Archive for Thursday, July 13, 2017

Editorial: Please explain tax increases

July 13, 2017

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Taxes are not evil. Government uses the money to provide many services that are needed and likely could not be provided as efficiently by the private sector. But in a prosperous community, you would like to think that the growth in the economy would supply the additional revenue needed to fund government rather than a continual increase in tax rates.

But this year it looks like it will come from a tax rate increase. It is too early to state a final total, but it looks like a $200,000 home will have taxes increased by about $125 for the year.

This comes at a time when there has been good economic growth in the community, and local budgets should be in a position to capitalize on it. In 2017, both property values and sales tax collections are growing significantly. Both the city and county collect property taxes and sales taxes, although the county doesn’t get near the benefit of increased sales tax collections. If taxes can’t go down this year, it is hard to see in what year they will.

Let’s look at the city in particular. The city crafted one recommended budget in May that called for a 1.25 mill property tax increase. But it then had to quickly revise that budget in June because it got good news from the county. Due to rising home values, the city was going to get an extra $1.4 million in property tax revenues. Despite that unexpected amount of tax revenues, the city has taken no steps to reduce its mill levy.

City officials have explained that the mill levy increase is to fund the city’s bond and interest fund, which pays for streets, infrastructure and other capital improvement projects. City leaders have said the city already is behind on many infrastructure issues. Fair enough.

However, the bond and interest fund is just one portion of the city’s budget. It has a property tax rate of just under 10 mills. The much larger part of the city budget is its general operating fund. It has a property tax rate of just under 20 mills.

As previously noted, the city is scheduled to receive $1.4 million in property tax revenues in 2018 that the city leaders weren’t expecting when they put this budget together. About $950,000 of that amount goes to the city’s general operating fund. In addition, sales tax revenues are growing faster than budgeted, which means the general fund is projected to receive about $600,000 in additional sales tax proceeds. As it stands now, the city plans to spend that approximately $1.5 million in money.

The city, though, could consider using some of those new funds to provide a reduction in the general fund mill levy. City officials would not have to touch the bond and interest fund. Needed capital improvement projects wouldn’t be impacted, and taxpayers would be hit with something less than a 1.25 mill levy increase.

Of course, the city could argue that the general fund has needs that can benefit from the additional funding. That is likely true, but the city needs to do more to explain how it is going to spend that money in the general fund. It appears currently that a sizable portion of the new money will be used to build up the balances in some reserve funds.

County commissioners also could stand to offer some greater explanation, although they have detailed that much of their proposed tax increase will fund increased mental health services, judicial matters and new sheriff’s deputies. The county, though, could offer explanation on another matter: Since 2007, the county’s mill levy has increased by 14 mills, greater than the city and the school district’s increases combined. How sustainable is that trend?

More explanation is needed before the city and the county finalize their budgets in August. Tax increases are not necessarily bad, but when they aren’t fully explained to taxpayers, they are always detrimental.

Editor's note: A previous version of this editorial incorrectly reported the amount of new property tax revenue the city is expected to receive in 2018. It is $1.4 million, not $1.8 million as previously reported.

Comments

Charles L. Bloss, Jr. 3 months, 1 week ago

I wish those people continually raising taxes would consider elderly people, living on fixed incomes. It really hurts us. Each time they do it, we have to cut something else out of our budget, many times it is something we need. I am on KPERS retirement, and I can't remember when we had a COLA. Social security did not give one recently. If my wife were not still working we would have to give up our home, and that will most likely happen when she retires. It isn't fair to people who work their lifetime to have a home to retire in, and then be taxed out of it. It is obvious they do not care, or they wouldn't keep increasing our taxes. I don't mind paying my fair share of taxes, but they have gone way beyond my fair share.

Francis Hunt 3 months, 1 week ago

2 out of 3 current county commissioners took office in early 2009. Since then (not including the current budget proposal) they have increased the mill levy by 11.272 (2.945 in 2011, 3.858 in 2015 and 2.994 in 2017). What IS the explanation?

The previous commission only raised the mill a total of 2.721 in their 4 years, 2.825 of that was the 2009 budget. Yes, they actually reduced taxes 2 of their 4 years. But why the big increase in their final budget?

As far as your question "How sustainable is that trend?" Simply put it is not sustainable. Thank goodness for the tax lid.

Bob Smith 3 months, 1 week ago

Little piggies will always want more feed in their trough.

Deborah Snyder 3 months, 1 week ago

As I've already stated, I will not support a tax increase that shifts its monies away from streets and transportation to divert funding for "affordable housing." City commissioners' desire to avoid saving the existing modest housing stock in central, east and north Lawrence is shameful, especially off the backs of the working poor in Lawrence.

That tax was successful because it dealt solely with transportation issues, period. Because we are Upside Down on rentals vs. homeowners occupied, our neighborhood streets bear an increased weight load and traffic use they were not designed to handle, particularly its underground infrastructure.

Stop passing the buck (literally and figuratively) on city zoning laws which single families cannot compete against, and enact district overlays to deal with affordable housing, rather than divert transportation monies to create unaffordable new housing that will quickly be converted into MORE RENTALS!

Carol Bowen 3 months, 1 week ago

Yes, the city needs to clearly explain the property tax increase and the sales tax. Just a bulleted list of what we are getting for our money.

By the way, as far as I can tell, a vote for the sales tax is not a tax increase. The sales tax has to be renewed and it funds very basic stuff like streets. Give readers a simple list of what the sales tax funds, and maybe, a couple of examples.

David Holroyd 3 months, 1 week ago

Deborah, here is a chance to see your street dollars at work, well sort of!

You know about ADA ramps at corners. Well the new curbing has been pourred at 14th and Ohio and nothing was done about the ADA access. So now your street dollars will have to be spent to go back an fix a problem that your City Manager, City Staff and 5 Amigos on the commission should have been on top of.

btw, what good is an overlay if the benefit is not fiancial gain. You Deborah, get an exemption of $250,000 for a single person and $500,000 exemption from profit of the sale of your home over what you paid and certain expenses put into it.

These landlords you gripe do not get that. They pay capital gains or do 1031s exchanges.

But nevermind, one day you will sell and you won't care who you sell to as the retirement communities in Lawrence are foaming at the mouth to get every penny you have save and then some..from the sale of your home.

If you don't like who buys a house in your neighborhood, buy it yourself and you can then hold it and sell it again to the family you think should live there.

Or MOVE! that is simple to do!

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