The big news in Topeka this past week, at least as far as Hutchinson and Reno Co. is concerned, was the overwhelming approval and passage of the Eaton Corp. job retention package. SB 164, which passed the Senate earlier in the session, easily passed in the House and is on its way to the Governor, who has announced she will sign the bill. The measure utilizes a percentage of the state income tax withheld from Eaton employee pay and allows it to be used to further upgrade the plant in the expectation that a newer, better product line will be made in Hutchinson leading to the long term success of the plant. Total state assistance is capped at $2M over ten years. In order to reach the $2M boost over 10 years, Eaton will have to maintain an average of $12.9M in payroll or nearly $130M over 10 years. Not only does the state have no out-of-pocket cost or risk, the state comes out ahead by 10% of taxes the first 3 years and 60% of taxes the last 7 years.
Other news of significant import for the state was passage in the House of the mega appropriations bill for FY 2007 and 2008. House Republicans were successful in holding off dozens of amendments calculated to inflate the amount of state spending. Of the overall state budget of $5.9B, only a little more than a net $1M was added to the State General Fund spending. Key votes on the mega bill included one eliminating $2M in funding for a presidential preference primary. Another key vote, important to central and western Kansas health care, would require approval by the Wichita Center for Graduate Medical Education before the proposed Kansas Medical Center St. Lukes Hospital affiliation is allowed to go through. We added $1.2M for newborn health screening and $2M for domestic violence and sexual assault outreach services, another important vote for rural Kansas. Another $1.6M was added to expand the HeadStart program, funded exclusively with tobacco settlement funds. The Senate appropriations bill will probably be debated this week and then a joint conference committee will work out the differences in anticipation of the Omnibus appropriations bill coming out during the wrap-up session, after the final consensus revenue estimates for the session are released in early April.
Those supporting expanded gaming in Kansas are still hard at work on a bill to debate in the closing days of the 2007 session. However, statistics show that live pari-mutuel racing is a dying industry throughout America and Kansas. The live handle at Kansas tracks has decreased from $273M in 1990 to $20M in 2005, an average 15% decrease per year. In fact, revenue has decreased so much that the state tax on wagers no longer covers the state’s cost to regulate the industry!
Economists say slot machines have had little impact on halting declining attendance at pari-mutuel racetracks in other states. Putting casinos at racetracks does nothing but prop up an ailing industry and line the pockets of track owners. Over 75% of regional casino revenues would come from the home county and surrounding contiguous counties. At the same time, social costs imposed on local governments by the casino would be at least 25% of revenues. Nevertheless, the proposed House bill provides only 3% to the home county and home city, while providing 24% to the state.