The pandemic caused counties across the state to issue varying levels of business shutdown orders meant to slow the spread of a life-threatening virus.
Now businesses that lost their ability to make money during the pandemic want a tax refund for the time they were forced to hang “closed” signs.
Lawmakers heard competing arguments about property tax rebates this week.
Businesses say the closures put them on the brink of shutting down for good. Local governments warn they don’t have the resources to be offering mass tax refunds.
A pending bill is a first step in a larger discussion looming before lawmakers: Should either the state or local governments be required to compensate the businesses that public officials ordered to close during the pandemic?
“We are fighting for the survival for our business,” Nick and Jake’s restaurants co-owner Kevin Timmons told lawmakers.
The legislation would require counties to refund taxes paid by property owners during times the county ordered businesses closed.
Timmons said businesses like his restaurants in the Kansas City area had to close by government orders and should get a break on taxes because of it.
“Reduced revenues through lockdowns and restrictions have forced us to make choices that were previously unthinkable,” he told lawmakers. “Do we pay property taxes or do we pay payroll?”
Government officials argue it’s not as simple as just giving businesses back the taxes they paid.
“The assumption of the legislation is we’re sitting on piles of money,” Sedgwick County Commissioner Jim Howell said. “That’s not true. We’ve actually spent those dollars providing services.”
The Kansas Association of Counties said it’s hard to estimate the full impact of the bill, but in Johnson County alone the cost of the refunds could total $177 million.
Statewide, KAC Legislative Policy Director Jay Hall estimated the bill could mean counties refunding a half billion dollars in property taxes. He said that would cause a tax shift. The refunds to business property owners would have to be paid with taxes on homeowners.
“That’s going to ultimately drive up taxes on our residential taxpayers,” Hall told lawmakers, “because the county is going to have to get that money from somewhere.”
Hall pointed to potential problems with the wording of the bill. For example, a restaurant owner may lease a building and pay the property taxes through their rent, but the bill says the owner of the property would be the one to receive the tax refund.
