Kansas City Judge's 'Excessive' Tax Order Ignites Public Furor, Has Leaders Ducking
A multi-million-dollar tax increase ordered this month by a federal judge in the Kansas City, Mo., school-desegregation case has sparked an "enormous outcry" in the midwestern city, and appears stalled by6a host of legal and logistical uncertainties.
"Excessive, exorbitant and extravagant" is how Gov. John D. Ashcroft described the Sept. 15 ruling that requires the state and the Kansas City school district to split the cost of a $187-million plan for school construction and renovation.
"But far more outrageous," he added, "is the imposition of higher taxes on the residents and workers in the school district by an appointed official who is not required to answer to the voters."
Civil-rights lawyers and school officials argue that U.S. District Judge Russell G. Clark was relying on a solid base of legal precedent when he ordered a 25 percent surcharge on the income-tax rate of employees who work within the boundaries of the Kansas City district and virtually doubled the rate of the local property tax earmarked for schools.
"If you look at what the appellate court has said, [Judge Clark] had no alternative," said Eugene E. Eubanks, dean of the school of education at the University of Missouri in Kansas City and chairman of a court-appointed committee to monitor desegregation.
But others view the court's action in a far different light.
The court-ordered tax increase is "absolutely asinine. It's taxation without representation," said Glenn Binger, a state representative whose suburban constituents will face higher income taxes if they work within the district.
"It's a blatant violation of not only the federal Constitution, but also Missouri's constitution, which requires voter approval for all tax increases."
One group of taxpayers demonstrated their outrage by staging a reenactment of the Boston Tea Party at a city council meeting in nearby Independence, Mo., Mr. Binger said.
The ruling goes "far beyond what has taken place at any place previously in the country," said Jerald L. Hill, president of the Landmark Legal Foundation, a law firm that advocates a strict interpretation of the U.S. Constitution and intervenes in cases nationwide where judges are practicing "judicial activism."
Judge Clark's ruling seems to be based on the premise that "the ends justify the means," Mr. Hill added, "but that just does not justify trampling upon the constitutional rights and safeguards upon which our country is based."
The foundation is seeking to intervene in the case on behalf of taxpayers, he said, and last week filed a motion to block the tax order with the U.S. Court of Appeals for the8Eighth Circuit. The state will also appeal the ruling, said Michael Fields, an assistant attorney general for the state.
Although the court-ordered 1.5 percent income-tax surcharge--added to the what the judge calculated was an existing 6 percent income-tax rate--was scheduled to take effect last Friday, it appeared late last week that the logistical problems involved in collecting the new tax would delay its implementation.
"We intend to ask the judge to postpone for a bit the notice to employers" that would trigger the tax withholding from employee paychecks, said Patricia Brannan, a Washington, D.C.-based lawyer who has been extensively involved in the case as a representative of the district.
"The parties are discussing the details of implementation," she said, "but the timeframe has been too brief for us to finish our work."
State officials noted that one major obstacle to the implementation of the surcharge is the fact that no one has compiled a comprehensive list of all of the businesses located within the district's boundaries.
Under the judge's order, only the income taxes generated within theel10ldistrict are subject to the surcharge, although it will also affect nonresidents who work in the district.
The ruling also left unclear whether investment and other non-employment income will be affected, officials noted.
The property-tax increase--from $2.05 to $4.00 per $100 of assessed valuation--mandated in Judge Clark's order has also become the center of a heated dispute.
Balking at Tax Order
Jackson County Executive Bill Waris, whose staff collects all property taxes in the county and distributes them to the schools and other spending authorities, has indicated he will not enforce the tax-increase order.
In a letter to the district's financial officer, Mr. Waris stated that the county "does not have the statutory authority" to collect taxes at the court-ordered levy rate, because the school board certified the lower rate before a statutory Sept. 1 deadline.
The Kansas City board last week passed a resolution supporting the court order and authorizing the county to collect at the higher tax rate, but Mr. Waris has been repeatedly quoted by the local press as saying his office will refuse to collect a tax he denounces as unconstitutional.
Mr. Waris was out of town and unavailable for comment last week, according to his receptionist.
The property-tax bills are scheduled to be mailed in November, and school-district lawyers say that Mr. Waris could be held in contempt of court, and possibly jailed, if the bills are not calculated at the court-ordered levy-rate.
To help the district meet the costs of desegregation remedies, Judge Clark has twice previously ordered that a state property-tax reduction of 39 cents per $100 of assessed value be withheld from taxpayers residing within the Kansas City district.
The latest order will provide the district with about $27 million annually until it expires in 1992, Judge Clark estimated. The proceeds are earmarked for the district's share of program expenses incurred as a result of his earlier orders in the case.
The income-tax surcharge is intended to help the district retire $150 million in bonds that the judge authorized the district to issue to meet its share of the capital-improvement plans laid out in the most recent order and an earlier one.
The judge ordered the unprecedented surcharge over the district's objections, explaining that he had "determined it would be equitable to involve" residents outside the district. Many, he said, "moved to the suburbs because of the district's efforts to desegregate its schools but continue to be employed in the district."
The surcharge will remain in effect, he said, until the bonds are retired or until "other provisions are adopted to ensure their retirement."
In previous rulings, he has criticized a state constitutional requirement that bond issues win the approval of two-thirds of the voters, saying that it restricts the district's ability to raise funds for school construction and renovations.
Lawyers for the district and the black plaintiffs who initiated the case4argue that a February 1984 ruling by the Eighth Circuit Court in the St. Louis school-desegregation case set the legal guidelines for Judge Clark's latest tax increase.
"The Eighth Circuit outlined carefully the procedure that the district courts should use to ensure that the desegregation remedies are fully funded, and those are precisely the steps that Judge Clark followed in this case," said Ms. Brannan.
Judge Clark noted in his opinion that voters in Kansas City had not approved any of the numerous bond issues or levies that the district had placed on the ballot since 1969.
"As a result, its physical facilities have literally rotted," he wrote. The children in the district, he said "are helpless without the aid of this court."
The judge also cited the 1964 U.S. Supreme Court ruling in Griffin v. School Board of Prince Edward County that states that a tax may be increased if "necessary to raise funds adequate to ... operate and maintain without racial discrimination a public-school system."
Civil-rights lawyers note similar rulings in desegregation cases involving schools in the Wilmington, Del., metropolitan area and the suburbs of St. Louis.
Mr. Hill, who filed for the stay of the tax order, responds that the district's inability to raise taxes is partly due to the "negative reaction" that voters have towards the current school leadership.
If this order is upheld, he said, it will give the judiciary branch ''unlimited power to shape society. Then you've got tyranny, and even if it's benevolent or well-intentioned, it's still tyranny."
George F. Garcia, who took over as superintendent of schools last month, said he was "very pleased" with the ruling becuse it contained ''all of the things that we had asked for."
A capital-improvements plan approved by the order will allow the district to construct 17 new schools, shut down 15 that are considered beyond repair, and renovate dozens of others by 1993, although the order only provides funding for the first three years of the plan.
In ordering the capital-improvements plan, Judge Clark said the schools had to be brought to a level of "suburban comparability" in order to successfully compete for students.
"This is the final leg of the table," said Arthur A. Benson II, the lawyer for the black plaintiffs. "Taken as a whole, it is a phenomenal remedy, and it stands a reasonably good chance of turning around a system that was bankrupt educationally."
Gov. Ashcroft and some business leaders express fears that the new taxes will harm the city's economic-development efforts.
But other business people say the desegregation plan could enhance the city's business climate.
"We must all do our share," reads a statement issued by the Kansas City-based Hallmark Cards. "In the absence of voluntary action by the residents of the Kansas City school district, Judge Clark's desegregation orders provide a way to remedy the constitutional violations that have adversely affected the protected rights of our school children.''
"In addition," the statement continued, "individuals and companies such as ours are taxed at a relatively low rate in Missouri, and have been taxed in such fashion for many years."