Governor: Gaming, not taxes, key to schools fix

John Milburn

Thursday, June 16, 2005 | 9:49 a.m.

TOPEKA, Kan. -- Seventeen months after pushing for higher taxes to prop up school funding, Gov. Kathleen Sebelius said Wednesday that goal can be accomplished without further burdening to taxpayers.

Instead, Sebelius told reporters during a news conference that a Kansas Supreme Court mandate to provide additional money to schools can be met with anticipated growth in state revenues and expanded gambling.

"We can strengthen Kansas schools, and we can do it without new taxes," Sebelius said.

She urged legislators to pass a gambling bill next week when they meet in special session to address the court's order to increase school spending by an additional $143 million by July 1. That amount would be in addition to the $142 million legislators approved during the 2005 regular session that ended in May.

Sebelius said she wouldn't be offering any specific proposal during the special session, which begins June 22. She said there were plenty of proposals floating in the Statehouse, including a bill on the Senate calendar that resembles a package she proposed in 2004 to authorize casinos and slot machines at dog and horse tracks.

During that session, Sebelius proposed a three-year, $314 million school funding package, relying on increases in sales and income taxes. The plan was rejected by legislators, some of whom applauded her change of heart Wednesday.

"I'm glad that the governor has figured out that the two years she spent pushing for a tax increase were not well spent," said Senate Majority Leader Derek Schmidt, R-Independence. "It is possible to provide as much revenue for K-12 as she called for in the 2004 State of the State and do it more quickly and without a tax increase."

Sebelius said capturing gambling dollars already spent by Kansans at casinos in Missouri and Oklahoma would help the state sustain investments in education and keep schools open this fall.

She questioned whether the state can sustain additional spending without gambling dollars.

"I can't imagine a worse outcome," Sebelius said. "If we write a check and walk out the door, that's irresponsible."

Economists and state officials revised revenue projections Tuesday, predicting the state would collect $172 million more than they had previously anticipated over the next two fiscal years. The state is now expected to raise $4.79 billion for the current fiscal year and $4.94 billion for fiscal 2006.

The extra revenue would cover the amount ordered by the Supreme Court.

House Speaker Doug Mays said Tuesday he didn't think legislators could pass a gambling bill during the special session, given the magnitude of such a policy decision. Sebelius said she would be meeting with Mays later Wednesday and gambling would be discussed.

Mays said of the more optimistic revenue forecast, "I think it takes the pressure off to pass a widespread gambling scheme."

Schmidt said it's not clear whether legislators want to approve a gambling bill during special session, but there is interest in finding new revenue.

He added that the state must start repaying the debts from borrowing and other financial maneuvers used when state finances collapsed during the final years of Gov. Bill Graves' administration and the start of the Sebelius' term. The state budget gap was close to $1 billion when Sebelius took office in January 2003.

A debate on gambling is inevitable, Schmidt said, if not next week, then next year.

"There is considerable interest in the Republican Party in claiming credit for avoiding a tax increase so far and going forward," Schmidt said. "Because of that, there will be serious discussion about recapturing gambling dollars going out of state."

Legislators have already answered the Kansas Supreme Court once this year, responding to an order in January telling legislators they need to spend more money on education and distribute funds more fairly. The court wasn't more specific at that time.

But last month the court ruled that the Legislature's $142 million increase was inadequate and that the state's spending must increase $285 million for the next school year, or by about 10 percent, to more than $3 billion annually.

Senate Republicans are scheduled to meet today at the student union at Emporia State University to begin discussing the special session.