One of the things Kansas Policy Institute President Dave Trabert says his organization does is help people work through false choices.
Kansas Policy Institute bills itself as an independent think tank to advocate for free market solutions. The chairman of its board is George Pearson, whom Trabert confirmed had been a longtime employee of Koch industries. He also confirmed the organization co-published a paper on doing away with the RPS standard for renewable energy.
“Some people would say our policies are conservative, Trabert said Tuesday night in an interview after giving a Kansas budget presentation at Horace Good Middle School. “But I would prefer independent over conservative. They imply social connotations, and we only do economic issues.”
On Oct. 8, there was a budget presentation made locally by Annie McKay of the Kansas Center for Economic Growth and Bernie Koch of the Kansas Economic Progress Council, both of which bill themselves as nonprofit, nonpartisan organizations, laying out a set of current expenditures and a set of planned cuts and asking citizens to imagine how a $3 billion cut could be made without cutting into the services those planned expenditures represent.
According to their numbers, 62 percent of the state’s budget is going to K-12 education, 20 percent to Medicaid and 6.7 percent to public safety, agriculture, natural resources and general government. The tax cuts will take $3 billion out of the $6.3 billion dollar funding all that.
“So when we think about the impact of eliminating nearly 50 percent of the state general fund, it’s difficult to imagine how we do that without impacting those investments that we look at here,” McKay said during the presentation.
But that, according to Trabert, is just the sort of false choice the institute is hoping to dispel with presentations like the one given Tuesday to an audience of about 25, which included teachers, administrators, businessmen and legislators.
“A tax plan is a classic example where citizens are supposed to have to choose between higher taxes and lower services, and that’s a false choice,” Trabert said. “We can have both lower taxes and good quality services. We have to do that because that is the only way to have sustained job and economic growth. That’s how the other states with lower taxes and stronger economic growth do it.”
Trabert took issue with figures presented by McCay showing tax cuts had cost $263 million in state aid for education. According to the figures he presented from the Kansas Department of Education, state aid this year was $224 million more than in 2012.
He also presented a chart showing that per-pupil aid has gone from just more than $9,000 to about $14,000 from 2005 to 2015, figures he said were obtained from the Kansas Department of Education.
Those are figures that participants in the audience later pointed out include many things that don’t go directly to student instruction, such as bonds for building projects.
Those expenses, Trabert said, nonetheless represent decisions on how to spend taxpayer money for education, even if they don’t go directly to students, and should be included in a complete analysis.
After showing that chart, Trabert showed a graph that plotted the increased spending with performance levels for reading scores, as measured by NAEP test scores. The data for performance were shown as flat lines for fourth-graders.
He asked the audience to think back on all the political commercials about education.
“Can you find one that talked about performance?” he asked.
He said the charts show it’s not how much you spend, but how you spend the money that matters.
“Those lines haven’t changed, and the standards on the test haven’t changed, but the per-pupil funding has gone up. All that increased spending didn’t have an impact. And this is what you would see across the country,” he said.
Trabert believes schools have come up with some good ideas to become more efficient.
“It might take some legislation or cooperation with local school boards, but there’s literally hundreds of millions of dollars that could be re-purposed so that your taxes don’t go up more, and we get more money into the classroom so that services are still provided,” Trabert said.
Trabert said there is a transportation hub at every school district, and he doesn’t think they’re all necessary.
“Everything is in silos,” he said. “For the most part, there’s 286 different systems of everything.”
Trabert said if some of those silos could be collapsed, districts could save money on expenditures for things that aren’t going into classrooms, and thus get more instructional money.
Outsourcing KPERS, using a state-wide accounting system; providing some instruction services regionally or statewide; consolidating buying power for medical insurance, computers, software and fuel were among some of the ideas Trabert suggested.
Trabert moved on to the subject of income tax reform. While too early to make any definitive conclusion, he said early indicators are encouraging.
“This will take years to develop,” he said. “You don’t have the data you need. There are so many things that just take time, and some of the data doesn’t come until two years after the fact, but the early signs are very strong.”
Trabert said it isn’t too surprising that economic stagnation hasn’t turned around yet in Kansas.
“You cannot turn around decades of economic stagnation overnight, especially in this case, when we are dealing with the remnants of the federal recession and a lot of businesses are talking about how Obamacare and the regulations that came with it are suppressing job growth,” he said. “All these factors are working together. It will be a while before we catch up.”
While he agreed Kansas is trailing national averages, he said that doesn’t mean the reforms have been a failure.
“We were trailing in the first place,” he said. “That’s why the reforms were enacted. We have a long way to go, but we’re coming from behind the national average in the first place.”
Trabert took Gov. Sam Brownback to task for calling his tax reforms an “experiment.”
“We know what works, and it’s simple economics,” Trabert said. “If we can provide the same service with less money and leave more tax money in your pocket, that money is going to circulate in the economy. That’s not an experiment. We know what works.”
The early indicators, according to Trabert’s presentation, included: Private sector GDP has beaten the national average and income taxing peers for 2013, private sector job growth has gone from 70 percent over the past 15 years to 82 percent for 2013 and 85 percent through August 2014, and the state has had two consecutive years of record new business applications.
Trabert said Kansas was 14th in the nation in personal income growth for the second quarter of 2014, and Kansas leads the Mid-America Business Conditions Index rankings, according to Creighton University.
From there, Trabert went on to the five-year Kansas Budget Plan put together by the Kansas Policy Institute.
He said there are a number of surplus funds sitting about that could be used to tide the Kansas budget over to get the state where it needs to go. Figures ranged from ending with a 3 percent balance — which he later admitted is lower than he would recommend — on up to 15 percent or more.
Trabert said historically, the state legislature has set a 7.5 percent ending balance as the minimum, except in years where exceptions were made. He would recommend the state begin setting aside a rainy day fund in addition to a required ending balance. Trabert is an accountant.
“Seven and a half percent has worked for Kansas, if it’s consistent,” he said in an interview after the presentation.
During the presentation, Trabert referred to $150 million held in surplus by the Kansas Department of Transportation.
“You hear it as robbing KDOT,” Trabert said, “but you know what that is? It’s taking the surpluses back. That’s one of about 1,400 funds the state operates, and we have the balances on them, and we can see how they’ve grown and grown and grown over the years.”
Trabert said the state now has a transportation secretary who has found ways to bring down costs, and there’s an opportunity working with the Kansas Turnpike Authority, too.
“So our plan is, let’s roll back the tax to where it was in 2013,” Trabert said, adding that the overall budget plan works even if this isn’t one of the options chosen to implement.
“This is about putting menus of options together to look at,” Trabert said. “There are no right or wrong answers on these things. It’s what the Legislature wants to do. All the highway plans would still get done, and you’d never hear again about robbing the bank with KDOT because they couldn’t build up those surpluses any more.”
Trabert also spoke about education surplus dollars and made the following suggestions for education:
School districts that have large cash reserve increases could be required to use a portion of the increases for a $147 million one-time savings, still leaving districts with $700 million; Universities could be required to use half of the tuition collected but not spent, saving another $38 million one-time; new hires could be put in a 401K retirement plan, saving $147 million over four years, and a statewide payroll system for school districts would capture $21 million annually.
Various other such elements would allow the state to provide the same or better level of services while ultimately reducing spending, and he invited participants to try all these factors out using a budget building tool at their website, kansaspolicy.org.
“We did a scenario of small, medium and large revenue reduction,” Trabert said. “Even under a large revenue reduction, our plan for Kansas would only need to operate less than 5 percent more efficiently in the first two years.”