Lawrence and Douglas County

Lawrence and Douglas county

Kansas business and agriculture groups line up against proposed property tax hike

Rep. Steven Johnson, right, and Rep. Tom Sawyer, the chairman and ranking Democrat respectively on the House Taxation Committee, listen during testimony from groups opposed to raising the statewide property tax that helps fund public schools.

Rep. Steven Johnson, right, and Rep. Tom Sawyer, the chairman and ranking Democrat respectively on the House Taxation Committee, listen during testimony from groups opposed to raising the statewide property tax that helps fund public schools.

March 6, 2018

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— A proposal to nearly double the statewide property tax that helps fund Kansas public schools over the next three years drew universal opposition Tuesday from groups representing business and farm interests.

"As we know anecdotally, small businesses rank property taxes among the most despised taxes because they pay the tax whether they are producing income or not," Daniel Murray, Kansas state director of the National Federation of Independent Business, told the House Taxation Committee.

Steve McCloud, a representative for the Kansas Farm Bureau, said such a tax hike would be especially hard for the state's farming sector, which is currently suffering from both low commodity prices and rising property values.

Rep. Steven Johnson, right, and Rep. Tom Sawyer, the chairman and ranking Democrat respectively on the House Taxation Committee, listen during testimony from groups opposed to raising the statewide property tax that helps fund public schools.

Rep. Steven Johnson, right, and Rep. Tom Sawyer, the chairman and ranking Democrat respectively on the House Taxation Committee, listen during testimony from groups opposed to raising the statewide property tax that helps fund public schools.

He also argued that in recent years, state and local governments have increased their reliance on property taxes to fund public services.

"It is troubling to see the state of Kansas consider significant property tax increases while continually putting upward pressure on the same through the use of local option budgets to fund public schools," McCloud said.

Since 1998, the state has levied a uniform property tax of 20 mills, the revenue from which is earmarked for public schools. That levy equates to $184 in tax on a home valued at $100,000.

In 2017, according to the Kansas Department of Revenue, that generated $651 million for schools, which is only a small part of the nearly $5 billion the state spends from all funding sources, including federal funds, on K-12 public education each year.

But in the face of a Kansas Supreme Court decision in October that declared current funding levels are inadequate and unconstitutional, members of the Taxation Committee have been searching for ways to generate more revenue for schools.

House Bill 2740 calls for raising that levy up to 38.43 mills over the next three years. That would raise the state schools tax on a $100,000 home to $353.56, a 92 percent increase.

That would generate an estimated $670 million in additional revenue by the time it would be fully phased in, roughly the amount that many experts have said it could take to comply with the Supreme Court's order.

But Dave Trabert, who heads the conservative think tank Kansas Policy Institute, said that would be an unacceptable price to pay.

"The appropriate response to the court is not to raise taxes and waste more money, but to simply thank them for their opinion," Trabert said in his testimony. "The court is statutorily prohibited from closing schools and constitutionally unauthorized to appropriate money."

Rep. Steven Johnson, R-Assaria, who chairs the committee, said he asked for the bill to be introduced, largely to gauge public reaction to the idea of raising new revenue through property taxes.

"It was just a need to make sure that we gave the people of Kansas a chance to weigh in on their preference, which is really what I think our collective role in the Legislature is, to discern those together, find how we mix that to pay for the things we want to pay for," Johnson said in an interview after the hearing.

But he also noted that lawmakers approved a substantial income tax increase in 2017, and before that, a substantial sales tax increase in 2016.

No one testified in favor of the bill. Two groups submitted neutral testimony, including the Kansas Association of School Boards, which argued in favor of providing the increased funding that the court is seeking, regardless of which source of revenue it comes from.

Although numbers in the range of $600 million and up have been suggested by many officials who've analyzed the court's opinion, including the Kansas State Board of Education, lawmakers are waiting on a new cost analysis being performed by a pair of consultants hired late last year.

That report, which is due next Thursday, March 15, will likely form the basis of whatever new funding formula lawmakers adopt this year.

Leaders in both the House and Senate say they want to resolve the school funding issue before they adjourn the regular part of the 2018 session on Friday, April 6.

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