A dispute over what voters were told in 1994 may stop county residents from getting property tax relief today
photo by: Chad Lawhorn
There’s such a thing as an urban myth, and perhaps, there’s a Douglas County myth too. The urban one is likely to make its appearance around a campfire, a water cooler or even a bar.
The Douglas County variety tends to show up around tax time.
As Douglas County property owners face their largest property tax increase in recent memory — many tax bills will be at least 10% higher than a year ago — discussion has increased about how local governments can reduce their property tax rates.
At the Douglas County Courthouse, a calendar that goes back to 1994 is useful for such discussions.
That was the year Douglas County voters approved a countywide one-cent sales tax, which is still on the books today. In question, though, is how much flexibility Douglas County has in using those sales tax proceeds to reduce the county’s property taxes.
Well, it is sort of in question. There is actually no dispute over whether the county can legally use the sales tax revenues to reduce property taxes. The ballot language from the election is clear: The revenues can be used for any “general governmental purposes.”
Rather than the legality, what is in dispute is whether today’s Douglas County Commission would be breaking a political promise by the County Commission made in 1994. In the balance is millions of dollars of taxpayer funds that currently are sitting in a Douglas County account but have not been budgeted to be spent. In a time when soaring property valuations are creating higher tax bills, those idle funds conceivably could be used to reduce property taxes.
The fund, known as the Local County Sales Tax Fund, is projected to have about $1.5 million of expenses in 2022, yet county commissioners are budgeted to deposit an additional $4 million of sales tax revenues into the fund. That sort of thing has been happening for years, and as a result the fund has a lot of cash sitting in it. The fund is projected to begin 2023 with $12.6 million of cash.
Recently I asked Douglas County Administrator Sarah Plinsky whether — in these extraordinary times of rising property values — she had considered recommending using some of the money in that sales tax fund to provide property tax relief.
The answer was quick and definitive.
“That would be different than what we told the voters that we would do,” Plinsky said.
Plinsky contends that voters during the 1994 campaign were told that Douglas County would not spend more than 50% of the funds on the operations of county government. The other 50% of funds would be used to fund large capital projects that required the issuance of debt. Spending the sales tax funds on county operations, effectively, is a way to reduce property taxes because every dollar of sales tax that is used for operations theoretically allows the county to collect one fewer dollar in property taxes.
Plinsky for several years has continued to recommend — and county commissioners have approved — putting several million dollars of excess sales tax monies into the fund each year. For the past several years, most of those funds have gone unspent. In 2019, the sales tax fund had a cash balance of $3.2 million. By 2020, $4.6 million; by 2021, $7.2 million; by 2022, $10 million; by 2023 it is estimated to have $12.6 million; and by 2024 it is projected to have $15.1 million in it.
Plinsky said she believes to follow through on the pledge to voters, she’s been obligated to recommend 50% of all the county’s 1% sales tax money (don’t confuse it with the more recent mental health sales tax; that is a different fund) is required to go into the Countywide Sales Tax Fund. She said that’s the case because the Countywide Sales Tax Fund is for capital projects.
Plinsky acknowledges that legally, the County Commission could decide to use the sales tax funds differently, meaning it could alter the 50-50 split. However, she thinks such a change would come with political ramifications.
“You know what happens when you tell the voters one thing and then do something different and how they tend to like that,” Plinsky said.
Such situations can create political blowback, but generally it would require voters to remember what was said to begin with. At this point, the campaign was nearly 30 years ago. It is questionable how much this issue remains on the minds of county residents.
But that question is dwarfed by another: Did Douglas County leaders ever make such a pledge to begin with? Or, is this just a Douglas County myth? In short, a review of the historical record by the Journal-World has found no evidence of such a pledge.
In a review of media coverage from the day, campaign materials from the day, and government documents from the day, the Journal-World did not find a single instance of a 50-50 split being discussed.
Probably most significantly, the Journal-World reviewed an interlocal agreement between the city of Lawrence and Douglas County from Aug. 9, 1994. Its sole purpose was to create a legally binding document that would give voters something to refer back to on how the two governments would use the sales tax dollars if voters approved the tax. The interlocal agreement makes no mention of, or allusions to, a 50-50 split.
Instead, the agreement says: “For sales tax revenue received by the County, the Board of County Commissioners shall be responsible for determining the appropriate appropriation thereof.”
While that statement seemed definitive, the Journal-World read campaign ads from the time and news articles of the day to determine whether the 50-50 split was mentioned on the campaign trail.
It did not find any such mentions. Rather, the Journal-World mainly found that the campaign gave very few details about how the sales tax was going to be used decades after its approval. Instead, everyone was focused on the here and now, which was full of issues.
The sales tax was proposed to voters to build three major categories of projects: 1. A new county jail; 2. New facilities for health care organizations Bert Nash, Visiting Nurses and the Lawrence-Douglas County Health Department; 3. About $12 million worth of parks and recreation projects in the city of Lawrence.
photo by: Kevin Anderson/Journal-World File Photo
The other prominent part of the campaign pitch was property tax relief. Voters were repeatedly told the county intended to lower its property tax mill levy by two mills during the next budget year, and the city of Lawrence intended to lower its mill levy by five mills during the next budget year. That, indeed, was a political promise.
That promise was tied to an even bigger political issue: Whether Lawrence should have a second high school. That same 1994 election featured a school bond issue that was approved and cleared the way for Free State High School to be constructed. It was no wonder that the Vote Yes campaign — supporters of the sales tax and the school bond joined forces — didn’t talk much about how the sales tax would be used once the jail, the health facilities and the parks and recreation facilities were paid for. There was so much to talk about in the here and now. That 1994 ballot was one of the more expansive in memory.
And, full disclosure, I do have memories of it. I covered the 1994 sales tax election as a reporter for the Baldwin Ledger, a now defunct weekly newspaper. But even I had forgotten how intense the property tax issue was during that time.
In reading past articles, I was reminded that Douglas County commissioners in 1994 had tried to exempt the county from a state property tax lid, they said, for mainly technical reasons. Voters had none of it. A group formed and gathered 1,200 signatures on a valid protest petition that would have forced the county to place the tax lid question on the ballot. County commissioners quickly abandoned the idea and agreed to live within the tax lid provisions.
In short, property tax reduction was a big part of the 1994 sales tax vote. Saying you were going to limit how much you could use future sales tax dollars for property tax reduction would not have been a great strategy to win the election.
But, 28 years later, here we are with that argument. Well, kind of. At one point in an interview for this article, Plinsky indicated she “had a lot of handouts and flyers” related to the 50-50 split that voters were told about. The Journal-World asked to see those, after its search of the historical record didn’t produce any evidence of such a pledge. Plinsky then clarified that she didn’t mean to say that the county had old campaign materials discussing the 50-50 split. However, she had been told by a former county employee that there were County Commission meeting minutes that mentioned the split. However, Plinsky said she didn’t have specific information about that meeting, such as when it occurred. Plinsky, after seeing the Journal-World’s review, said she is not sure what, if any, pledges were made to voters related to a 50-50 split, but said it was accurate that it had become the county’s longtime, well-established practice.
County commissioners as part of the 2023 budget are poised to lower the property tax rate by one mill. It should be noted, the county is the only major government in Lawrence that is proposing a mill levy reduction this year. But due to rising property values, most county property owners are still going to see a large property tax increase when bills arrive in the mail in November. Commissioners did not use any of the sales tax dollars in question to lower the property tax rate. Rather, they cut spending that had been part of Plinsky’s recommended budget.
Plinsky indicated she is not likely to recommend a major change in how sales tax dollars are used. She did acknowledge that the amount of cash in the sales tax fund “is higher than that fund is used to having.”
But she thinks spending activity in the fund soon will increase. Approvals haven’t yet been granted, but Plinsky anticipates the County Commission will strongly consider building projects to address a shortage of county office space near its downtown courthouse and law enforcement center. This coming week, the county is expected to approve an order to begin advertising for consultants to work on the project, which dates back to 2017.
Plinsky believes that project could lead to sizable construction work that will require debt to be issued. The county would use the Countywide Sales Tax Fund to pay for that debt. Plinsky said other projects, such as significant maintenance work at the courthouse, may require use of the fund.
At this point, it is unknown whether county commissioners will have a desire to dive into the history and make changes to how they spend the 1994 sales tax money. But, there are other interesting points to note from that busy time.
photo by: Journal-World File Photo
For one, campaign statements didn’t always hold true. Voters in 1994 were told that the new jail project was going to be built downtown next to the existing Judicial and Law Enforcement Center, and the project would create 200 new parking spots for the downtown area. That didn’t happen. After the vote, some opposition emerged to the proposed jail site, and the new jail was built on the far eastern edge of Lawrence. Campaign materials also said the health facilities were going to be located inside Lawrence Memorial Hospital, resulting in a renovation for unused spaces at LMH. That did not happen either. Rather, a brand new building was built across the street from LMH.
And finally, some voters from 1994 may feel the property tax relief provisions that were sold on the campaign trail haven’t exactly stood the test of time. If you thought property tax rates were forever going to stay below where they were in 1994, you are likely disappointed.
The campaign literature and coverage of the day would make it difficult to say that proponents of the sales tax were promising the county’s property tax rate would always be two mills lower than its 1994 total and the city of Lawrence’s would always be five mills lower than its 1994 total. Rather, it seems they were promising a one-time drop. How long those lower taxes would last was never addressed very specifically.
What’s clear is they haven’t lasted through today by any stretch of the imagination. The county’s mill levy in 1994, before the sales tax passed, was just under 30 mills. The budget the county is set to approve Wednesday has a property tax rate of approximately 46 mills. In 1994, the city of Lawrence had a mill levy of about 28 mills. The budget it plans to approve has a tax rate of about 33 mills.
County commissioners meet at 5:30 p.m. on Wednesday at the Douglas County Courthouse to take public comments on the proposed budget and will consider approving it.