Politics & Government

Legislative negotiators strike deal pairing tax increases with school funding

Lawmakers meet Saturday to negotiate a school finance deal. The Legislature is meeting for a rare weekend session. (June 3, 2017)
Lawmakers meet Saturday to negotiate a school finance deal. The Legislature is meeting for a rare weekend session. (June 3, 2017) The Wichita Eagle

Republican House and Senate negotiators agreed to pair tax increases with a new school funding plan Sunday in a mega-deal that could quickly end the lengthy legislative session.

Lawmakers must close a budget gap projected at $900 million over the next two years and implement a new school funding formula by a court-imposed deadline of June 30. Funds to keep the Legislature operating are dwindling, with each day costing about $43,000.

The House, which would debate the measure first, adjourned until Monday morning. Representatives are expected to take up the legislation then.

“The state is waiting on us to continue to govern,” House Speaker Ron Ryckman, R-Olathe, told Republican lawmakers on Sunday night.

Democratic negotiators refused to sign off on the idea, a signal that Democrats will oppose the legislation.

Without significant Democratic support, the bill is unlikely to gather the two-thirds support needed in both chambers to overcome a veto from Gov. Sam Brownback. Supporters of the idea hope combining tax increases with education finance will convince the governor to not block the plan.

“We’re hoping that this will give him another reason not to veto,” said Senate Majority Leader Jim Denning, R-Overland Park.

Brownback issued a statement last week that said the state’s school finance system needs to be “predictable and sustainable” for educators and taxpayers. But the governor rarely says publicly whether he will sign or veto a bill before it is passed.

“I think it remains to be seen whether Gov. Brownback would actually sign this bill into law,” said Senate Minority Leader Anthony Hensley, D-Topeka.

The tax plan includes three income tax brackets, with rates of 3 percent for married couples earning up to $30,000, 5.25 percent on income between $30,000 and $100,000 and 5.6 percent on income above $100,000. The bill would end exemptions on certain kinds of business income. It also would end some sales tax exemptions.

The plan would raise more than $1 billion over two years. All revenue raised through it would go to schools.

“What that would do is, going forward, 100 percent of personal income tax revenue would be dedicated to K-12,” House Majority Leader Don Hineman, R-Dighton, said.

More than half of the state’s general fund goes toward education currently. In effect, the bill would require other parts of state government to rely on non-income tax revenue sources for their funding.

The Kansas Supreme Court ruled the state’s school funding formula inadequate in March and gave lawmakers until June 30 to make changes.

The school finance portion of the bill gives schools $180 million more in the next budget year and $278 million more in the year after that. It would also expand a program that provides a tax credit to corporations that donate to tuition scholarships for students that go to private schools. Under the plan, individuals would become eligible for the tax credit.

Rep. Clay Aurand, R-Belleville, one of the school finance negotiators, said pairing taxes and school finance could make it easier for some lawmakers to vote yes.

But getting everyone on board could prove challenging.

“The problem is you have so many moving pieces with the tax bill,” Aurand said.

House Minority Leader Jim Ward, D-Wichita, said the combination of items in such a deal would set bad precedent.

“I absolutely think it’s horrendous policy to do three things in one bill: policy, money and raise taxes,” Ward said.

Sen. John Skubal, R-Overland Park, said Sunday afternoon that he was skeptical about the bundled proposal.

He said he didn’t think there were enough votes to pass it.

“I don’t think it will work,” Skubal said.

Sen. Carolyn McGinn, R-Sedgwick, who is helping to negotiate a school finance deal, was more open to the proposal.

“I think it’s something that’s worth trying,” she said. “We’ve got to get something going in the House.”

Lawmakers have made little public progress on taxes since Tuesday, when the Senate passed a three-bracket tax plan but the House voted it down. Some conservative Republicans opposed to tax increases and many Democrats who said the bill didn’t raise enough revenue joined to oppose it.

Contributing: Hunter Woodall of the Kansas City Star

Jonathan Shorman: 785-296-3006, @jonshorman