a tax increase and there are programs that the Governor as well as the Legislature want to pursue as well as basic government functions that must be funded so where will the money come from?

Rural Revitalization Committee
This year a new committee was added, the Rural Revitalization Committee will be Chaired by Representative Don Hineman (former House Majority Leader) R-Dighton. So far this committee has heard informational briefings on population migration patterns, rural broadband, the Food and Farm Task Force, rural grocery stores, and various economic development presentations. The committee is also planning presentations on Health and other topics in the future. What has yet to be seen is what will the committee do to address these, now well defined issues, and how does it fit into the legislative process. One thing that is for sure is that rural communities are not doing well and this committee is raising attention on the problem and educating legislators on these topics and that should pay dividends into the future no matter what.