(Second of three articles)
The Kansas Legislature is in a monumental struggle to balance a state budget that otherwise faces an operating deficit of nearly a billion dollars over the next year and a-half.
The red ink stems from an accumulation of errors, starting five years ago with a plan to abolish income taxes for select businesses and wealthy individuals.
Then came a series of clumsy attempts to cover the lost revenues: Ill-timed and off-target budget cuts, state agency layoffs, raids on agency fee funds, “borrowing” from state pension funds, sales of phony highway bonds, repeated raids on the state highway fund.
None of this could recover revenue losses, not even large cuts in school finance, the single largest expense at more than half the state’s $6.5 billion operating fund. Property taxes, the single largest source of school funding, are at the core of any budget deliberation – or should be.
Part of the trouble involves human nature, how people tend to view government funding: Impose taxes so the other person pays them. The struggle is compounded with property taxes because the system has, at times, seemed to lack all fairness.
More than 30 years ago, Gov. John Carlin and the Kansas Legislature put much of the blame on the appraisal and assessment of property and decided to fix it. The plan, a constitutional amendment, was to classify property by use, assign it a value, and limit assessment rates in various categories – utilities, agriculture, residential, businesses and so forth. Before reform, assessments at the county level seemed more a matter of guesswork than the product of rational planning.
Carlin convinced lawmakers of the need for a constitutional amendment to accomplish two things: a massive, statewide reappraisal of all property; and listing various classifications of property for a range of assessment rates. Among the key classifications and rates: residential, 11.5 percent; mobile homes, 11.5 pct.; personal property, 25 pct.; businesses, 25 pct.; utilities, 33 pct., and others.
One other classification was critical, at the time perhaps the Constitution’s most necessitous: farmland would be appraised by its ability to produce income and assessed at 30 percent. The political and economicimpact of this section was so significant that the entire amendment, covering a dozen classifications, came to be known simply as the “use-value amendment.”
This is because the amendment, approved by Kansas voters in November 1986, protects farmland assessments through use-value property appraisal; taxes were (and are) determined by the income derived from the land, not by its market value. The amendment was to prevent owners from being forced to sell land simply to pay the taxes on it. It was a critical reform, exposing a glaring issue with property taxes, the chief component in funding local schools.
Although the property tax was written into the territorial constitution ten years before Kansas became a state, the state income tax was not adopted until the early 1930s.
Property taxes are tied tightly to the premise of local control, although the income tax seems a far better, more equitable source of state revenue for local government.
This suggestion runs contrary to the feeling that local control is better, that friends and neighbors can manage their towns more reasonably than costly and troublesome bureaucracies. Usually they can. But today’s friends and neighbors are no longer apt to be tomorrow’s. Consider the disparities in property values across Kansas, and the transience of Kansans today; many programs such as welfare, Medicaid, and transportation have been on a state basis for years, supported by income or sales taxes.
This runs counter to Gov. Brownback’s dream of a state with no income tax, a plan that invites a return to the past, to the days of heavier reliance on the property tax and the hope that we can continue to make some sense of it.
The school finance reforms of 1992 had created a statewide uniform property tax for schools, a central pool for allocating the revenue and a formula for aid to resolve wide disparities in districts’ property values.
This was seen as a momentous shift, the burden of finance to be shared more equitably. It revived the focus, the quest for a more equitable and balanced network of state finance.
We had fixed it once, but Brownback’s plan set aside those reforms. Kansas with no income tax is a state returned to the 1920s or before, to a heavy reliance on state and local property taxes, before the roads were much good, before the farms had electricity and the cities had decent water, before the state shared revenue with cities and counties, and before the schools were consolidated.
The income tax gave us the difference between SRS and the poor farm, between the one-room school and low-enrollment aid, between hunger and the school lunch, between walking or staying on the farm and a ride on the bus, between the teacher who cared and one who couldn’t afford to. Between a public that hoped, and those who had given up.
(Next: Targeting rural schools)
– JOHN MARSHALL