State Rundown 11/14: Here Comes the Judge

New data out of Kansas shows local property tax rates falling after an infusion of state cash for struggling school districts. After the Kansas Supreme Court ruled that cuts in state aid to schools created “unconstitutional, wealth-based disparities” between districts, $134 million in funding was restored, with the greatest relief going to those districts most in need. The case, Gannon v. State, began with a lawsuit brought by a coalition of Kansas school boards. A portion of the lawsuit, concerning general aid to schools, is still pending.

The United States Supreme Court heard arguments today in a case that could have ramifications for states’ ability to tax income earned outside their borders. The case, Comptroller of the Treasury of Maryland v. Brian Wynne, will determine if state residents are entitled to tax credits on certain income earned outside the state. Right now, Maryland taxpayers can deduct taxes paid in other states from their Maryland state income tax, but the rule doesn’t apply to portion of state income tax collected on behalf of counties. The Maryland Court of Appeals ruled that this is unconstitutional under the Commerce Clause because it discriminates against interstate commerce.

A coalition of school districts, parents and civil rights advocates sued top officials in Pennsylvania this week, alleging that state funding for K-12 education underfunds public schools and denies students in poor districts equal educational opportunities. They want the state’s Commonwealth Court to strike down the funding formula as unconstitutional and require a more equitable replacement. According to the plaintiffs, some districts are underfunded by as much as $4,000 per student and the disparities in per-pupil spending between low-income and high-income districts is almost $20,000. In 2011, state officials reduced state education funding by $860 million, leaving districts to rely on inequitable property tax revenues to close the gap.