The Kansas chapter of Americans for Prosperity has created an information system to help keep Kansans notified when legislators propose to increase taxes.
According to AFP: “AFP’s Kansas Tax Alert will notify you when a state representative or state senator sponsors legislation that will increase taxes. You will be just a few clicks away from letting that legislator know how you feel about the proposal to increase your tax burden.”
To register for the system, click on Kansas tax alerts.
Kansas Governor Mark Parkinson says Kansas has a $400 million budget gap, and he’s proposed increasing sales and cigarette taxes to close it.
The source of nearly all this gap is the governor’s proposal for increased spending in the fiscal year 2011 budget. State general fund spending for FY 2010 — that’s the current budget year we’re a little more than halfway through — is estimated to be $5,451.1 billion, according to the governor’s budget report release a few weeks ago.
For FY 2011, the governor proposes to spend $5,831.1 billion, which is $380 million more than spending this year.
There’s nearly all the $400 million gap right there.
Revenue is projected to fall next year by $122 million, according to the budget report.
If we could hold spending steady for next year — and remember that inflation is running at very low levels — we could get by without a tax increase. If the governor and the legislature would consider tapping some of the available Kansas fund balances, we could even increase spending without tax increases.
Yesterday the Wichita Eagle printed a letter from citizen activist John Todd concerning the proposal for City of Wichita subsidy for a hotel in the downtown WaterWalk development. This is the unabridged version of the letter.
In 2002 elected city officials leased a prime 20-acre parcel of city owned downtown land known as the East Bank to the WaterWalk developers for $1 per year for 99 years. The lease contained a subordination clause that allowed the developers to place new first mortgage financing on improvements (buildings) they made to the property, thus leaving the publicly owned land in second position to new first mortgage financing. This land was therefore subject to foreclosure action and loss in the event the developers defaulted.
The Wichita Eagle reported that WaterWalk developers have received an estimated $41 million of taxpayer-subsidized stimulus money since the inception of this public/private venture. In addition to essentially free land, government officials have placed the project in a tax increment financing district and have utilized the STAR bond programs, both of which transfer tax revenues away from the public treasury and into the hands of the private developers. The Eagle also reported that WaterWalk developer Jack DeBoer was buying out his other WaterWalk venture partners and said there would be no need for additional government subsidy
Just days prior to the January 12th City Council meeting the public learns that a new proposed WaterWalk hotel developer will ask the Council for a letter of intent approval seeking millions of dollars more of public subsidized funds.
I feel certain that the letter of intent would have been unanimously approved had not several concerned citizens been there asking for a public hearing process that would allow citizens the opportunity to examine this project. (A video of that meeting can be seen at the city’s website by clicking on Wichita City Council meeting, January 12, 2010.)
Is the WaterWalk hotel developer the only hotel bidder for this public/private partnership? Will our City Council issue a RFP (Request for Proposals) from other developers? Perhaps there is another private developer who will build the hotel with less public stimulus money or none. With massive public subsidy already given, why hasn’t hotelier DeBoer built a hotel on the property? He has stated he has no need for additional public money.
How much money will, if any, is Mr. DeBoer receiving from the hotel developer for transferring the $1 per year for 99 year least on the .8-acre parcel of WaterWalk land? Who owns the parking garage next to the proposed hotel site, and how much money will the hotel developer be paying to use 100 parking spaces?
As stewards of the public trust in the WaterWalk public/private partnership, our Mayor and City Council have an obligation to the taxpayers to hold a meaningful public forum to discuss the public’s interests in this public/private project. It needs to be held in a public forum similar to those held by Sedgwick County Commissioners.
Local officials have locked us into an expensive public/private partnership with massive taxpayer provided benefits accruing to the private developer. Isn’t it time for the interests of the “public” portion of this partnership to be protected? Don’t Wichitans deserve the opportunity to discuss this project before additional public money is promised once again to developers?
Do Kansas business tax exemptions benefit only business at great cost to the state? Member of the Kansas House of Representatives Dale Swenson thinks so, according to a recent letter written by him that appeared in the Wichita Eagle.
He cites a Kansas sales tax exemption on the purchase of hearing aids, something Swenson says helps “regular folks.” The way it helps folks — and only those folks with hearing problems, by the way — is by making these purchases less expensive.
But right after this Swenson complains about tax exemptions for business, that, he claims, benefit only business to the detriment of everyone else: “This means average citizens are paying more and more to fund public services, while business pays less and less.”
The problem with this argument is that taxes are a component of costs that business firms face. When costs are lowered, firms can reduce prices to their customers, just as hearing aids are less expensive when not taxed. Big-tax advocates often argue that business just pockets the tax savings as a way to increase profit. But when markets are competitive, that’s not easily done. Savings are passed along to consumers.
The people of Kansas who would like to have a job also benefit from lower taxes on business. The state and local governments like the City of Wichita continually grant targeted tax relief to businesses in order to induce them to locate in Kansas, or to stay here instead of leaving. Whether these targeted incentives work is a separate issue. I and others contend they don’t, and that a better policy is lower tax rates spread over a broad base. But it is evidence of belief that high taxes are bad for business, and low taxes are good for jobs — at least for private sector jobs.
The real problem the legislature faces is that spending in Kansas has risen rapidly in recent years, developing constituencies that are accustomed to or dependent on ever-rising government spending. When revenues fail to keep pace, there’s a big problem.
For good measure, Swenson throws in a few pokes at those who oppose his big-taxing and big-spending agenda: “Now we have self-proclaimed ‘think tanks’ that are well-financed (likely by some of those businesses that benefited from tax cuts and exemptions).”
He also writes: “During the next five months, when you read or hear self-proclaimed independent groups criticizing spending for our schools and programs, take a moment to wonder who would want to make these cuts.”
From these jabs, should we conclude that Swanson believes being well-financed is bad, and that being independent is good? I don’t know, but a quick look at Swenson’s campaign finance reports shows generous contributions from KNEA (the Kansas teachers union), Stuart Elliott (a Wichita labor organizer), Kansas Families for Education PAC (a school spending advocacy group) , Service Employees International Union, Kansas State Council of Machinists and Aerospace Workers, Kansas AFL-CIO COPE fund, and Wichita/Hutchinson Labor Federation.
From this writer’s viewpoint, it looks like Swenson is beholden to two special interests: unions and public school spending advocates.
By the way, the reports also show a contribution from Sedgwick County Republican Women. I wonder if this group would like their money back, since Swenson left the Republican Party and became a Democrat.
Kansas Senate Bill 385, introduced by John Vratil, Senate Vice President and Republican from Leawood, would let Kansas school districts increase their local property tax levies beyond what is currently allowed.
This bill would allow school districts to levy additional property taxes — the so-called local option budget (LOB) — in the amount necessary to cover the shortfall between the actual base state aid per pupil and $4,433. Currently, base state aid per pupil is $4,012.
On Monday January 25, a group of citizens will hold a public forum concerning the proposal for a hotel in the WaterWalk development in downtown Wichita.
The event is from 7:00 pm to 8:00 pm in the meeting room of the Wichita Downtown Public Library. The meeting room is on the top floor of the library.
Tirza Heflin is the organizer of this forum. She says:
“You and the public are invited to join a group of interested citizens to discuss the proposed Water Walk hotel.
An invitation to join this public forum discussion has been sent to Wichita Mayor Carl Brewer and all of the Wichita City Council members.
The forum is being organized by a group of citizens who are interested in downtown redevelopment, and want to see our downtown thrive. Several citizens have questions about the public sector interests in the WaterWalk public/private partnership before our City Council considers the letter of intent for this project on February 2, 2010.”
Contact Tirza Heflin at 316-201-8353 or tvgustadj_88@yahoo.com.
The Facebook page for this event is Public forum on WaterWalk hotel proposal.
The Kansas Policy Institute has released a proposal for property tax reform in Kansas that will protect property owners from what some call “stealth” tax increases. These increases result from the fact that the property tax system has two factors or moving parts: appraised valuations, and the mill levy (or tax rate). Governments — the state and local units such as counties, cities, school districts, fire districts, townships, etc. — may not increase their mill levies, but when appraised values rise, property owners pay more tax and more revenue flows from the private sector to government.
Representative Steve Brunk, a Republican who represents Bel Aire and parts of far northeast Wichita, is the bill’s sponsor in the legislature.
At a press conference announcing the proposal, Rep. Brunk noted that in an age of lengthy and complex bills that no one can understand, the enabling legislation for this reform is a page and a half, double spaced. (Read the bill and other information about this proposal at Kansas Policy Institute Property Tax Reform Data.)
Brunk said that legislators on both sides of the aisle appreciated the simplicity of the bill. He also said that legislators liked protecting people that are in their homes, giving them the ability to accumulate wealth in their property, instead of having that wealth drained away by rising property taxes.
Dave Trabert, president of KPI, presented findings that from 1997 to 2008, total property taxes collected in Kansas increased by 92%, which is three times the rate of inflation and over 11 times the increase in population during the same period.
This rapid rise in property tax collections closely matches my research on taxes paid to the Wichita school district, where I found that from 1999 to 2007, taxes paid to the district increased by 91%.
Elected officials have not voted to implement all of this increase, although there have been increases in the tax rates, or mill levy. Rising property appraisals have accounted for much of the increase.
The reform proposed by KPI and Brunk includes these factors:
Total property taxes on existing property will not increase without voter approval. Appraised values may rise, depending on market factors, but if they do, the mill levy will move proportionally in the opposite direction so that total tax revenue is unchanged.
Appraised values may not increase uniformly. Individual property owners may find that their property changed value at a different rate than the average. This is a factor that is different from last year’s proposal. In that plan, all property increased in appraised value at the same rate, which some criticized as unfair and possibly unconstitutional.
This proposed legislation excludes the 20 mills collected by the state for schools, the 1.5 mills collected for the state building fund, and any mill rate increase approved by voters from adjustment.
Even with the mill levy being adjusted so that tax collections on existing property is unchanged, governments would still experience increased revenue. That’s because new construction has been increasing the tax base by about three percent per year. That is not affected by this proposed legislation.
Finally, voters could approve increases in the mill levy (tax rate) at any time.
KPI has conducted opinion surveys that show broad support for property tax reform.
Last year Brunk and KPI (then known as the Flint Hills Center for Public Policy) proposed a property tax reform measure known as Proposition K. The proposal this year incorporates feedback and concerns expressed last year.
In particular, the exemption of the 20 mill statewide property tax for schools from this proposed legislation may help convince school spending advocates to support this measure. Additionally, measures like bond issues that are passed by voters are not affected. Increases in school districts’ local options budget would be affected, as these would need to be put to a vote of the people, and existing mill levies would be subject to change.
A benefit of Proposition K — at least to me — was the predictability of assessed valuation increases, as all would increase at a uniform set rate. Furthermore, new construction was to be valued based on actual construction costs instead of an appraiser’s judgment. These measures are not present in this year’s plan.
Property taxes are different from most other taxes in that citizens must pay property tax even though they may have earned no income with which to pay the tax. The simple act of owning a home requires citizens to pay tax. For those on fixed incomes, that can be a problem.
We should also remember that renters, in effect, pay property tax too, as taxes are part of the cost structure that landlords face. Further, businesses and utilities pay property tax too, and at far higher rates than homeowners. Anyone who purchases goods, services, and utilities is affected by rapidly increasing property tax rates that these firms pay.
News from alternative media around Kansas for January 20, 2010.
(State of the State Kansas) “This week we will also look at the issue of tax exemptions where we will hear from a number of people, including, Revenue Secretary Joan Wagnon, Representative Marc Rhoades (R) and the Kansas National Education Association.”
(State of the State Kansas) “The Great American Forum hosted the first debate between the Republican 4th Congressional District Candidates Friday night. We put in a word from each of them here starting with ladies first in reverse alphabetical order.”
(Kansas Reporter) “LAWRENCE, Kan. – Better investment results alone will not pull battered government pension plans out of the financial ditch, according to some new research by a University of Kansas economist. Fundamental reforms will be needed in both how investment targets are calculated and how individual states determine what will be required to keep promises made to retirees.”
(Kansas Reporter) “TOPEKA, Kan. – Kansas legislators shouldn’t count on millions of dollars more from tax settlements to balance the budget, Kansas Department of Revenue Secretary Joan Wagnon told House Appropriation committee members Tuesday.”
(Kansas Reporter) There’s a danger in “temporary” tax increases: “TOPEKA, Kan. – What goes up in Kansas doesn’t always have to come down, especially when it comes to the sales tax rate, according to research on the history of sales tax increases.”
(Kansas Watchdog) “Gov. Kathleen Sebelius helped the American Federation of State, County and Municipal Employees (AFSCME) unionize as many as 7000 family child care providers.”
(Kansas Reporter) “TOPEKA, Kan. – With a projected budget deficit of nearly $400 million on the horizon, there is a lot of talk around the Kansas Capitol of a constitutional amendment to set up a rainy day fund to have money set aside for when the next recession arrives. But the most prominent proposal — introduced by state Sens. Jon Vratil, a Leawood Republican, and Laura Kelly, a Topeka Democrat earlier this month — is not the only one.”
(Kansas Health Institute News Service) “TOPEKA – More than 5,700 Kansans with physical or developmental disabilities are waiting for Medicaid-funded services designed to help keep them out of a nursing home or state hospital. About 2,000 people on the waiting list are developmentally disabled children or adults who are receiving some government-funded services but are waiting for others for which they are eligible.”
(Americans for Prosperity, Kansas) “‘Considering that over a six-year time frame, from FY 2004 to FY 2009, spending increased by a staggering 40 percent, it was disappointing to once again hear Gov. Parkinson fail to identify excessive spending as being the real reason why Kansas is facing a budget shortfall,’ said AFP-Kansas state director Derrick Sontag. ‘The budget crisis we are currently experiencing is a direct result of our state government living beyond its means, thus it is simply unacceptable for Gov. Parkinson to call for tax increases on Kansas families and businesses.’”
A city in Colorado has voted to repeal a TIF district. Wichitans ought to take notice. Randal O’Toole, the author of the post, notes the complexity of the TIF mechanism. This is in line with testimony I’ve delivered to the Wichita City Council, in which I characterized TIF districts as “a confusing arrangement that hides the reality and size of the subsidy given to TIF developers.” The benefit, I said, is that “this confusion serves a useful purpose to this council, because if the people of Wichita knew what was really happening, they’d be outraged.”
It’s likely that more TIF districts will be proposed as part of the revitalization of downtown Wichita, as our planning firm, Goody Clancy, has said that Wichita should “Continue to employ established TIF funding mechanisms.”
O’Toole will be visiting Wichita on Thursday and Friday February 4 and 5 for a series of events, including a public lecture that Thursday evening. Details will follow.
I’ve reproduced the post in its entirety below. The original version, complete with many links to supporting documents, is at Estes Park Repeals TIF District.
In what leaders hope to be the start of a movement, nearly 61 percent of voters in the city of Estes Park, Colorado decided to abolish the city’s urban-renewal district. The measure, which was put on the ballot through an initiative petition, also requires voter approval before the city creates another one.
Supporters of the urban-renewal district made the usual claim that tax-increment financing doesn’t cost anything. In fact, it takes money that would otherwise go to schools and other urban services and puts it in a slush fund for city officials to use to benefit favored developers.
The city made every effort to keep the measure from passing, including scheduling it during a time when many voters were out of town and it would be a single-issue election, thus depressing voter turnout. Despite this, voter turnout exceeded 60 percent.
After the election, the Mayor Bill Pinkham announced that the city may challenge the vote in court. However, he later backed away, perhaps because he couldn’t find any legal grounds to contest it.
The problem with tax-increment financing is that it is just complicated enough that it is easy to confuse people about it. This makes it hard for critics in major cities such as Denver or Portland to gather enough signatures to put a similar measure on the ballot in their cities. But if some more smaller cities pass such measures, it may inspire similar campaigns in the big cities.