Hundreds of millions of tax dollars for public schools are at stake in a lawsuit before the Kansas Supreme Court, but so is the core of Republican Gov. Sam Brownback’s vision for the state.
Brownback is banking on massive personal income tax cuts boosting the state’s economy, and his successful push for the reductions makes Kansas a lab for conservative fiscal ideas. But Brownback’s signature policy stands to unravel if aggrieved school districts and students pursuing the lawsuit succeed in forcing a dramatic increase in education spending.
The Supreme Court heard arguments from attorneys last week in the state’s appeal of a lower-court ruling that Kansas must increase its annual spending on aid to its public schools by at least $440 million. Projections from the Legislature’s research staff suggest the state can’t add so much new spending to its annual budgets with the income tax cuts in place.
“If the court orders a very large sum of money, it is very difficult to accommodate all of them,” Senate Majority Leader Terry Bruce, a Hutchinson Republican, said of the tax cuts, which he strongly favors.
Thirty students and the Wichita, Hutchinson, Dodge City and Kansas City, Kan., school districts sued the state, and their attorneys hope the Supreme Court agrees that legislators aren’t providing enough money to meet their responsibility under the Kansas Constitution to make “suitable provision” for financing schools.
The state has faced education funding lawsuits for more than 40 years, and the latest case was filed in 2010 – only 4 1/2 years after the last Kansas Supreme Court ruling on the subject. The state’s attorneys argued that the constitution gives legislators broad latitude in setting funding and lawmakers haven’t provided more money for schools because of the economic problems that arose during the Great Recession.
“This cycle of school finance litigation must end,” Brownback said in a statement last week. “It is the Legislature who has the power of the purse and they must decide how (to) solve this issue in the long run.”
But the three-judge panel that heard the lawsuit in Shawnee County District Court called the argument that legislators have done the best they could for schools “completely illogical,” given income tax reductions enacted under Brownback. Yet the tax cuts didn’t arise as an issue during the Supreme Court’s hearing until Alan Rupe, a Wichita attorney representing the students and school districts, raised it.
“I would put it in the `obvious’ category,” Rupe said afterward. “I got a sense that they’re aware of them (the tax cuts).”
The Legislature’s research staff projects that changes in the state’s tax laws will provide net reductions worth $540 million during the current fiscal year, with the annual figure exceeding $1 billion in fiscal 2018. But legislative researchers also project that the state’s cash reserves will dwindle over the next six years, so that before July 2019, the state would face a projected budget shortfall.
While the projections could allow modest increases in spending on aid to public schools and teacher pensions, increasing education funding as much as the lawsuit demands could create a projected shortfall by July 2015. Critics of the tax cuts championed by Brownback have described them as reckless.
“I think that he did everything he could to undercut us in every way possible,” said Lila Bartel, a retired English, social studies and gifted education teacher from Topeka. “Did it ever make sense to cut the income tax?”
Brownback and Republican legislators who backed the income tax cuts are confident the reductions will improve the state’s economy, create jobs and generate offsetting revenues to sustain schools. Brownback and his allies want to phase out personal income taxes to create what Brownback calls a “pro-growth” state.
The governor and his allies have repeatedly described his policies as a sharp break with the past – and Brownback has gained attention in national conservative circles for the reductions.
“The courts have the luxury of dealing with the (school funding) case in a vacuum, as if nothing else matters,” said former House Speaker Mike O'Neal, a strong backer of the tax cuts who’s now president and CEO of the powerful Kansas Chamber of Commerce. “For local schools to thrive and survive, they need a vibrant local economy.”
In past rulings, the Supreme Court has said the state constitution requires Kansas to provide each child with a suitable education. But in comments from the bench last week, several justices wondered whether they can set a clear legal standard and suggested they want to avoid perpetual litigation.
There’s also the question of how readily Brownback and the GOP-controlled Legislature would comply with a decision ordering a massive increase in spending.
Kansas Democratic Party Chairwoman Joan Wagnon, a former state revenue secretary who has strongly criticized the tax cuts, said for Brownback’s makeover of the state to remain on track, “He can’t have a piece out of his control.”
If the aggrieved students and school districts succeed in the lawsuit, she said, “They turn off the Bunsen burner under his grand experiment.”