Residential reliance

Lawrence is a great place to live, but residential property owners have reason to be concerned about the high share of the local tax burden they are carrying.

One of the most troubling numbers thrown out at Thursday’s annual Kansas Economic Policy Conference concerned the state’s growing dependence on residential property to support its tax base.

Speaking at Kansas University, Bart Hildreth, a Wichita State University public finance professor, told conference participants that state and local governments are becoming far too reliant on residential property taxes. In 1988, he said, residential property accounted for 22 percent of the state’s assessed valuation. By 2005, that figure had risen to 40 percent.

“If we continue on the current path,” Hildreth said, “it may well result in a taxpayer revolt.”

Figures supplied to Lawrence city commissioners in March indicate that local residents may have reason to lead the charge in such a revolution. If 40 percent sounds high, consider that residential property accounts for almost 69 percent of Lawrence’s assessed valuation. That is the highest percentage among the state’s 10 largest cities, according to data provided by the League of Kansas Municipalities.

Lawrence obviously is a great place to live, but our dependence on residential property taxes to fund the growing need for public services is of serious concern. The rise in property valuations has kept the local mill levy relatively stable, but people still are having to pay more and more money just to stay in their homes.

Some observers say the answer is to make new housing construction “pay for itself” through impact fees to extend streets, sewers and other infrastructure, but such citywide services should be the responsibility of all Lawrence taxpayers. The more practical answer is to rebalance the city’s tax base by bringing in more business and industrial taxpayers.

Unfortunately, Lawrence hasn’t seen much progress in that area in recent years. The current situation with Wal-Mart raises the issue of whether city commissioners are pushing a no-growth agenda. That could be part of the problem, but it also seems that the Lawrence Chamber of Commerce hasn’t been as aggressive as it could be in pursuing opportunities in the biosciences industry and other fields. A second round of private fundraising for the chamber’s economic development efforts took place earlier this year, but there has been no announcement about how much money was raised or how it is being used. Where is the chamber concentrating its efforts?

Economic development is a highly competitive area, partly because of every community’s desire to attract companies that will broaden its tax base and provide jobs to its residents. The startling dependence of state and local governments on residential property taxes seems to validate the concern of many taxpayers, especially those on fixed incomes, that they could be taxed out of their current homes.

As the Wichita professor said, if governments continue on their current path, they shouldn’t be surprised if they soon are faced with a full-fledged taxpayer revolt.