Archive for Saturday, February 24, 2001

Property tax levy seen as key to school finance

February 24, 2001


— Because it raises hundreds of millions of dollars for public schools, the statewide property tax levy is likely to be renewed by the House.

But that doesn't mean it will sail smoothly to passage.

"There will be lots of discussion, but at the end of the day it will be renewed," said Rep. John Edmonds, R-Great Bend, chairman of the House Taxation Committee.

The bill renewing the mill levy has already survived spirited debate in the Senate. Now, in the House, the measure faces new questions.

However, Edmonds said, in a year in which state revenues are tight, the levy is too big a piece of the finance equation not to be renewed.

The state imposed the levy in 1992, when legislators rewrote the school finance formula. The idea was to reduce the burden on local districts for funding schools.

Under the Kansas Constitution, legislators must vote on the levy every two years. Once as high as 35 mills, legislators have reduced it to 20 mills. A mill is $1 in tax for every $1,000 in assessed property value.

The levy is expected to raise about $382 million for schools during fiscal year 2001, which ends June 30.

House Speaker Kent Glasscock, R-Manhattan, said he did not sense a desire to replace revenues produced by the mill levy with an increase in the state sales tax. To bring in the same revenue, the sales tax would have to rise 1.25 cents on the dollar, to 6.15 percent.

Mark Tallman, lobbyist for the Kansas Association of School Boards, said the finance formula itself is fine but that there is too little money for public schools.

Tallman acknowledged that each time legislators reduced the property tax levy, they directed more general tax revenues to public schools to offset each property tax dollar lost.

But he said they haven't set aside enough general tax revenues. Had the levy stayed at 35 mills, it would bring in another $300 million a year, and the state still could have increased its commitment of general tax revenues, he said.

"If the Legislature had not reduced taxes that much it could have kept up with inflation," Tallman said.

As a result, he said, local option budgets, or LOBs, that were intended to give districts a way to pay for extras actually fund such basic needs as teacher salaries. An LOB allows a district to spend up to 25 percent more than the budget the state sets for it, but only if voters agree to raise local property taxes.

He said in 1992, local option budgets raised less than $100 million. Now they raise more than $350 million.

"If you raise the sales tax, you will not replace the LOB but will minimize them," Tallman said. "Lowering the mill levy will exacerbate the problem."

Some legislators want to allow larger local option budgets. House Minority Leader Jim Garner said choosing between a sales tax and increasing the limit on LOBs is not a fair choice.

"The LOB just starts a bad precedent," said Garner, D-Coffeyville. "We'll get right back where we were in the late '80s, where you had wealthy school districts and poor school districts."

An attempt failed earlier this session in the Senate to reduce the levy from 20 to 19 mills, despite arguments that the property tax disproportionately hurts the agriculture community.

Sen. Tim Huelskamp, R-Fowler, said most of his constituents object to financing schools through property taxes. His district includes Dodge City, where a large portion of the population works at packing houses.

"They would rather see an increase in the sales tax because of our large transient population," Huelskamp said. "That way, everyone pays their fair share."

He voted in favor of reducing the mill levy. Others share his desire to eliminate property taxes and would increase another tax to make up for the lost revenue.

Sen. Les Donovan, R-Wichita, said he would support increasing the state's sales tax by 1.1 cents on the dollar to 6 percent if the state could eliminate the levy.

He said the sales tax is a better source, because people outside Kansas traveling through the state pay it. He views property taxes as punitive.

"The property tax is paid strictly by folks in Kansas," Donovan said. "As a business owner, you can have the worst year in history and your property taxes doesn't change if anything, it goes up."

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