The Kansas Supreme Court is expected to rule soon on the legislature’s latest effort to redeem itself in state funding
for local schools. This issue has acquired a leathery history,
worn to a shine with lawsuits, legislative shouting matches,
impassioned hearings, deliberations plunged into long,
sweat-stained nights.
Stunning episodes have at times salted this history, providing
moments that define the relationship between power
and purpose.
One special adventure – now a distant memory – was
launched in 1995, three years after our basic funding
reforms had become law.
Background: Some lawmakers had begun to question the
reforms’ durability. Most of the state’s 304 school districts
(now 286) derived a lion’s share of their operating expenses
from a shared state revenue pool – funds collected through
a uniform state property tax levied in each district. In return,
most local taxes were reduced, some dramatically. The state
funds were redistributed to each district by a formula based
chiefly on district enrollment; other factors determined any
additional aid.
But the revenue pool had limits. And those limits were
being tested by, among other things, new state and federal
mandates covering special education (severely handicapped),
uniform testing and accountability standards,
pre-school programs and more. Most such mandates were
under-funded or not funded at all. Local taxes had begun to
increase, again.
In mid-March of 1995, State Sen. Jerry Moran, then a
Hays Republican, teamed with Sen. Bill Wisdom, a Kansas
City Democrat, to craft Senate Bill 41, a dramatic plan to
phase out the state property tax for local schools.
“If education is a state responsibility,” Moran said at the
time, “we must change our philosophy to pay for it with an
equitable state tax, not an inequitable local tax.”
At the time Moran (who is now a U.S. senator) was
majority leader of the Kansas Senate. He and Wisdom had
written a bill that phased out the state property tax over
three years. The tax cut was to be financed with graduated
increases in state sales and income taxes.
Moran was the first of 11 witnesses who testified for the
measure before the Senate Tax Committee. Other proponents
included the Kansas Farm Bureau, Kansas Livestock
Association, Kansas Board of Realtors, Kansas Association
of School Boards, American Association of Retired Persons
and Kansas Lodging Association.
Richard Kurtz, at the time owner of Lindsborg’s Viking
Motel and president of the Lodging Association, also testified:
“Our members are strongly in favor of replacing this
(statewide) property tax with sales and income taxes.”
Moran’s bill had been approved a month earlier, in late
February, by the Senate Education Committee, then headed
by chairman Dave Kerr, a Hutchinson Republican. His
panel had provoked an angry rebuke from other Senate
leaders, including the president, majority whip, and the
chairmen of the tax and appropriations committees – all
from Johnson County.
Gov. Bill Graves joined them in denouncing Moran’s
plan. Senate President Bud Burke, of Olathe, condemned
the measure and re-referred it to the Tax Committee, where
chairman Audrey Langworthy of Prairie Village was under
orders to bury it.
In spite of opposition from establishment rulers, sentiment
in favor of the Moran-Wisdom bill was growing in
the Senate. And on Langworthy’s committee, eight of 11
members said they favored the bill, or would vote for one
like it.
Moran argued that the property tax, a Civil War relic, was
no way to fund education in the 20th century. He had seen
trouble simmering and wanted to prevent it from boiling
over. His premise was that the base of school funding –
property values and tax levies – is subject to shifting local
conditions, politics and policies; state funding for a state
education system should be derived from more equitable
state taxes. The citizens of Ellis County, he noted, pay the
same state income tax rate as those in Johnson County.
Moran’s plan went this way:
– The state school property tax (35 mills at the time; it’s
now 20) would be phased out over three years; the levy on
motor vehicles would be scrapped immediately.
– Over the same period, the state sales tax would change
from 4.9 to 6 percent over four years. (The state sales tax is
now 6.5 percent.)
– Personal income tax rates would be increased an average
nine percent (depending on income levels) each year for
two years. (At the time, the rate for a married couple filing
jointly with taxable income from $30,000 to $60,000 would
increase from 6.25 percent to 6.8 percent. On an income of
$50,000, the increase was $275 each year.)
— The rates on banking privilege taxes, then at 4.25 to
6.75 percent depending on income, would be increased 18
percent over two years.
— Other corporate taxes would not be increased.
Although the Moran-Wisdom plan to reform school
funding had wide support in the House and was gaining
support in the Senate, it eventually withered under pressure
from Johnson County, and the threat of a veto from Graves.
Legislators in Johnson County said the taxes proposed in the
bill would so damage their economy that any property tax
cuts (estimated then at $109 million for the county) would
be overrun in the long haul.
There the matter dissolved. As a district judge would later
note, various special interests have sprouted and have been
mollified with money for an array of programs. Examples:
special aid for both low- and high-enrollment districts; aid
for busing; for vocational education; for “at-risk” students;
for local option budgets; for bond and interest payments; for
capital expenditures; and for districts with federal property
off the tax rolls.
The episode has been consigned to the dusty archives of
adventure abandoned.
Moran’s legislation, it turned out, was more about power
than taxes. It was about authority at Topeka, and the groups
who rely on it. It revealed, glaringly, how any change must
first be measured for the sovereignty before it is passed to
the citizenry.
‒ JOHN MARSHALL
