During last year’s legislative session, Kansas lawmakers put in place a property tax lid on local governments. The law, which takes effect in 2018 unless legislators amend it to start sooner, would prohibit local governments from increasing property taxes beyond the rate of inflation without putting it to a vote of the people.
Sort of sounds good in theory, although the state was acting in a “do as we say, not as we do” perspective. At the same time the Legislature passed the bill, without any committee hearings or public input, much less a vote, it was imposing the largest tax increase in state history — far in excess of last year’s inflation rate.
The cap, which was hailed by the Kansas Association of Realtors as a “success,” ironically will have a negative effect on realtors throughout Kansas once in place.
The reason? Cities and counties simply won’t be able to invest in housing additions that don’t have an immediate positive cash flow for the governing body. And when was the last time any developer paid all the infrastructure costs for a new subdivision? We’re talking streets, sidewalks, water mains, sewer lines, fire and police protection, etc.
We’ll give you a hint: New development doesn’t happen in that manner. Cities and counties invest in projects they hope eventually will add to the tax base, and even those payments can get delayed with abatements, tax increment financing and community improvement districts. The law specifically exempts such construction costs from the lid, but not the maintenance costs.
In short, cities and counties will await the annual assessed valuation report with even greater anticipation. If valuation doesn’t increase at least the rate of inflation, expenses need to decrease. If the valuation matches inflation, then the governmental unit can go about attempting to convince its employees, health and life insurance companies, prescription drug companies, and every other vendor they have contracts with for goods and services that the only price increases allowed will have to be at the rate of inflation.
We can’t imagine any city manager or county administrator being able to dictate such terms.
Even if they could, what happens when there is an unexpected bout of snowstorms that didn’t happen the year before? Or some sort of public health crisis? Does the community’s new casino or convention center require a marketing campaign to draw people in? That will be up to voters.
We’re interested in lowering the tax burden on individuals as well. This law doesn’t accomplish that aim.
Lawmakers passed it in hopes individuals would not notice the real damage being inflicted by other economic policy decisions. The state, which is not shy complaining about federal overreach, simply handcuffed local governments with this property tax lid.
When revisited this session, legislators should not be looking to move the start date forward. They should repeal the entire ill-conceived notion.
Editorial by Patrick Lowry