For a moment, consider yourself Joe or Jane Average. You live in an average-priced home and you receive an average wage.
So, what major Kansas city should you live in if you want to pay the least amount of local taxes?
A new set of numbers and an analysis by the Journal-World suggest it is not in either one of the state’s two major university communities. Using numbers compiled by the League of Kansas Municipalities, the Kansas Department of Revenue and the U.S. Census, the analysis found that local taxes in Manhattan and Lawrence were higher than in any other Kansas city of more than 40,000 people, when measured against the average wages paid to full-time workers in each city.
Each year, the League of Municipalities publishes the total property tax rates — the mill levies charged by city governments, county governments, school boards and other miscellaneous taxing agencies — for every city in the state. The Journal-World took those numbers for the 11 cities in the state that have populations of at least 40,000 people. We also gathered sales tax rates for each city, median home prices for each city and the median annual wage for a full-time, 40-hour-per-week worker in the city.
Then, we tried to make sense of it all. Let us walk you through what we found.
Property tax rates
When it comes to the mill levy charged by local governments, Lawrence’s total is the fourth lowest of the 11 cities above 40,000 people.
Overland Park: 113.91 mills
Wichita: 120.55 mills
Salina: 123.14 mills
Lawrence: 123.40 mills
Shawnee: 126.19 mills
Manhattan: 127.57 mills
Lenexa: 129.35 mills
Olathe: 131.09 mills
Topeka: 147.42 mills
Hutchinson: 169.80 mills
Kansas City: 171.89 mills
How much your home is worth, of course, plays a major factor in how large your property tax bill will be. We used median home values as determined by the U.S. Census Bureau’s American Community Survey. (For you data geeks, we used the five-year estimates that were gathered from 2005 to 2009. They’re the most recent numbers available and also are considered the most reliable because they use the largest sample size.) Lawrence had the fifth highest median home values.
Overland Park: $220,400
Kansas City: $93,100
When Lawrence voters approved a trio of sales tax increases in 2008, the city’s total sales tax rate rose to become the fourth highest of the 11 large cities. (Note: These rates don’t include special taxing districts that some cities allow. For instance, Kansas City has 11 special taxing districts, which allow up to 10.02 percent in sales tax to be charged in some areas. Lawrence has two special taxing districts that charge 9.85 percent)
Wichita: 7.3 percent
Hutchinson: 8.05 percent
Salina: 8.2 percent
Manhattan: 8.55 percent
Overland Park: 8.65 percent
Olathe: 8.65 percent
Shawnee: 8.775 percent
Lawrence: 8.85 percent
Lenexa: 8.9 percent
Kansas City: 8.925 percent
Topeka: 8.95 percent
Taxes are kind of relative. A tax bill of $500 isn’t nearly as painful to someone who makes $100,000 a year as it is to someone who makes $20,000 a year. Again, we used the American Community Survey to find median wages for workers in each city. We know that some wage figures for university towns end up looking really low because of the number of students who either don’t work or get paid very little to work. So we used a number that measures the median average annual wage for a male, full-time, year-round worker. That’s our best effort to factor out the student effect. (We used the male number instead of the female because the margin of error was lower for the male data. For some reason, the Census doesn’t average the two together for us.) Lawrence was right in the middle of the pack when it comes to full-time wages.
Overland Park: $63,675
Kansas City: $36,224
Totaling it up
Here’s what we did to try to make sense of this. We figured how much a person who lives in an average-priced home would pay in property taxes in each city. Then we assumed that person would spend $5,200 a year on groceries (don’t get hung up on the number — we just needed something to compare), and we figured the sales tax on those purchases for each community. Lawrence has the fifth-highest tax bill.
Wichita: $1,498 property, $379 sales = $1,877 total
Salina: $1,479, property, $426 sales = $1,905 total
Topeka: $1,547 property, $465 sales = $2,012 total
Hutchinson: $1,657 property, $418 sales = $2,075 total
Kansas City: $1,840 property, $464 sales = $2,304 total
Manhattan: $2,276 property, $444 sales = $2,720 total
Lawrence: $2,385 property, $460 sales = $2,845 total
Shawnee: $2,845 property, $456 sales = $3,301 total
Olathe: $2,868 property, $449 sales = $3,317 total
Overland Park: $2,887 property, $449 = $3,336 total
Lenexa: $3,186 property, $462 sales = $3,648 total
As we mentioned before, taxes are relative. So we took the totals from above and compared them with the average wage totals for each city. Then we expressed the result as a percent. The lower the percentage, the less tax burden a person has. This is where Lawrence started to fall below average. (Note: Don’t make too much of the actual percentages. They are highly dependent on the assumption that the average person only spends $5,200 on taxable sales. That’s likely low. What’s meaningful, we hope, is how the communities rank compared with one another.)
Wichita: 4.2 percent
Topeka: 4.9 percent
Salina: 5.0 percent
Overland Park: 5.2 percent
Hutchinson: 5.3 percent
Olathe: 5.7 percent
Shawnee: 5.9 percent
Lenexa: 6.3 percent
Kansas City: 6.3 percent
Lawrence: 7.0 percent
Manhattan: 7.4 percent
Make what you will of the numbers. But don’t ponder any of it too long. The city, the county and the school district’s tax rates all will change soon enough. All three governments will discuss their tax needs as part of their budgeting processes that will run throughout the summer.