Gov. Laura Kelly prepares for a podcast recording at Kansas Reflector’s office. (Sherman Smith/Kansas Reflector)
TOPEKA — Democratic Gov. Laura Kelly said the Kansas economy’s emergence from COVID-19 depends on sober responses to the public health nightmare, record unemployment and inevitable declines in tax revenue.
She said the answer wasn’t to recklessly throw open doors to business activity nor starve core state government services, such as education or transportation. That was the strategy of GOP Gov. Sam Brownback after implementing massive income tax cuts in 2012 that failed to deliver promised job expansion but was blamed for years of revenue shortfalls, budget problems and lackluster economic growth.
“I’m trying to avoid that as much as possible because this will end, you know, and I want us to be positioned as best as possible,” Kelly said on the Kansas Reflector podcast. “There’s no doubt that deep cuts to our economic drivers would not only stall us out but send us backwards.”
In her initial round of budget adjustments necessitated by an estimated two-year, $1.2 billion pandemic-inspired budget crater, the governor said her intent was to shield education, transportation and health sectors of state government. She said the situation reinforced her belief that it was wise to veto two tax-cut bills in 2019, because holding that cash in reserve helped cover about $600 million of the problem. The governor recommended the state rely on delayed payment on debts, use of federal COVID funding and a series of one-time cuts to balance the current fiscal year’s budget.
The governor also appointed a task force to guide distribution to cities, counties and businesses of more than $1 billion in federal aid tied to the pandemic. The idea is to cover local government expenditures on COVID-19 and transition to public-private partnerships designed to address ongoing health challenges.
New eco-devo plan
David Toland, secretary of the Kansas Department of Commerce, joined Kelly on the podcast and said the state’s economic challenges ought not be underestimated. There’s no question, he said, there’s a lot of Kansas families who are suffering and that certain business sectors have been hit hard by the pandemic.
“The first thing we have to do is be clear-eyed about the economic realities that we’re facing right now,” Toland said. “One of those is that some of the jobs that have disappeared are gone forever.”
He said the commerce department was nearly finished with crafting the state’s first comprehensive economic development plan in more than 30 years. The Framework for Growth will make the case Kansas must focus on developing personnel talent, expansion of broadband services and opportunities to invest in businesses engaged in advanced manufacturing, animal health, and logistics and distribution.
The economic plan has been modified due to the pandemic, Toland said. The virus’ impact on business illustrated the value of having flexible manufacturers, especially in the health sector, capable of pivoting to emerging demand for goods required by COVID-19. The state also should plow deeper into potential growth of e-commerce throughout the state, he said. It’s important to take advantage of Kansas’ central location and highway network to bolster logistics and distribution operations, he said.
The COVID-19 scourge has so far infected 22,000 and killed 300 in Kansas, based on reports from the Kansas Department of Health and Environment. Testing has revealed COVID-19 cases in 102 of the state’s 105 counties, but three-fourths are concentrated in a dozen counties.
Kelly said the Kansas Department of Labor’s antiquated computer network failed to handle the rapid surge of more than 200,000 new filers for unemployment and led to significant delays in processing claims.
Labor Secretary Delia Garcia resigned in June after millions of dollars in duplicate payments were mistakenly sent to jobless Kansans. The consulting firm Accenture was hired by the governor to help the labor department improve training of call-center employees and speed response times. An automated element added to the mix featured the robotic “Amelia” answering frequently asked questions about unemployment benefits.
“We’re working very, very hard on that,” the governor said. “I do want to say that with … all the problems that we’ve had, we still have been taking care of over 200,000 Kansans and pushed out over $1.2 billion in unemployment benefits throughout the state. It’s been wild and crazy.”
House Speaker Ron Ryckman, an Olathe Republican, said the governor ought to reconsider her veto of legislation that would have earmarked $60 million in idle state funds for loans to small businesses and of a scholarship program designed to help Kansans enroll in technical skill college programs with workplace demand.
He said careful implementation of the state’s new highway construction program should be a key force in economic development for years.
The Kansas House formed a special committee to complete by January a set of policy and program recommendations for the state’s economic recovery from COVID-19. It will examine taxation, business financing, regulatory issues and operations at the state departments of commerce and labor, he said.
“There’s a lot of work to be done to make sure the Kansas economy rebounds post-COVID at a pace that keeps the doors open for our local businesses and ag producers,” said Rep. Blaine Finch, R-Ottawa. “This allows us to … identify where the gaps are and to make sure the federal stimulus dollars coming to Kansas are being used to jumpstart the economy.”
House Minority Leader Tom Sawyer, a Wichita Democrat, said recovery from the pandemic would be aided by retention of the 26-week unemployment benefit that was passed this year as the virus spread across the country. He said state lawmakers should reduce the 6.5 percent sales tax on groceries to help families purchase essentials.
A $5 million business loan program operated by the state commerce department should be expanded after applications outstripped available cash, Sawyer said.
“The money went really fast. Reopening something like that will open up money for small businesses,” Sawyer said.
Chandler Burrows, a Republican from Rolla who is running against incumbent Republican Rep. Marty Long in the most southwestern district of Kansas, said the state’s economy has been “severely mismanaged for several decades.” Because of the pandemic, the state is facing a massive unemployment problem, Burrows said, and Kelly’s response has been “low intensity.”
He proposed abandoning the fiscal responsibility of a balanced budget and instead take on more debt — like a big corporation might do — to invest in the state’s future. During a recession, he said, government needs to address unemployment, make sure businesses don’t shut their doors and make sure people don’t lose their homes.
“I’m talking about either assisting private businesses with helping people get back to work or a public works program,” Burrows said, “and you know there’s a lot of work that needs to be done in our state — making sure there’s high speed internet for every county in Kansas, basic maintenance stuff, beautification projects that we could put people back to work on. Not on a permanent basis, but until the economy’s in good enough shape where the private sector can pick up the rest of that slack.”
He is concerned his fellow Republicans will pursue another option during next year’s legislative session.
“There’s an alternate theory on how to handle the recession, which is pretty much just let the recovery take its course,” Burrows said. “And that sort of aligns more into the orthodox Republicans ideas. I just think that if we actually do something like that, it will be an absolute disaster for our state. We can’t afford to let the recession take its course. We need to actively intervene and do some hands-on management of the economy to get us through the situation.”
Kelly was denounced by Republican lawmakers for being the first governor to order an end to in-person K-12 school instruction in March. She was criticized for a statewide stay-at-home order also implemented to slow spread of COVID-19, which skeptics claimed unnecessarily contributed to economic disruption as “nonessential” workers were prevented from working. Her order to limit mass gatherings in churches was challenged in court.
The governor said she appreciated the weight of her decisions on 3 million Kansans, but was unapologetic about her desire to put public health above other considerations.
“Whenever you’re making decisions that impact everybody’s life, it’s huge. So we, from the very beginning, decided to rely on science and our public health experts to help guide us through this,” Kelly said.
She said the Legislature made some “very bad decisions” that handcuffed her ability to fight the spread of COVID-19. The onus of those decisions was eventually transferred to county health officials and county commissioners. Since that transition, the number of positive COVID-19 cases has escalated.
She said 14 years as a Topeka state senator helped her develop a thick skin to second guessing of decisions.
“I’m also the mother of two girls,” the governor said. “I’m used to a lot of back talk and have figured out how to deal with that over the years.”
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