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Murrel Bland addresses legislatorsMurrel Bland addresses legislators on Jan. 5.
Murrel Bland addresses legislators
Businesses do not want to pay any higher property taxes. That was the message that I reported to the Wyandotte County Legislative Delegation that met Saturday, Jan. 5, at the new South Branch Library in the Argentine community.
For many years, until most recently, Kansas has had a reasonable balance among the three main sources of taxes— property, income and sales. This has been described as a three-legged stool. Unfortunately, the reduction of income tax, which Gov. Sam Brownback promoted, may leave this stool unbalanced.
I am concerned that the tax burden may shift unfairly to property owners. The governor argues that the lower income tax will encourage new businesses, particularly small business, to come to Kansas. His critics argue that it will discourage more businesses than it will attract.
Property tax is the most stable revenue source and sales tax is the most fluid; income tax comes in someplace between.
There has been some discussion that the “temporary” sixth-tenth of a cent sales tax that expires June 30 might be extended. Two of the members of the legislative delegation, State Rep. Kathy Wolfe Moore, D-36th Dist., and State Rep. Tom Burroughs, D-33rd Dist., said, at this time, they favored letting the temporary sales tax expire. An effort to repeal the tax in the last session of the Kansas Legislature failed.
Cindy Cash, president of the Kansas City, Kan., Area Chamber of Commerce, said the chamber supports the use of state and local portions of Hollywood Casino revenues to reduce property taxes.
There was also discussion at the legislative hearing of a change in tax policy that would shift the tax burden, now covered by state sources, to units of local government. Mayor Tiny McTaggart of Edwardsville, also expressed his concern.
The Council on State Taxation, a nonprofit organization, reports that 44 percent of the taxes businesses pay is for property; that amounted to $2.6 billion in Kansas in 2011. Kansas businesses tied with those in Indiana as the sixth highest state in the United States paying property tax.
High property taxes discourage economic development. Most of the more significant recent expansion in Wyandotte County has come about because of tax incentives—particularly property tax relief. The Kansas Speedway received a 30-year property tax abatement; the Plaza at the Speedway also received a significant discount.
Another issue that discourages economic development is an overly aggressive appraiser’s office that refuses to resolve too many property tax issues locally. That forces property owners to hire very expensive legal counsel and go to tax court.
High property taxes also discourage residential development. Compare the tax rate in the Piper community to western Shawnee where the rate is about 20 percent less.
The 2013 legislative session will begin Monday, Jan. 7. How to fund the state’s various programs will be a very central issue. Maybe legislators will find a way to balance the budget without extending the “temporary” sales tax—however, I doubt that. Keeping the sales tax is certainly more acceptable than increasing property tax.
Murrel Bland is the former editor of the Wyandotte West and The Piper Press. He is executive director of Business West.