Archive for Monday, April 2, 2001

Sales tax

April 2, 2001


City hall underwriting the cost of keeping Free State High School's baseball team stocked with the best metal-alloy bats?

Or the county commission paying salaries of nurses taking care of elementary schoolchildren?

It's not a far-fetched idea, given Atty. Gen. Carla Stovall's written opinion that city or county governments in Kansas may legally use local retail sales tax revenue to finance capital improvements and operating budgets in public school districts. The catch is that all expenditures must be under the umbrella of "economic development."

It's the type of unorthodox tack Kurt Thurmaier has been advocating as a candidate for Lawrence school board.

"I think the good news from that opinion is that there is no problem whatsoever if the city or county wanted to use some of the sales tax revenue they're getting now for reimbursing the school district for services, including health or athletics," Thurmaier said.

Public policy question

The city of Lawrence and Douglas County already collect the maximum sales tax 1 percent each allowed by state law. But it's possible that either of these governing bodies could reallocate a portion of existing sales tax revenue.

"It's a public policy," said Mike Wildgen, Lawrence city manager. "Commissions can change public policy over time."

"Interesting concept," said County Administrator Craig Weinaug. "The most difficult barrier would be convincing county or city commissioners that they should vote, in effect, for an increase in sales tax to benefit a responsibility that wasn't theirs."

Thurmaier has proposed that the city provide about $1 million annually to support athletics programs and that the county allocate $700,000 to support nursing programs in Lawrence public schools.

Legislative responsibility

If given a chance to vote on the concept of a sales tax for schools, Lawrence Supt. Randy Weseman would darken the "no" oval on his ballot.

Weseman said adding sales tax revenue to the public school funding mix would widen the economic gap that already plagues Kansas districts. It would exacerbate weaknesses in a state school finance system that has been the target of a series of lawsuits during the past decade, he said.

"It fuels the fire of inequity throughout the state," Weseman said.

He said the sales-tax approach would inappropriately relieve the Kansas Legislature of its constitutional obligation to properly finance public education. "The Legislature can say, 'Let somebody else raise taxes.'"

In Stovall's opinion, city and county governments have home-rule powers that offer wide latitude in determining what constitutes "economic development." Governing bodies could declare that spending sales tax revenue to improve schools was an economic development initiative useful to attracting people or businesses.

Rep. Tom Sloan, R-Lawrence, said Stovall's interpretation didn't mesh with the Legislature's perspective on the issue.

"I do not think this was ever legislative intent when we were addressing economic development bills," he said.

Salina experiment

The city of Salina and the Salina school district already have the type of cooperative deal Stovall believes is capable of withstanding legal challenge. In 1998, Salina voters approved the collection of a quarter-cent sales tax to support instructional technology programs in the school district. The tax brings in about $2 million annually, and will remain on the books until 2005.

Salina is the only district in the state relying on such a funding arrangement, said Dale Dennis, assistant commissioner in the Kansas Department of Education.

Enrollment drops in dozens of Kansas school districts, including Lawrence, have been increasing pressure on local education budgets.

But Dennis said the sales-tax option wouldn't help all districts. Lawrence can't raise more sales tax under current state law. And in some school districts, retail businesses are scarce.

"Some school districts don't have a city where there is much purchasing," Dennis said.

Seeking an alternative

Thurmaier said the state could provide an alternative to cities and counties already at the 1-cent sales tax cap.

The Legislature could authorize creation of special "local-option" sales taxes assessed by cities or counties for the benefit of public schools, he said.

Perhaps the tax for schools could be as low as one-tenth of a cent, he said.

Lawrence got into the sales-tax business in 1972 with voter passage of a half-cent sales tax. Another half-cent was approved in 1990. Both were designed to support police and fire departments and help contain property taxes.

Douglas County adopted a 1-cent tax in 1994, with proceeds shared by the county and four cities Lawrence, Eudora, Baldwin and Lecompton.

In Douglas County, the money has been used to build public buildings and enhance public park services.

Already partners

The city and county governments are already significant financial partners with the Lawrence school district, Wildgen and Weinaug said.

When the school board made a push to gain voter approval of a bond issue to build Free State High School, the city and county agreed to reduce their mill levies to offset increases necessary to pay for the construction project.

"The mill levy was the same, but it had a higher percentage for the school district," Weinaug said. "It make it easier to adopt the bond issue."

Wildgen also said the city used sales tax revenue to build an indoor pool at Free State High School. The city also invested $200,000 in construction of an extra-large gym last year at Langston Hughes School for the purpose of supporting recreational programs such as soccer and basketball.

The city also has acquired park land most recently 40 acres in southeast Lawrence for a public park that reserves space for construction of a new school, he said.

Bob Johnson, chairman of the Douglas County Commission, said that Stovall's argument about "economic development" initiatives might not carry much weight in the Lawrence area.

"I think it might be difficult to justify improving our schools to enhance our economic development because, in my opinion, our schools are already a significant plus in our economic development efforts," he said.

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