Archive for Friday, September 18, 1992

CHAMBER OFFICIAL PANS STATE ABATEMENT STUDY

September 18, 1992

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A local economic development official takes exception to the suggestion that industrial revenue bonds and tax abatements are siphoning $73 million in revenues from Kansas schools.

Bill Martin, economic development director for the Lawrence Chamber of Commerce, said a report released this week by the Legislative Research Department doesn't tell the whole story. The report, which was prepared for the Legislature's Interim Assessment and Taxation Committee, pegged the appraised value of tax-exempt Kansas property at $3.4 billion to $7.6 billion.

If all that property were returned to the tax rolls, the report said, it would generate $73.3 million from the 32-mill statewide property tax that was imposed to support elementary and secondary education.

Martin said that figure is at best misleading and at worst inaccurate.

"I think what they've done is look at one side of it," he said.

Martin said the report does not take into account that although an economic development project might be financed through IRBs and receive a tax-exempt status, most cities still require payments in lieu of taxes.

The city of Lawrence, for example, generally exempts only 50 percent of the property tax on a project, meaning that half the taxes are still being paid, he said.

"While abatements under IRBs and economic development might total $73 million, what's the payment in lieu of taxes?" Martin said.

In some cases, such as projects in Lenexa and Overland Park, where no tax abatements are available, companies are making payments in lieu of taxes equal to the amount of tax that would be collected without IRB financing.

Martin said the report also fails to consider the spinoffs from economic development.

"What they're showing is the cost side of things. What I'd be interested in seeing is the benefit side of things," he said. "What kind of jobs and benefits and other tax revenue are being generated because of these projects?"

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