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Conference examines impact of Kansas tax changes

Published on -10/24/2013, 2:50 PM

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By JOHN MILBURN

Associated Press

LAWRENCE, Kan. (AP) -- Leaders of urban and rural local governments said Thursday that recent changes in the Kansas tax structure have put more pressure on towns and counties to maintain public services with property and sales taxes.

The comments from the Johnson County manager and the Salina city manager were part of a panel at the University of Kansas focused on the impact of changes in the Kansas income tax policy in 2012 and 2013. The changes have resulted in lower rates for most taxpayers, but also fewer dollars available for state government and state aid to local governments.

The event sponsored by the university's Institute for Social and Policy Research drew more than 100 state and local government officials, as well as economists.

Kansas has cut individual income tax rates and eliminated taxes for nearly 200,000 businesses over the past two years. Republican Gov. Sam Brownback pushed for the changes, along with the GOP-controlled Legislature, which has set a goal of eliminating income taxes entirely in the coming years.

Local officials said that they have rung out as much as they can from their governments as the state pushes more responsibility for funding and providing public services on them.

Hannes Zacharias, Johnson County manager, said the state's most populous county is "in a pickle."

"Indeed, we are at the end of the food chain, and we're the ones who have to clean up the mess," Zacharias said.

He said the county has lost state revenue for jobs such as inspecting sewer septic tanks for new residents in rural areas. In addition, furloughs in district court operations caused by limited state funds mean defendants must stay in county jails longer while awaiting trial, a cost picked up by local governments.

Salina City Manager Jason Gage said other factors besides tax rates affect whether new residents or businesses move to an area, including the quality of life, services and a trained workforce.

Gage said low taxes typically result in low-quality services, such as bad roads. Increasing fees for the services is an option, but he said those fees have the same effect as taxes on lower and middle-income residents who have the least ability to pay.

Panelists said higher sales and property taxes could be an option. Some suggested that a 10 percent sales tax might be ideal for Kansas, but the question is how much of that rate would be charged by the state and what level local governments would have left. The Kansas statewide sales tax is 6.15 percent.

Education officials said their options were even more restricted. School districts rely on state aid, approximately $3 billion annually, plus local property taxes to fund schools. Overall state funding has increased in recent years when counting increased contributions to teacher pensions.

Sally Cauble, a State Board of Education member from Dodge City, said while Kansas spends 52 of its overall budget on public schools, the ability to improve student achievement is feeling the pinch of reduced state spending.

"Kansas doesn't have unlimited funds, but funds available to education today will have more of an impact on the state than any other dollars it can spend. That is an investment," Cauble said via video link from Ulysses in southwestern Kansas. "My concern is, 52 percent of what? (There's a) big difference between 52 percent of $100,000 and 52 percent of $1 million."

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