A bill that would repeal mortgage registration fees moved forward from a Senate committee Wednesday.
Sedgwick County could see a significant drop in revenue over several years if Senate Bill 298 passes. Senators who support it say the fees prey on low-income and middle-class homebuyers.
The Senate Assessment and Taxation Committee advanced the bill, which is strongly endorsed by the Kansas Bankers Association.
However, the committee altered the bill significantly to try to quash concerns from county governments. The original bill repealed the fees outright; the amended bill phases them out over five years starting in 2015.
The bill also increases fees for documents filed with the recorder of deeds by $4 per page to help offset some of the lost revenue.
Sen. Les Donovan, R-Wichita, said Sedgwick County could break even or possibly see revenue go up next year, but he conceded that it would face a loss in coming years.
Sedgwick County Commission Chairman Dave Unruh said phasing in the change wouldn’t make a difference.
“It’s just going to impact county services,” he said. “All of these sort of decisions that are funding decisions that have been historically relied upon, when you change them it has consequences. And the consequence for Sedgwick County citizens is simply going to be reduced services.”
Mortgage registration fees brought in $7.4 million in revenue to Sedgwick County in 2012.
“We’ll have to either make cuts in personnel and services or (institute) a property tax increase,” said Bill Meek, register of deeds for the county.
Proponents of repealing the fee say it unfairly affects low- and middle-income homebuyers. Sen. Jeff Melcher, R-Leawood, called it a predatory tax.
Many homebuyers face several hundred dollars in fees just to register their mortgages, proponents said.
“That’s a big detriment to people wanting to buy a home,” Donovan said. He called the bill a tax cut for mortgage holders.
Donovan also questioned the reliability of mortgage fees as a revenue source, because there is no way to predict how many people will get mortgages each year.
Sen. Julia Lynn, R-Olathe, scolded county governments for what she considered to be a failure to offer compromises on the issue.
“The policy that we are charged with is to protect our constituents and those that pay these fees,” Lynn said.
However, Sen. Tom Holland, D-Baldwin City, the lone dissenting vote, said counties had offered compromises. He predicted that cutting the fees would lead to increases in property taxes.
“Make no mistake: We’re shifting the tax burden. We do this every time. Here we go again,” Holland said. “I’m really conflicted about this bill. I’m not sure we’re being honest.”