Archive for Sunday, July 20, 2008

Mill levy numbers don’t tell whole story

July 20, 2008


There seems to be one near certainty when it comes to property taxes this year: If you live in Lawrence, your mill levy is going up. Facing finances tighter than they've seen in years, Douglas County commissioners have tentatively agreed on a 2.92 mill levy increase.

There seems to be one near certainty when it comes to property taxes this year: If you live in Lawrence, your mill levy is going up. Facing finances tighter than they've seen in years, Douglas County commissioners have tentatively agreed on a 2.92 mill levy increase.

What is a mill?

A mill is $1 in property tax for every $1,000 in assessed value. Your home's assessed value is 11.5 percent of its fair market value, or, in other words, the amount the county thinks you could receive if you sold your home.

Pity poor Coffeyville.

The southeastern Kansas community has the highest combined mill levy of any city above 10,000 people in the state.

Its total mill levy - city, county, school district, et al - is 179 mills. It makes Lawrence's combined mill levy of 115 mills look like a tax utopia.


Not exactly.

The owner of an average single-family home in Coffeyville paid $1,121 in property taxes this year. The owner of an average single-family home in Lawrence paid $2,493. The difference, of course, is that an average home in Coffeyville costs about $55,000. In Lawrence, it costs about $190,000.

But hey, you can pity Coffeyville if you want.

That's the world of property taxes for you. First glances often are deceiving, and many times you end up comparing apples to oranges and then wishing you had a tangerine.

It's complicated because the average home in one community may be far different from the average home in another. Amenities in one town may be far better than amenities in another. One town may be perched upon the hill overlooking the valley; the other may be in the valley looking up the hill.

You get the picture.

But there does seem to be one near certainty when it comes to property taxes this year: If you live in Lawrence, your mill levy is going up. The Douglas County Commission has pretty much sealed that. Facing finances tighter than they've seen in years, county commissioners have tentatively agreed on a 2.92 mill levy increase.

It seems unlikely that either the city or school district will cut their mill levies enough to offset that increase. The city has proposed a one-tenth-of-a-mill decrease, although commissioners will be lobbied this week to increase the mill levy to provide guaranteed funding for the city's public transit system. The school district is still wading through the budget muck, but board members have talked more about increasing the mill levy than decreasing it.


So where does all this leave us when it comes to property taxes? That all depends on where you stand.

On one side of the fence is Boog Highberger, the lone city commissioner who has come out in support of increasing the mill levy this year to fund public transportation. Highberger is far from a fan of property taxes - he said they were damaging downtown businesses - but says property taxes are not as heinous in Lawrence as some may believe.

Highberger can point to the mill levy rates of some of the larger cities in the state to back up his point. Of the 25 "cities of the first class" - a legal term used to describe cities that generally are among the higher profile in the state - Lawrence's mill levy is significantly below average.

Lawrence checks in with a combined mill levy of 115 mills. The average for the group is 129 mills.

"I think as long as we're still below the median on the mill levy, that's a good sign for us," Highberger said.

As our trip through Coffeyville confirmed, mill levies can be deceiving. But so can common perceptions. Highberger said he believed many people were under the impression that Lawrence was somehow more expensive to live in than Johnson County communities.

A look at the numbers shows that is not the case. Here's the math that we did: We used the mill levy of each community and the average selling price of a single-family home in each community- based on 2007 data - to determine how much the owner of an average-priced house paid in property taxes for a year.

The result was that of the 19 communities in Johnson County, only three - Roeland Park, Merriam and Mission - came in with an average property tax bill below Lawrence's.

"I think people are still getting a pretty good value for their money in Lawrence," Highberger said.


On the other side of the fence is City Commissioner Rob Chestnut, who has been one of the more fervent opponents of increasing the city's mill levy. Chestnut makes two points: Compare Lawrence's property tax bills with any place other than Johnson County, and Lawrence residents generally end up paying the higher bill. And second, he thinks the situation has gotten far worse in recent years.

The numbers seem to back him up. We weren't able to do a comparison between Lawrence and every city in the state, but a quick look at a few major cities outside of Johnson County confirms Chestnut's suspicion. The owner of an average home in Lawrence pays about $500 more per year in property taxes than an average homeowner in Topeka; about $250 more than in Manhattan; and about $850 more than in Salina.

But more concerning to Chestnut is that Lawrence has a significant history of large property tax increases. In 2000, the owner of an average-priced home in Lawrence paid an annual property tax of $1,546. Today it is $2,493. That's an increase of about 61 percent, or about 7.5 percent per year.

"We're talking about people experiencing increases two, three or four times the rate of inflation," Chestnut said. "At some point, you have to believe enough is enough."

People who agree with Chestnut can point fingers in two directions. One was a hot real estate market during the eight-year period. The average selling price for a single-family home increased from $132,500 to $189,900. But elected leaders in all three levels of government also raised property tax rates. In 2001, the total mill levy was 101 mills, compared with 115 today.

Another number pointed to by Chestnut - he's a chief financial officer by trade - is how much faster property tax collections are growing than sales tax collections. From 2002 to 2007, property tax collections in the city's general fund have increased by 82 percent - rising from $6.6 million to $12 million per year. Sales tax collections have increased by 33 percent during the same time period - growing from $18 million to $23 million per year.

To Chestnut - who is a supporter of two proposed sales tax initiatives - it is clear the property tax trend must change.

"If it doesn't, I think more and more we will face the challenge of people saying they would love to live in Lawrence but can't afford to live here."


So, what do you think? Maybe you don't have enough numbers. Take comfort. You're sure to get at least one more.

Property tax bills will arrive in November.


twaldaisy 9 years, 4 months ago

The other thing is that JOCO has good paying jobs. Not only for degreed people, but they have significant industrial jobs that start out paying anywhere from $10 an hour up to $12 an hour. That is starting out, with raises in 90 days.

cato_the_elder 9 years, 4 months ago

It would be very interesting if, through some miracle, we could get 7 CFOs elected to the Lawrence Board of Education. Very few people in legitimate private business have chosen to run for the school board over the last 25 years or so, and its budgets have clearly reflected that.

Richard Heckler 9 years, 4 months ago

Where does the money being set aside come from to "plan" for economic growth? Better watch those funds.We've all been brainwashed to believe all new development is good for the community and taxpayers which could not be further from the truth: it folks the development/real estate community controlling our governing bodies built a city with no way to"pay" for demands. Extremely mismanaged planning. Could this have been prevented? Yes! By a slower methodical growth plan that provided good jobs not low wage warehouse jobs for new residents to prevent a bedroom community. Fewer houses would have been built but revenue generation to support the activity would be the end result. Job providers pay a higher propert tax rate (25%) than residents do which has been the rule of thumb forever. These special interests controlling our governing bodies are doing the same thing today as they were doing 10-15 years ago. Why? Because the real estate moguls make a ton more profit off housing than to provide a building that manufactures parts for wind turbines and solar panels. The T is not breaking the way jose'.No more tax increment financing(TIF) Lawrence cannot afford it! "How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick You with the Bill)" housing projects create a tax dollar dependent need for: Additonal city staffing and equipment water and sewer lines streets and repairspublic schools fire stations law enforcement manpowersidewalks snow removal bike trails and cross walks Traffic signals Traffic calmingExpensive Flood ControlIn general increases the cost of community services to all taxpayers.Our city's current budget crunch could easily be tied directly to infrastructure expenses needed to serve new housing developments. The community is way over extended in this regard. If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of houses you have increased demand on services, and historically the funding of revenues generated by residential housing does not pay for the services, they require from a municipality. This fact has been known forever. This fact is constatntly shared with our governing bodies and has been for at least 12 years. Why not IMPACT FEES or EXCISE TAXES on all new development to help curtail the demand for new fees and taxes? Local real estate developers have had a great time laughing all of the way to the bank on the backs of taxpayers. This is the root of the problem.

igby 9 years, 4 months ago

Everything else will have to go. $3,500 per year for a $130,000.00 house the county says is worth $220,000.00 is just too much. Allen press will soon start laying off people too. Chestnut, will have fewer beans to count just like everyone else. What happened to Jim Clark motors, drove by there today and all the cars were gone. Are they planning to pave the lot or did they go out of business overnight?Hope the T dies a slow horrible death and the city will have to file for bankruptcy over it. Every since the T, the new school and the new jail taxes have more than doubled here in Lawrence.Betting on sales tax is a gamble because everyone will spend less and buy the basics, even students, especially students. Beer, food and clothes and everything else will wain.Rent, utilities will go up 30%.

Richard Heckler 9 years, 4 months ago

Now so many scream out bring more more more retail without realizing that there are only so many available retail dollars not only in Lawrence,Kansas but in any community. Over saturated markets unfortunately do not magically create more available retail dollars. Over saturated markets do not create economic growth. Instead this situation also creates a need for more from taxpayers because of too many empty buildings/lots are not generating sales taxes or jobs. Too many retailers are not generating projected amounts of sales tax dollars or jobs because the limited number of retail dollars are spread too thin aka economic displacement.JUAN GONZALEZ: You also delve into this whole phenomena across America of the big box stores, the Targets and the Wal-Marts and the Kmarts. And obviously they've-to some, they at least offer cheaper goods, cheaper consumer goods. Your analysis of their impact?DAVID CAY JOHNSTON: Well, first of all, they say they offer cheaper goods. I don't accept that that's necessarily true.But here's what happens. And this is a good example of where the news media hasn't done a good job. I have tons of news clips that say, oh, this new shopping mall is coming or a new Wal-Mart or a new Cabela's store, and thanks to TAX INCREMENT FINANCING, this store is going to be built. Well, WHAT IS TAX INCREMENT FINANCING? I'll tell you what it is. You go to the store with your goods, you pay for it at Wal-Mart, and there's a very good chance that that store has made a deal with the government that the sales taxes you are required to pay, that government requires you to pay, never go to the government. Instead, those sales taxes are kept by Wal-Mart and used to pay the cost of the store. And typically in those deals, the store is tax exempt, just like a church.Now, there are two ways that it's important to think about this. One is, that means your kid's schools, your police department, your library, your parks are not getting that money. And you'll notice we keep saying we're starved for money. We're twice as wealthy as we were in 1980, but we've got to close hospitals, and we've got to close schools, and we don't have money for all sorts of things like after-school programs, even though we're twice as wealthy. The second thing to think about is, imagine that you own Amy Goodman's or Juan's department store across the street. You suddenly have to compete with people whom the government is giving a huge leg up on. You think you would go broke after a while? Well, in fact, you will.That's not market capitalism, which is what Ronald Reagan said he was going to bring us. He said, you know, government's the problem, we need markets as a solution. Well, that's not the market. That's corporate socialism. And what we've gotten is corporate socialism for the politically connected rich-not all the rich, the politically connected rich-and market capitalism for everybody else. This is also Lawrence,Kansas.

Chris Ogle 9 years, 4 months ago

Taxation without representation.... get it city commission?

KsTwister 9 years, 4 months ago

Wage increases can't keep up,inflated housing, lack of jobs here,crumbling infrastructure needing raised rates (sewer,water,street,levy,T)and high property taxes. I don't think people are are happy continually paying taxes for the same improvements in the last 15 years. I find that people are moving in droves. Now how does that help? Count your empty strip malls because their is nothing like urban blight to increase that exodus.

twaldaisy 9 years, 4 months ago

But RC have you tried to sell your home? IMO you have not made any money unless you actually sell your home and have the profit in your pocket? I am legitimately asking this.

Richard Heckler 9 years, 4 months ago

So why do officials continue to approve housing projects anywhere that will further drop the value of existing homesthus will create a need to increase taxes and fees further because the bedroom community has no way to generate revenue to pay its' bills?Go figure!

dandelion 9 years, 4 months ago

xbusguy, they are our representatives. They were voted in by a majority of those who voted. Of course, not everyone voted.Comparing Coffeyville to Lawrence is apples and oranges. Would you really want to live in Coffeyville and be subject to all the leftover pollution from the former paint factories? Quality of life isn't free. In the past cities with good tax bases had business to pay taxes, now they give up those taxes to bribe those places to come to the city. Guess who makes up the difference? Where did all these businesses locate before they figured out that cities would be willing to bend over for them?

twaldaisy 9 years, 4 months ago

Sorry the opinion is not a question, but a statement.

Godot 9 years, 4 months ago

Though the increase in the city's tax revenues since 2002 is huge in comparison to the rate of inflation, it still was not enough to satisfy the voracious apetite of the Lawrence city beast. During that time, the "rainy day" fund, which had been growing for years, was also depleted.Name the new entitlement programs that have been created since 2000, and you will have most of the answer to our tax problems. Add to that the increase in the minimum wage paid to city employees, and then the royal salaries and benefits and perqs paid to city administrators, and the hundreds of thousands of dollars paid to consultants because these high paid administrators are incapable of doing their jobs, and the picture is complete.Defund the T, defund Eagle Bend, defund the parks and recreation classes (these all compete with private, tax paying enterprises), defund the Chamber of Commerce, eliminate about 20% of the management staff, stop funding notforprofit agencies, and you will see the bleeding stop. Then the real budget cutting can begin.

Richard Heckler 9 years, 4 months ago

Rainy day fund was not depleted.... perhaps reduced. How much is in the rainy day account?The increases in fees are 2-3 times greater than a cost of living increase. Why is that? Is this how property taxes are reduced?

Richard Heckler 9 years, 4 months ago

"twaldaisy (Anonymous) says:But RC have you tried to sell your home? IMO you have not made any money unless you actually sell your home and have the profit in your pocket? I am legitimately asking this."If our homes are losing value at such a rate to justify increasing taxes as a result all of us are losing money. When the housing boom when beyond reality and some mentioned slowing the pace the real estate communitypulled the fear card by saying home values would go through roof and THEY would not be able to sell as many homes. I would rather have a solid higher home value and fewer new homes on the market.Now that the bottom has fallen out of the market, home values are dropping and taxes are increasing the real estate community and commissioners continue to put forth more housing projects thus further flooding a flooded market? What is the logic behind this concept? More corporate socialism aka local corporate welfare....?

igby 9 years, 4 months ago

Godot: You are right on about all the above.In 2009, all we need is three CC who will fire all these commies and put the city back on track for survival during these hard economic times.

Kasha 9 years, 4 months ago

Statistics can be used to show whatever the creator wants them to. Highberger and Chestnut can justify a mill levy increase any way they want, but it's not going to make Lawrence "a pretty good value for their money in Lawrence" (Highberger).Lawrence is a very expensive place to live, In part, I believe, because of an inept city commission that spends more time procrastinating than acting--and acting responsibly--and staying within its budget. It wasn't but three months ago that we heard about the overwhelming windfall to hit Lawrence after both the K.U. football and basketball teams brought such glory to our city. Unexpected profits! Wow! Exciting prospects for a banner year for Lawrence! Wonderful sales tax income! Hmmmm. Where did all that profit go? Not into the budget, apparently..I lived in Lawrence for thirty years before retiring from K.U. in 1991 and moving to SC to live with my daughter. Two and a half years ago, I returned to Lawrence because I remembered it being an inexpensive and pleasant place to live. SC turned out to be too expensive. Little did I know what I was getting into, what with Federal, State, City, County, Local, District taxes lined up in a column on all of my bills from utilities to cell phone. On top of that, a KPERS Pension that has not given us a COLA in eight years, and Social Security that giveth and then taketh away for ever-increasing Medicare payments.This is no place for anyone on a fixed income. I may have to move back to SC.

Godot 9 years, 4 months ago

One never really knows what max1 means when she posts her links (aren't links to external sources against the rules?) Perhaps she is inferring that since property taxes in Lawrence increased by about 3 times the increase in the CPI over the last few years, we should expect to see an explosion in the mill levy now that we are experiencing near double digit inflation in the cost of consumer goods.

Chris Ogle 9 years, 4 months ago

dandelion, I expect the chance to vote on the proposed sales tax, instead of allowing "Representatives" to decide what my overall city tax will be. Please vote!!!! We need to hold the line on taxes.

igby 9 years, 4 months ago

Why is there a sales tax on building material anyway?The property owner has to pay property tax on the house or building every year for ever. The county gets and economic gain of five time the value of the property over 100 year time span. There should not be double taxation on anything that becomes fix to real property.

huntershaven 9 years, 4 months ago

Perhaps it is foolish for me to be moving into Lawrence at this point in time, but my wife and I have the opportunity to get into a house that is perfectly located and is neither too old and in need of regular maintenance nor too new and complexly built requiring expensive maintenance in the future when it will need to be done.That being said, I do not look forward to watching property taxes and monthly utility rates going up on a regular basis, especially when it seems that service levels and quality continue to go down. It is possible that the examples I've seen are not indicative of the entire city, but so far I am not convinced otherwise.I'll have to do whatever I can not to give the city an incentive to increase the assessed valuation simply because I try to keep our new, to us, home in reasonable condition. As money hungry as they are right now I would hate to think what they would want to value the home at if I were to actually try to make it look better than reasonable.

Centerville 9 years, 4 months ago

I think Highberger is missing something: just because we don't have the world's highest mill levy doesn't mean we aren't overtaxed. And just because our city commission can't say 'no' doesn't mean we need yet higher taxes. With what we're paying for a bus system, we would be ahead if we bought every regular rider a car.

gr 9 years, 4 months ago

"(aren't links to external sources against the rules?)"Please give details why you think that and how max1 violated such.

Phil Minkin 9 years, 4 months ago

XD40 (Anonymous) says: The seeds sown by the Progressive Lawrence Coalition have sprouted, grown and born their no growth fruit. They broke the economic development engine that was growing us to a bright future. Now, there is nothing: no economic growth; no valuation growth, no population growth, no revenue growth. All this will lead to the city's decline. It will no longer be a bright spot in Kansas' future. Thanks to the so-called progressives.Sorry, but Bush's war, economic policy and unjust tax policy did more to hurt the city's economy than 2 or 3 commissioners. Do you really think that Lawrence is the only place with problems. That damn PLC caused the oil crisis, mortgage failures and our being in debt to China.

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