Wichita ? In a move to spur business investments, Gov. Kathleen Sebelius on Thursday proposed exempting new industrial and commercial equipment purchases from state property taxes – a first step in the phased elimination of the tax in the future.

“Business owners have repeatedly brought to our attention their need to invest in new equipment and technology, but the current Kansas business and machinery personal property tax often creates a barrier to those investments,” the governor said.

Sebelius told community leaders attending the Kansas Prosperity Summit that she would push for such a bill when the Legislature reconvenes. The summit focuses on issues that emerged from seven regional meetings conducted across the state.

“We need to encourage businesses to invest in the future to make sure that they stay in Kansas and to invest in technology to keep pace with the rapid change in the marketplace,” Sebelius said.

Elimination of property taxes for newly purchased machinery can be done immediately without jeopardizing homeowners, farmers and streams of revenue for local and county governments, she said.

“The tax relief will provide an important new incentive for businesses to start or relocate in Kansas,” she said.

Industrial and commercial equipment taxes bring in $200 million to counties, providing a huge revenue source for counties like Sedgwick with a big manufacturing base, said Revenue Secretary Joan Wagnon.

The plan initially would apply to new purchases – regardless of whether that equipment is new or used – and would include spare parts and supplies, Wagnon said.

Most neighboring states do not have personal property taxes on industrial equipment, Wagnon said.

The governor told business leaders that taking $200 million out of schools and roads or shifting the burden to homeowners and farmers would not be productive. Her proposal would phase out the tax, rather than eliminate it abruptly.

Commerce Secretary Howard Fricke told community leaders that several consistent statewide themes emerged in discussions at seven regional meetings. They included things like more local government control, incentives for economic development, work force development, transportation funding and a statewide energy policy.