TOPEKA — County tax officials inconsistently appraise manufacturing plants across the state, forcing some businesses to pay taxes on property that they wouldn’t have to pay for in other counties, according to a newly released state audit.
A review of ethanol plant appraisals in Sedgwick, Anderson and Phillips counties by state auditors found the counties use different methods to tax things like piping fixtures, heating and ventilation systems.
That means in some counties, those companies don’t have to pay property taxes on the equipment because they’re exempt under a 2006 tax change.
And in some counties, including Sedgwick, appraisers have taxed property twice, although such errors are often corrected.
The report, released this week, doesn’t specify which plants were examined.
The audit stems from lawmakers asking whether machinery and equipment used in manufacturing plants have been property classified and valued since the state exempted it from taxes in an effort to boost the economy by encouraging industrial companies to replace or expand equipment.
But the audit also comes when lawmakers are trying to decide whether to change state law as a result of a lawsuit in Montgomery County where a fertilizer plant challenged how the county appraised its equipment.
The Kansas Court of Tax Appeals upheld the county’s appraisal.
If the Legislature had changed the law in response to the Montgomery County situation last year, it would have led to a $170 million to $500 million tax break that probably would have caused many local governments to increase property taxes to make up for the loss.
The audit recommends the state work more closely with counties to provide consistent valuations, and it urged the Legislature to avoid broad policy changes that would drastically cut local tax revenue, potentially leading to property tax increases.