CHANUTE — Representatives from Neosho County’s taxing districts may have a potential payment plan to refund $6.5 million to Ash Grove Cement. NOT ALL of the representatives favored seeing the funds repaid over four years. THERE are still “wrinkles” that need to be ironed out, Neosho County Clerk Randal Neely warned.
The plan endorsed Tuesday by representatives from the Neosho County Commission, City of Chanute, USD 413, Neosho County Community College and Southwind Extension District will have the groups repay the $6.5 million, interest-free, over the next four years.
In May, the Neosho County appraiser’s office and Ash Grove attorneys settled the cement company’s property tax dispute, in which the company claimed its equipment had been improperly classified as taxable real property or untaxed personal property.
Each county’s appraiser sets the value of taxable property in his or her area.
A law passed by the Kansas Legislature has since clarified the equipment as personal property, and exempt from taxation.
Several methods of repayment were considered, including all of the taxing entities borrowing from an investment pool to repay Ash Grove all at once, then repaying the loan at .117 percent (based on Tuesday’s variable interest rate.)
“I know it’s only .117 percent,” NCCC President Brian Inbody said. “That’s pretty small; almost free money. But zero percent is better. Zero is my favorite cost.”
Inbody favored a proposal presented by James Hardy, USD 413’s superintendent of schools.
Hardy’s presentation would have the district repay the funds over four years. But rather than coming straight from USD 413’s coffers, the money will instead be withheld by the county each December when property taxes are paid.
The difference is significant, Hardy explained, pointing to the state’s school funding formula that allocates 20 mills to generate funds for each school district’s general fund monies.
That’s because the state will cover the 20 mills for the district’s general fund if the district does not.
“By allowing us to do distribution procedures, which is common, that will save us $684,000,” Hardy said. “That’s a big chunk of change.”
Hardy said the proposal, which has been endorsed by the Kansas State Department of Education, will save local taxpayers the equivalent of 2.25 mills on their property tax bills. The school district owes just shy of $2 million, a combined $1,908,910.60.
“This way, we will do without added revenue, but we can plan for it when we set our budget,” Hardy said.
County Commissioner Nick Galemore noted the county has enough cash to pay off its share immediately.
“It’s not our money,” he said. “It’s Ash Grove’s money.”
The plan developed Tuesday should be able to, for the most part, satisfy both trains of thought, Hardy countered.
The first payment, about $1.625 million, is due Dec. 20. The county will make the payment out of the money it already had set aside for a potential settlement.
Then, it will withhold the allotted amounts — 25 percent of what each of the other taxing entities holds — to replenish that fund.
First off, the governing bodies of each of the taxing entities must sign off on the plan. Then, it must be endorsed by the Kansas Board of Tax Appeals.
“And we still need to explain how this is going to work to the county treasurer,” Neely said.
A breakdown of what each entity owes as part of the $6.5 million settlement:
— State of Kansas, $51,352.95
— Neosho County, $1,836,118.10
— Chanute, $1,393,89.91
— USD 413, $1,908,910.60
— Neosho County Community College, $1,156,500.06
— USD 413 Recreation Commission, $106,204.81
— Southwind Extension District, $47,022.57
Payback time: Ash Grove due $6.5 million refund
