Part 2

Gov. Sam Brownback’s plan to slash state spending for

schools comes from his overall mission to abolish the state

income tax; to cover the resulting revenue losses, he would

force massive cuts in the state budget. This can’t happen with-
out reducing spending for education, the largest single state

expense.

Brownback has directed the Kansas Legislature to abolish the

state’s current school finance law. To replace it, he has offered a

vague, two-year plan to send block grants to each school district

in amounts equal to their current state aid allotment. Depending

on the school district, the grants will cover from 65 to 80

percent of the schools’ operating costs. To pay the remainder,

districts will rely on local property taxes.

A tax on property was the first foundation for government

finance, written into the territorial constitution in 1859, 18

months before Kansas joined the union of states – long before

the state would have an income tax (1931), and even longer

before schools would become the state’s largest single obliga-
tion and expense.

The Kansas history of school finance is a litany of complex-
ity and passion, of the co-mingling of local and regional cul-
tures and economies, of the conflicting interests among patrons,

parents and politicians. But this history is also distinguished,

not long ago, by a remarkable package of compromises, the

incubation of historic reforms in state funding of local public

education.

The School Finance Act of 1992 demonstrated that legislators

had discovered, with considerable success, a way to manage

both education funding and the property tax that supports it. It

did not happen easily.

INITIALLY, PART of the trouble lay in human nature, and how

people tend to view government funding: Impose taxes so the

other person pays them. The trouble was compounded with

property taxes because the system seemed to lack all fairness.

Thirty years ago, Gov. John Carlin and the Kansas Legislature

placed a big part of the problem in the appraisal and assessment

of property, and decided to fix it. The plan, through a constitu-
tional amendment, was to classify property by use, assign it a

value, and limit assessment rates in various categories – utili-
ties, agriculture, residential, businesses and so forth.

At that time of pre-reform, property was to be appraised at

“fair market value” and assessed for taxing at 30 percent of that

value. But it had never really worked that way. Only utilities

were paying taxes based on 30 percent assessments because the

state was charged with utility assessments. For other property,

assessments were for county appraisers. And in far too many

cases, setting local assessments seemed to be a matter of throw-
ing darts at a board in the court house boiler room.

Appraisers were never able to keep up with the 30 percent

law. The ratio of sale price (market value) to appraised value

– the sales-assessment ratio – rarely if ever approached 30 per-
cent in any city, township or county.

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 clas-
sifications and rates: residential, 11.5 percent; mobile homes,

11.5 pct.; personal property, 25 pct.; businesses, 25 pct.; utili-
ties, 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 economic impact 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 vot-
ers 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 compo-
nent in the system for funding local schools.

*

*

Protecting farmland

THE PROPERTY tax is generally viewed as a hangover from the

Pony Express days, the early years of Kansas settlement, when

property and the assessment of a “uniform and equal” levy were

to spread the cost of community services and improvements. It

was thought fair, then, because the extent of the tax reflected

the productivity of the land, not its market value, real of imag-
ined. Productivity of the land was the promise of Kansas. All

this changed as settlements became towns, and then cities, and

agriculture prospered. And good schools became important for

communities.

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.

Since then, property taxes have come to be seen as dated,

a relic of the Homestead Act. The tax is expensive to collect

and, as history notes, it is hardly uniform and rarely equal. It

has been revealed to have a negative social impact. Property

maintained and improved is taxed more; the inefficient and the

negligent are rewarded with lower taxes.

One premise in the issue of government finance is that the

property tax now is valid only in relation to property, not

people. That is, taxes on property might pay for rural roads and

bridges, for rural fire and water systems; in town, the property

tax would finance non-arterial streets, storm sewers, parking,

even subsidize low-income housing.

Taxes for people functions are in another class. These should

come from income and sales taxes and user fees collected

chiefly on a statewide basis. The cost of public schools, as sug-
gested in early reform debates, should relate not to the value of

land in a district but to the number of students to be educated. A

state-run and state-financed school system might not be a popu-
lar idea, but it seemed logical. The state was paying, on average,

nearly 70 percent of the cost in local districts, with local boards

in charge of operations.

PROPERTY TAXES have been tied tightly to the premise of

local control, although the income tax as a far better, more

equitable source of state revenue for local government. This

suggestion runs contrary to the feeling that local control is bet-
ter, that friends and neighbors can manage their towns more

reasonably than costly and troublesome bureaucracies. Usually

they do. But today’s friends and neighbors are no longer apt

to be tomorrow’s. Consider 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 the governor’s dream of a state with no

income tax, a plan that invites a return to the past, to the days

of heavy reliance on the property tax and the hope that we can

continue to make some sense of it; local control would become

local rule with the state relegated to the status of bystander.

In reality, this may be seen as a momentous shift, the burden

of finance moved from one fellow to the other. The system will

always demand revenues, and history tells us that the system

relying on property taxes tended easily to get out of control.

And the price of that system too often has been inequitable

and discriminatory taxation with equally unfair results.

We fixed it once. The governor’s plan sets 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.

– JOHN MARSHALL

(Next: Targeting rural schools)