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Kentucky legislators and Gov. Wallace G. Wilkinson have agreed on a compromise funding plan under which the state sales tax would rise by one cent to help pay for court-ordered education-reform legislation.

The compromise calls for an increase in the current 5-cent sales tax instead of a higher tobacco tax and the imposition of a tax on services, as the Governor initially proposed.

Mr. Wilkinson dropped his pledge to veto a sales-tax rise after legislators promised to support his call for road and economic-development funding measures.

The sales-tax hike is expected to generate $220 million to $240 million a year, while the tobacco and services tax would have generated $201 million in the next two years.

In addition to the sales tax, the package includes a 1 percent increase in the corporate-income tax and changes to make state tax rules conform to the federal tax code. The total package is expected to generate $1 billion over two years.

The tax proposals are attached to the education-reform bill currently moving through the legislature.

As a part of the compromise, Mr. Wilkinson asked lawmakers to keep intact the bill written by the Task Force on Education Reform.

The task force was appointed after the state supreme court last year declared the state's entire school system unconstitutional. The task force has put forward a plan for a thorough restructuring of the schools. (See Education Week, March 7, 1990.)

Property-Tax Funding Ban Advances in Wisconsin

The Wisconsin Assembly last week approved a measure providing for a statewide referendum on a controversial constitutional amend8ment to stop funding schools with local property taxes.

The proposed amendment seeks to bring about dramatic reductions in the historically high levels of property taxes paid by state taxpayers.

The Senate is expected this week to consider the measure. If senators approve the bill before adjourning this week, the amendment will be included on November ballots.

The proposal has been attacked by educators and some lawmakers because it provides no alternative mechanism for funding schools. Local property taxes fund a little more than half of all education costs in the state.

"Everybody wants property-tax relief and tax reduction," said Jan Grunewald, an aide to the bill's sponsor, Assemblyman Robert Thompson, a Democrat from Poynette.

"But," she added, "to a lot of people this is a scary proposition."

Carruthers Calls Session To Consider Teacher Raises

Gov. Garrey Carruthers of New Mexico last week called legislators into a special session that was expected to deal with demands by teachers for a pay increase, along with other issues.

The regular legislative session ended last month without approving funding for salary increases. The National Education Association of New Mexico has said it will ask its members to authorize a strike if no action is taken during the special session to raise salaries.

Governor Carruthers has proposed a quarter-cent increase in the state's gross-receipts tax, a local-option mill levy, and other measures to provide a 5 percent raise for teachers.

Meanwhile, the Governor has vetoed the major education bill to come out of the regular session. The bill would have limited kindergarten classes to no more than 20 students next year, eliminated the hour-by-hour course requirements of a 1986 school-reform law, and increased bilingual-education funding. He said the bill combined too many educational concepts.

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