Topeka ? Cities and counties would forgo state aid for a third straight year but taxes would be raised to give school districts more money under proposals outlined by Gov. Kathleen Sebelius in her State of the State address.

Sebelius’ proposed budget for the fiscal year that starts July 1 totals $10.2 billion — about $29 million less than the current budget — and is balanced partly with $126 million from the state’s cash reserves.

The rest of the balancing act requires that the state once again go back on commitments in Kansas law to dedicate money to local governments and transportation. For fiscal 2005, those obligations are about $90 million for cities and counties and $202 million for transportation improvements.

Separate from the budget plan she presented Monday night, Sebelius also urged that the state spend an additional $304 million on elementary and secondary education over the next three years by raising taxes on sales, personal income and property.

“We are not adequately funding our schools,” the Democratic governor said in her speech.

The Legislature’s Republican leaders had been predicting that lawmakers would reject any tax increases, and they gave Sebelius’ proposals a chilly response after she shared the details with them Monday night.

Dismay could also greet Sebelius’ decision to finance state operations partly by withholding aid again from cities and counties. The denial of state aid this year inspired protests from local officials and left them considering cuts in services or higher property taxes.

Some legislators wondered Monday night whether Sebelius’ proposal to divert funds from highway projects means the future of a 10-year transportation program begun in 1999 is now in doubt.

Sebelius’ budget assumes that the Department of Transportation can do all projects promised in 1999 at lower cost, but she also recommended that the state issue $465 million in bonds, starting in fiscal 2006, to help fill any potential gaps.

“It is a prudent plan,” Sebelius said of her overall budget. “I pledged to continue vital state services within existing resources, and this budget does that. I pledged to look for every alternative for savings and efficiencies, and this budget does that.”

Sebelius also proposed nearly $17 million in new funds for state universities, community colleges and vocational-technical schools; an additional $40 million to cover higher social service costs; and an additional $6 million to shorten the waiting list of disabled Kansans seeking in-home services.

Details of her proposal to increase taxes were included only in a written summary of the plan that was distributed to legislators and the media after Sebelius began speaking at 7:05 p.m. In the speech itself, carried on some radio and TV stations around the state, Sebelius did not give specifics.

Sebelius proposed:

• Raising the state’s 5.3 percent sales tax to 5.5 percent on July 1, to 5.6 percent in July 2005 and to 5.7 percent in July 2006.
• Imposing a 5 percent surcharge on personal income taxes, with no expiration date specified.
• Raising the state’s 20-mill property tax levy for schools to 21 mills in 2005 and to 22 mills in 2007. The owner of a $100,000 home would pay an additional $9 a year in taxes in 2005.

Without the education package, state spending for schools would remain at $3,863 per pupil. The plan would raise spending by $250 per pupil over three years.

In his party’s formal response to the speech, House Speaker Doug Mays, R-Topeka, said, “Increased taxes would render a crushing blow that could send our state into an economic death spiral.”

Senate President Dave Kerr, R-Hutchinson, said Sebelius had told voters during her 2002 campaign “that she would do more with less, that she wasn’t talking about a tax increase. This is a very large tax increase, and it hits all the taxes.”

But House Minority Leader Dennis McKinney predicted that Kansans would be open to higher taxes because Sebelius also proposed to establish a school audit team and make districts more accountable.

“She did a good job of outlining our options, saying here’s the current resources to get us through today and here’s the vision to get us through tomorrow,” said McKinney, D-Greensburg.