Healthy economy could help pay for school funding plan

? Unprecedented tax increases, budget cuts, expanded gambling or a combination of the three will be needed to pay for a proposed three-year, $610 million school finance plan.

At least that is what opponents of the plan approved by the House last week said.

But would it?

The same dire warnings were made as state spending grew during the last regular legislative session and special session. But, so far, the rapidly rebounding Kansas economy, and accompanying increased tax receipts, have paid for the increased spending without a problem.

“The growth over the past year has been pretty exceptional,” said Duane Goossen, budget director for Gov. Kathleen Sebelius.

Last year, the Legislature approved a $142 million increase in school funding amid cries for increased taxes or expanded gambling to pay for the plan. The Legislature was then forced into special session to add another $150 million for schools.

That produced more pressure for tax increases or expanded casino gambling. But in both cases, the Legislature rejected the proposals, and new revenue estimates showed lawmakers really had nothing to worry about as tax receipts soared.

This year, the case is being made again that school funding increases will require new revenue sources.

Rep. Kathe Decker, R-Clay Center, said the plan would require a 22-mill increase in state property taxes, a 7.3 percent state sales tax or 21.9 percent increase in the state income tax.

That was based on a memo by the Kansas Division of Legislative Research.

But a competing memo by the agency was devised by supporters of the school funding plan that assumed a lower tax increase because of the availability of increasing revenues.

That scenario outlined a .15-cent sales tax increase, 3.1 percent income tax surcharge and no property tax increase.

Rep. Ward Loyd, R-Garden City, who led the charge for the House-approved school finance plan, said the second memo shows the proposal can be funded at a cost of “one Quarter Pound biggie sized and two margaritas per month” per average family.

Total tax receipts from the start of the fiscal year – July 1, 2005 – through February are $300 million, or 10 percent more than the same period in the previous fiscal year.

Goossen said he couldn’t say whether the expanding economy could pay for current school finance proposals in the Legislature.

“The question is in the out years,” he said.