Jonathan Shorman
November 12, 2016

The stunningly bad revenue picture Kansas now faces carries the potential to act as a roadblock as lawmakers seek to pay for an anticipated school finance ruling.

In the coming weeks or months, the Kansas Supreme Court will rule on whether school funding is adequate under the state constitution. Most expect an opinion that will require at least some additional spending — perhaps several hundred million more dollars — to bring the state into constitutional compliance.

Revenue forecasters this week cut the amount of anticipated revenue during the next fiscal year by more than $580 million. The amount represents a reduction of 7.4 percent from what the state anticipates it will collect during the current fiscal year, which estimators downgraded by about $350 million.

When that $580 million is coupled with the potential cost of a school finance ruling — some estimate upwards of $800 million may be needed — the scale of the potential revenue challenge becomes mammoth.

Educators will be closely watching the budget proposal put forward by Gov. Sam Brownback in January and looking to see how the new, more moderate Legislature reacts. State budget cuts will almost certainly be required, even if lawmakers increase taxes to boost revenue.

But is it possible to spare education, the largest part of the state budget? For some, the situation approaches a “damned if you, damned if you don’t” scenario.

“Obviously, we don’t want to be cut,” said Mark Tallman, a lobbyist with the Kansas Association of School Boards. “But how the Legislature deals with that — if you don’t include schools you magnify everyone else’s cuts, which has an impact on communities. You include schools, you’re worsening their ability to provide a constitutionally-suitable education.”

When the revenue forecast was unveiled Thursday, state budget director Shawn Sullivan ran through a litany of troubling economic signs for the state, suggesting a fiscal turnaround isn’t on the immediate horizon.

“That’s when you need more state resources to help families, to help people who are having difficulties in life. In schools, we deal with those. The difficulties that families have walk into our school doors every day,” said Diane Gjerstad, a lobbyist for Wichita public schools. “These numbers — they’re deeper than I thought they were going to be.”

Voters opted to send more moderate GOP and Democratic lawmakers to Topeka this coming January. Many are bent on changing Brownback’s signature 2012 tax policy.

Support appears most widespread for ending tax breaks for business owners. Yet eliminating the provision would only generate about $200 million, according to estimates.

Generating the kind of revenue needed to produce half a billion dollars or more would require much more aggressive change. On Thursday, Sullivan refused to detail what Brownback might propose in January.

But in August, Brownback made clear a large tax increase would be needed to respond to a Supreme Court ruling — while also hinting he believes the court may overstep its bounds.

“(With) the adequacy piece, there is a lot of concern about, ‘Is this the role of the courts to determine that piece of it — that that is inherently a legislative determination to be made.’ And $500-$800 million is a substantial property or tax increase somewhere to come up with those resources,” Brownback said.

Proponents of tax reform have been organizing and will launch a coordinated effort in December. The Kansas Center for Economic Growth, Kansas Action for Children, Kansas Organization of State Employees and the Kansas National Education Association are coalescing around the label “Rise Up Kansas.”

Duane Goossen, a former state budget director and a fellow at the Kansas Center for Economic Growth, said full recovery in Kansas will likely take a generation. He called on lawmakers to immediately return the state to a structurally balanced budget next year.

“Taking a comprehensive approach means reviewing our entire tax code — not just the income tax,” Goossen said. “Kansas’ sales and property tax structures are also antiquated and unfair. By modernizing all revenue sources, we can ensure all Kansans pay the fairest possible taxes at the lowest possible rates.”

Read more from the Topeka Capital Journal here.

ClayTOPEKA CAPITAL JOURNAL: Bad revenue picture may complicate response to anticipated education funding decision