While Kansas legislators try to find the right combination to deal with a budget revenue shortfall the next two fiscal years of well over $1 billion, two bills much on the minds of city and county leaders await in the wings.
One would repeal the lid on local property tax levies; the other would make local tax-supported budget increases subject to protest petitions.
The law in question was passed in 2015, when ultra-conservatives held sway in both the House and Senate, and requires cities and counties to have voter approval before they can adopt a budget that increases spending of property tax revenue by more than a five-year average rate of inflation.
With inflation having been miniscule in recent years, that means budget increases, no matter the justification, are pretty much forbidden unless local voters come to the rescue.
That isn’t as easy as it might seem, Allen County Clerk Sherrie Riebel told the Register.
First of all, budgets are difficult to construct until assessed valuation is known, which isn’t certified until June 15 of each year. Up until now, that has not been a concern because required public hearings haven’t been scheduled until late July or early August, with a deadline of Aug. 15 for publishing the finished product.
Meanwhile, the tax lid law rigs the voting process so that observing its deadline would be a nightmare.
Riebel explained: Referendums have to be on Sept. 15, with no latitude. That means to complete all that is required, including legal publications, for an election, she has to know one is upcoming by July 1.
The result is that commissioners and council members have to put together a budget on the quick — a difficult task under the best of circumstances — or else ignore pressing needs and considerations of citizens.
With their own problems, stemming from ill-advised income tax cuts in 2012-13, it would have been appropriate for legislators to have ignored the temptation to meddle with what occurs on the local level.
Locally elected officials are closer to the people and understand their needs infinitely better than legislators in Topeka.
CITIES that have enterprise, or profit-generating funds — such as Iola’s water, gas and electric departments — have a leg up with the law.
For years Iola has transferred revenue from utility reserves, at the start as “loans” for extraordinary needs and in more recent years often to buffer dependence on property taxes for general operation of the city.
Other towns in the county have done similarly, but they don’t have the latitude of Iola. Humboldt is trying to rebuild reserves, per its auditor’s recommendation, after having had them slip dangerously low.
Philosophically, using reserves for operations or to keep property tax levies lower is somewhat misleading. Quite honestly, when that occurs transfers can be considered a back-door tax, because accumulation of reserves comes from what utility rates produce, and reserves come only when charges exceed costs.
For years, Allen County didn’t have the luxury of being able to draw on reserves with the magnitude of Iola.
However, commissioners did take into account the tax lid law when they socked away a good portion of tax revenue that streamed to the county after Enbridge laid a pipeline across the county and constructed a huge pumping station a mile southeast of Humboldt.
The county’s valuation specific to Enbridge increased about $40 million and brought in about $2 million that was put in a capital reserve account.
Those funds may be transferred elsewhere in the budget, and, if push comes to shove, may be used to permit budget increases in excess of what the tax lid would permit.
KENT THOMPSON, our representative in the Kansas House, said he had heard little about the two measures championed by the League of Kansas Municipalities, either to derail the tax lid or at least make it subject to a petition rather than automatic.
Thompson favors the petition approach, primarily because he thinks it would be an easier sell in the two chambers, with some members still holding fast to more conservative positions.
Rep. Steve Johnson, Assaria Republican who chairs the House Taxation Committee, told the Lawrence Journal-World he had delayed working either bill until he better knows which may stand the better chance of passage. City and counties likely would prefer to do away with the law altogether, but given how difficult it might be to force a referendum by petition, they readily would accept that approach.
We think debate and passage of the measure took up valuable session time and resources from the outset. Further, we would find either rebuff much better than what is on the books today.
— Bob Johnson
