Judge Orders Billion-Dollar Tax Hike in Kansas

Published January 1, 2004

In a December 2 ruling sure to haunt the governor and lawmakers in the 2004 legislative session, a Topeka judge declared the Kansas school finance system unconstitutional and gave lawmakers until July 1, 2004 to fix it.

The decision by Shawnee County (Topeka) District Court Judge Terry Bullock came in response to a lawsuit brought by mid-size districts in Kansas, alleging schools are underfunded and that small, mostly white districts get more than their fair share of the money. Bullock announced his decision a week after lawyers for both sides wrapped up their closing arguments in the case, which was originally filed in 1999.

In his order, Bullock said the state was “shortchanging public schools, especially minority and disadvantaged students, by about $1 billion.” According to the Lawrence Journal-World, Bullock also said the “unequal disbursement of education funds in Kansas was a blatant violation of state and federal constitutional provisions.”

George Petersen, taxpayer advocate for the Kansas Taxpayers Network, called Bullock’s ruling “judicial nonsense.”

“Bullock basically overruled himself,” Petersen said, “since he dismissed a similar lawsuit in his court in 1992. This decision means Kansas will follow in the footsteps of Nevada, which in 2003 also faced a judge trying to usurp legislative and executive authority.”

Tax Hike on the Horizon

House Speaker Doug Mays, a Topeka Republican, said complying with the judge’s order would mean a tax increase so big it “would be a crushing blow to the economy of this state and would send us into a death spiral.”

Mays told the Journal-World that, despite the judge’s order, there would be no such tax increase, because all legislative seats would be up for election in 2004.

“I know that is distasteful to some, but that’s reality,” Mays said. “The votes are not there for a tax increase.”

In addition, Mays said, the legislature cannot be ram-rodded by a judge on school finance, a subject he described as complex. “We need to take our time and do what’s right for the children of Kansas,” he said.

The state already spends $2.6 billion, about 52 percent of its total annual budget, to educate nearly 445,000 students. Total state, local, and federal funding for the state’s K-12 government schools is now approaching $4 billion.

A $1 billion increase would require a tax increase equivalent to a 3 cents increase in the state sales tax, a 250 percent hike in the statewide property tax, a 50 percent hike in income taxes, or significant budget cuts. For a family of four, the tax hike would reach nearly $1,500.

Senate President Dave Kerr (R-Hutchinson) said such a funding boost “would give taxpayers enormous heartburn if it were the subject of a tax increase, and it would devastate the state budget if we were to take it from the other 48 percent that wasn’t going to education. It would wipe out higher education and many other parts of the state budget entirely.”

Sign of Things to Come

Kerr also said the order wasn’t realistic. “This judge is not the final authority on this or any other issue.”

Because Bullock’s decision was a “preliminary order,” it wasn’t clear whether the state could appeal immediately, or would have to wait until a final order is issued. Governor Kathleen Sebelius said she would propose a school finance measure in January, regardless of the status of Bullock’s ruling.

“The governor is committed to ensuring that all Kansas children have the best possible educational opportunities,” Sebelius spokeswoman Nicole Corcoran said. Even before Bullock’s ruling, Sebelius had been floating sales tax hike proposals of varying sizes around the capitol informally with legislators.

In late 1991, Bullock issued a similar ruling, and the legislature responded by passing the largest tax hike in state history, raising personal and corporate income taxes as well as the state’s sales tax rate. At that time, Kansas had a Democratic governor, a narrowly Democratic House of Representatives, and a narrowly Republican Senate.

In 1992 there was a major swing of seats from Democratic to Republican in both houses that continued with the 1994 election. In 1994 Kansas elected a GOP governor who campaigned as a fiscal conservative.

Karl Peterjohn is executive director of the Kansas Taxpayers Network. His email address is [email protected].