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Wyandotte County Register of Deeds Nancy Burns told legislators at a forum Jan. 7 that a proposed bill would eliminate the mortgage registration fee, costing the UG about $1.8 million and potentially raising local property taxes. She opposed the bill. (Staff photo)
Unified Government officials are mounting an effort to oppose a bill that would eliminate the mortgage registration fee. The bill could cost the UG an estimated $1.8 million a year.
Wyandotte County Register of Deeds Nancy Burns asked state legislators attending a recent forum at the South Branch Library to oppose the bill.
“We would have to raise our mill levy in order to make up the difference,” Burns told the state legislators.
A resolution may come before the UG Commissioners this week asking them to oppose the effort to eliminate the fee. The proposed resolution states that it would be unfair to counties and county taxpayers to lose this revenue without the Legislature authorizing a revenue source of equal or greater significance. The resolution also says that if this fee is eliminated, with no change in county services, taxpayers would experience increased property taxes of about 1.5 mills.
The push to eliminate the fee is led by the state Realtors and state bankers’ associations, according to Burns. The idea started in rural areas. The Kansas registers of deeds are leading an effort asking counties to oppose the bill.
The legislative platform of the Kansas Realtors Association says that only 10 states have this mortgage registration fee, and Kansas’ fee is the third highest state in the Midwest. It calls the tax “burdensome” and expresses the belief that more homes could be sold without it.
The Kansas City Area Realtors Association, including Wyandotte and Johnson counties, opposes this bill, however, according to State Rep. Kathy Wolfe Moore, D-36th Dist.
“They realize that although you may be putting money in one pocket, you’ll be taking it out of the other pocket,” Rep. Wolfe Moore said. The Kansas City, Kan., Area Chamber of Commerce has opposed the bill, legislators said. Organizations that represent county officials also are opposing the bill.
Eliminating the fee will not help sell more homes, as the sponsors of the bill desire, because local governments will have to raise property taxes to make up the difference, according to Rep. Wolfe Moore. When they are buying homes, more people look at property tax rates than at fees, she added.
The average mortgage registration fee is about $460, officials said, and everyone who bought a home paid it at the time of the purchase. The fee, in existence since 1925, is currently paid only one time.
But in the future, if the bill passes, everyone who already paid this fee would be paying it again through increases in their property taxes, according to local officials.
“Instead of paying it one time, you and I would be paying it every year in another form,” State Sen. Pat Pettey, D-6th Dist., said. She added Johnson County officials also are opposed to it, as that county would take a $16 million hit if the bill passes.
Besides going to counties, about $55,000 of the $47 million statewide mortgage registration fee goes to a state fund, the Historic Trust Fund, that helps restore historical buildings, Burns said.
UG Administrator Dennis Hays told the UG Commission on Jan. 16 that the potential of $1.4 million disappearing at the discretion of the Kansas Legislature made it very challenging as the commission enters into the summer budget process. The mortgage fee generated $1.4 million in Wyandotte County in 2012 and $1.7 million in 2013. It is projected to be $1.8 million in 2014.
The commission is already in the early stages of discussing the budget. Hays said the mortgage registration fee goes to the county general fund, which is smaller and has fewer options for revenue generation than the city side.
Hays last week was discussing the budget with the commission and the costs of a new $25 million public safety communications system that is financed on the county side. Bonds were issued for physical components of this project last year, and there also will be equipment-related expenses. This project could require a mill levy increase on the county side in 2015.
“We are not recommending at this time a tax increase, simply saying that is the level required to meet the debt service at this time,” he said. “It will be really difficult if the Legislature removes the $1.4 million from the mortgage registration fees.”