State school needs call for tax hikes — quickly

opinions

April 22, 2010 - 12:00 AM

Tax increases will be on the minds of Kansas lawmakers when they return to their desks next Wednesday. The prospective budget deficit remains above $400 million, despite two straight years of painful spending cuts. Without more revenue, the reductions needed to balance the budget for the coming fiscal year are simply too drastic to consider.
Gov. Mark Parkinson opened the 2010 Session of the Legislature with a recommendation to hike the state sales tax by 1 percent — raising it to 6.3 cents — and to increase the tax on cigarettes to the national average of $1.34. He stressed the need for more school funding.
There appears to be support for tax increases in the Senate. The House remained opposed when it adjourned for the spring break.
Raising the sales tax, doing away with some of the sales tax exemptions and bumping up taxes on tobacco would bring in badly needed money within weeks of the effective dates of the increases, an important reason to choose those ways to increase revenue.
The American Cancer Society, the Heart Association and the Lung Association have combined forces and are lobbying for a $1 a pack tax increase — 45 cents above the governor’s proposal. They point out that 69 percent of the Kansas public favors the $1 increase, far more than support higher sales or income taxes.
They estimate that the higher tobacco tax would raise an additional $74.7 million a year — and would have the added benefit of persuading many smokers to quit and still more youngsters to decide not to start.
As Craig Neuenswander, USD 257 Superintendent of Schools, told the Register Tuesday, the need for additional funding is particularly acute in Iola. The district will lose about $1.2 million — 9 percent — this year alone. Part of the loss is explained by a drop in enrollment because state funding is based on student count. The remainder is due to three straight school aid cuts made necessary because of state revenue losses. All of the major sources of state revenue are down due to the recession.
The district does have $500,000 in contingency funds, which it may be forced to spend if state aid continues to fall.

IN A MEETING hosted by Virginia Crossland-Macha, a hired representative of the Kansas Policy Institute maintained that the state’s public schools could do without a tax increase or an increase in state school spending since school districts have a total of $699 million in reserve.
Register reporter Richard Luken asked Dale Dennis, deputy education comissioner with the Kansas Department of Education, about the reserves. Dennis said the state’s public schools spend about $400 million a month and that their reserves are used to meet expenses when state payments are late due to slow tax collections and in other circumstances which cannot be anticipated.
Under Kansas law, units of government must stick to their budgets and can’t run federal-style deficits. That is why the state budget includes an unemcumbered ending balance and why cities, counties and school districts establish and fund contingency accounts.
It is a rule of thumb that a family should have the equivalent of two months expenses in savings accounts to cover unexpected needs. School districts should follow the same prudent guideline. As Supt. Neuenswander pointed out, the $500,000 squirreled away by USD 257 wouldn’t come close to covering the district’s lost revenue.
Spending the school district contingency funds, as the KPI recommends, could result in districts being required to issue non-fund warrants to meet unbudgeted expenses or cover late state aid payments. No-fund warrants cost money. Using the saved money would, in short, exhaust the contingency funds in a single budget year and could prove punitively expensive. Bad idea.
The Kansas Policy Institute, incidentally, is a  very conservative private non-profit organization that exists to lobby against tax increases in particular and government programs in general. It is primarily funded by contributions from the wealthy.

— Emerson Lynn, jr.

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