State legislature abandoned the Local Ad Valorem Tax Reduction Fund 20 years ago
BY: SHERMAN SMITH, Kansas Reflector
TOPEKA — The Legislature’s perennial failure to invest in lowering local property taxes left Miami County with a budget dilemma this year.
The sheriff’s office, competing with higher wages for law enforcement in the neighboring Kansas City metro area, was about 20 deputies short of a full staff. Faced with the prospect of raising property taxes to pay for better salaries, Miami County Commissioner Rob Roberts said the question he had to ask was: “Are we going to have law enforcement in Miami County?”
By increasing the base pay by $2.50 for law enforcement, the county hired five people. But it meant increasing property taxes by roughly the same amount — $1.7 million — that the state was supposed to distribute to the county through decades old revenue-sharing agreements designed to lower local property taxes.
“Those are dispatchers. Those are men and women who sit in your jail and take care of inmates. Those are people who patrol our city or our county area,” Roberts said. “And what choice do counties have? The wage pressure that’s put on local jurisdictions is right now tremendous.
“Each of these functions that the county is required to put on, there is not one of them that we put on that has anything to do with social ills. People go, ‘Well, you’re providing too much social services.’ It’s a county appraiser. That’s not social services. It’s a county sheriff’s department. When you call 911, what do you expect?”
Roberts joined Bruce Chladny, executive director of the Kansas Association of Counties, on the Kansas Reflector podcast to talk about the benefits of the Local Ad Valorem Tax Reduction Fund, which has been dormant for 20 years.
“This actually is a program that started way back during the Dust Bowl days, back when Kansas was struggling, the economy was in the tank and citizens were really having a hard time to make ends meet,” Chladny said. “Luckily, the state started to recover a little bit faster than the economy did. And so they actually had extra tax dollars that they purposefully pushed back out to the local government to help lower property taxes for the struggling citizens.”
Between 1937 and 2003, the Legislature set aside 3.63% of state sales tax collections and divided the money among counties through a formula based on population and assessed property tax value. But lawmakers abandoned the fund during a round of school finance litigation, then left it empty during the economic downturn of 2008 and the financial calamity of Gov. Sam Brownback’s administration.
Now, with the state holding billions in surplus and lawmakers unable to agree on who should benefit from reduced taxes, counties hope to pressure lawmakers into reviving the fund.
It won’t be an easy task.
Republican leaders in the House and Senate favor passage of a flat tax rate for income, a priority of Americans for Prosperity and the Kansas Chamber. The idea is to offer a trivial income tax cut, as little as $5 per month, to those earning less than $75,000 per year while dramatically lowering taxes for high-wage earners. Senate President Ty Masterson, an Andover Republican, describes it as “a benefit for everybody.”
House Democrats have tried to make the ad valorem fund part of tax reform negotiations.
Rep. Jason Probst, a Hutchinson Democrat, said Republican leaders in the Legislature lack the “desire to solve today’s problems.”
“They are stuck in a 1950s TV sitcom storyline — keep giving money to the wealthiest people in the state, and the rest of us will grow rich too,” Probst said. “Kansans have been waiting their entire lives for this Republican myth to come true — but it’s a lie, and you’re still not rich.”
During a statewide tour last week to promote Americans for Prosperity’s interests, House Speaker Dan Hawkins, a Wichita Republican, said the fund had “failed miserably.” Counties used it as a “slush fund,” he said.
Roberts said Hawkins’ comments were disappointing. Counties could use the ad valorem fund to lower property taxes that pay for essential services, he said.
In his 35 years of working in various areas of local government, Roberts said, he never heard someone say: “You got some money coming in, baby! It’s a slush fund!”
If local residents don’t like the way county officials spend money, they can vote them out.
“Not only that, but they’ll show up at your meetings and point their finger at you and tell you,” Roberts said. “They do not worry about the words they use. Every Wednesday at 1 o’clock is open mic night for the county.”
He wondered how Hawkins and other lawmakers could rebuild the trust that is needed for local and state leaders to “sit at the same table” and “solve our problems without throwing barbs.”
Residents are mad because taxes are too high, Roberts said, and they’re right.
“These men and women are your neighbors. Most of them don’t have a political ambition,” Roberts said. “They just want to know how to help get the road paved. They’re mad because the ambulance didn’t show up quick enough. Or they want to make sure that we have dog catchers because the dogs have been chewing up my garden.”
Chladny said his goal was to educate the public and newer lawmakers about the the fund. If fully funded, the state would have distributed $128 million to local counties through the program this year.
He said he wants people to realize they are paying the same tax twice.
“How come I have to go to the store and pay sales tax, but then also, I get my property tax bill that Rob sends to me and I have to pay that money again?” Chladny said.
When people talk about property tax relief, “this is it,” Chladny said.
“It’s already on the books, and it’s already been proven to work and be effective,” he said.