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Finance Reform in Kansas Snarled in Fight Over Funding

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Kansas lawmakers' efforts to make their state's system of funding schools more fair were bogged down last week in a politically charged battle over how to pay for the changes.

Both the House and Senate have passed a finance-equity bill, which calls for increasing state spending on precollegiate education by $160 million.

The two chambers are sharply split over related tax-increase measures, however, with the Senate having passed a bill relying on higher property taxes and the House likewise on record in favor of greater sales and income taxes.

Gov. Joan Finney, meanwhile, has so far refused to sign the equity measure lest it lead to property-tax hikes.

Ms. Finney, whose upset election victory over the Republican incumbent last November has been attributed in large part to voter anger4over property-tax levels, has vowed to resist the Senate's proposed increases in those levies.

But while the Governor might be more willing to sign the House's $120-million tax bill, the measure faces strong opposition from the state's business community, which argues that raising individual and corporate income taxes would discourage investment in the state.

Last week, as the Senate debated the House proposal and prepared for a spring recess, educators warily watched the debate from the sidelines.

"We're in a state of flux," said Dale Dennis, a spokesman for the state education department.

Spending Increases Capped

A central feature of the school-finance measure, which is still on the Governor's desk, would revise the formula under which the state distributes aid to its 304 local school districts. It would channel more money to poorer districts in an at8tempt to equalize spending.

The measure would allow districts that now spend more than the statewide median level for per-pupil expenditures to increase their budgets by only 1 percent next year.

Districts that currently spend below the median, however, would be allowed to raise their budgets by 3 percent to allow them to close the gap with the higher-spending school systems.

The bill also would allow some 30 districts with low enrollments to raise their budgets by 4.4 percent next year in an attempt to reduceel10lthe spending differential between themselves and other districts.

The tax measure approved by the House would also allow an overall reduction of $35 million in property taxes next year, even if every district raised its budget by the full amount allowed under the finance-reform measure.

But the finance-reform legislation is stalled until lawmakers reconcile the differences between the House and Senate versions of the tax measures.

While the House bill would commit the money from its increased sales and income taxes to education reform, the Senate version would rely on property-tax increases to fund the finance measure.

After the school-finance package was cleared by the legislature last month, Governor Finney said she would veto it if the Senate's plan to raise property taxes also was approved.

"I cannot, in good conscience, be part of any plan that risks property-tax increases," she said.

The Senate version of the tax measure also has been attacked by rural legislators, who maintain that large increases in property taxes would cripple small rural districts whose tax bases already are strained.

Rural educators also predict that the Senate measure could trigger a legal challenge to the school-finance system.

Lukewarm Reception Seen

Meanwhile, the Senate Assessment and Taxation Committee began several days of hearings and markup last week on the House tax package.

But the measure received only a lukewarm reception initially from educators.

One group that argued in favor of the House bill was the Kansas School Boards Association.

"We do not believe that you can starve schools into excellence," Mark Tallman, a ksba lobbyist, told the committee.

But Mr. Tallman also made clear that while the association supports the concept of raising taxes to support education, it does not offer a blanket endorsement of the House measure.

The state's business and economic-development lobby, on the other hand, warned that the proposed increase in individual and corporate income taxes would make those rates the highest in the region, reducing Kansas' economic competitiveness.

Late last week, the Senate committee continued to work on proposed amendments to the legislation.

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