Hawver: First and Biggest Fight

It’s going to take a few days, but the first and biggest fight of new Governor Laura Kelly and, well, apparently the entire Legislature, will break out this week.

Martin Hawver
Martin Hawver

The bell that started the first round: Friday’s 117-0 passage by the House of the Senate’s unanimously passed on Valentine’s Day of a short little bill that sends $115 million to the Kansas Public Employee Retirement System to pay back the $97 million (plus interest) that it didn’t pay in 2016.

Repaying debt…not a bad idea, except that everything is different when the Legislature is dealing with the pension fund that, while “not actuarially balanced,” is still making those monthly pension check payments to retirees.

But here’s the big fight over the very first bill passed by this year’s heavily Republican Legislature to the brand-new Democrat governor Kelly: pay KPERS now, or pay KPERS later…

Why is this so mesmerizing? Because the governor clearly lost her argument to the Legislature for her own KPERS plan. Now, she can sign the bill, reluctantly, and say she just didn’t want to waste time with a veto.

Or, she could veto the bill and get overridden. Hard to say who would want to be in that picture with her.

Or she could just put it in her desk drawer, and after 10 days it becomes law anyway with none of her DNA on it.

The governor hasn’t said what she intends to do with the bill.

There really isn’t a good choice for her, and it’s going to be interesting to see how she describes what she’s going to do with the bill.  A well-thought-out explanation is necessary, one that will make the ultimate beneficiaries of the pension program believe she’s working for their best interests.

The “pay KPERS now” side of the issue makes sense to pay back money that lawmakers borrowed from the pension fund back when the state was scrambling to keep its annual balance out of red ink. That $97 million non-payment to KPERS was needed as the state started a series of tax increases to dig out of the former Gov. Sam Brownback “lower taxes and the economy will boom, and we’ll take in more money” experiment which just didn’t work.

The “pay KPERS later” side of the issue? Well, Kelly had a different idea. Refinancing the pension fund’s actuarial shortfall (basically the amount it would need to pay off all its members in one day) over another 30 years brings smaller annual payments that the state is more likely to actually pay. Everyone gets paid, it just takes longer…and the state pays interest on that refinancing for 30 years, a long time.

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The politics are interesting because that borrowed money is from the schools/state workers’ section of the pension fund. Democrats voted for the bill because those two categories of pensioners are often solid Democrat voters.

Republicans decry that interest the state would pay on refinancing the pension system under the Kelly plan. They’ve made a big deal out of the $24,000 per day interest the state is running up by not paying that $115 million now. They apparently pay cash for their cars and houses.

What happens next? Nobody but the governor knows. But whatever Kelly does, it is going to influence future governor-Legislature fights, and whatever happens, she’ll go into Round 2 of the prize fight a little weakened.

Dramatic, and it might tell the future. Or at least change the relationship between the governor and the Legislature.

Get your bets down…

 

By Martin Hawver

Syndicated by Hawver News Company LLC of Topeka; Martin Hawver is publisher of Hawver’s Capitol Report—to learn more about this nonpartisan statewide political news service, visit the website at www.hawvernews.com

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