Kansas House, Senate change mortgage fees

07/23/2014 1:12 PM

08/08/2014 10:24 AM

After a long day and night of wrangling over tax fairness, the Legislature passed a bill in early morning hours Saturday to change the way counties can collect mortgage fees, a move expected to cost Sedgwick County $2 million a year.

That provision, sought by Realtors and bankers, was substituted into House Bill 2643 after the House soundly rejected an earlier version that would have exempted private-sector health clubs from property taxes.

The bill also clarifies provisions for classifying business property for tax purposes and for exempting vehicle taxes on active-duty National Guard and reserve military personnel.

Lawmakers then adjourned their wrap-up session, heading home after three long days.

At present, counties charge a fee based on the amount of the mortgage.

Bankers and Realtors asked the Legislature to repeal the fee.

But after an outcry from county officials and a concerted campaign led by Sedgwick County Register of Deeds Bill Meek, House and Senate negotiators reached accord on a bill to allow counties to recoup some of the lost revenue through charges per page.

Even so, Sedgwick County stands to lose about $2 million on mortgage fees when the change is fully phased in in five years, according to a state report released earlier this week.

Most of the debate in the Senate was over a section of the bill that would revalue a cement plant in Neosho County.

Ash Grove Cement has claimed that too much of its plant was classified as taxable property, instead of untaxed business machinery.

"This is the type of thing government does to come up with quick cash," said Sen. Jeff Melcher, R-Leawood, who supported the bill.

But opponents argued that reclassifying the cement plant would devastate the budgets of Neosho County, its schools and community college.

The college alone will lose $1.3 million, or10 percent of its budget, said Sen. Molly Baumgardner, R-Louisburg, the Senate’s newest member who was sworn in this week.

She said the college "has already come up with a game plan. They will raise tuition, they will raise fees. They would lay off for the first year five to 10 employees."

The bill ended up passing the Senate 24-13.

In contrast to the lengthy Senate debate, the House passed the bill about 2 a.m. by a vote of 70-53 with no argument, closing out the legislative business session for the year.

The health-club exemption proposal that was rejected earlier in the day was heavily promoted by Wichita-based Genesis Health Clubs and its owner Rodney Steven II, along with former Wichita City Council member Greg Ferris, now a business consultant and lobbyist for a fitness club association.

Members of a House-Senate conference committee had earlier removed the proposed tax break from a bill that had passed the Senate, but supporters in the House made a last-ditch effort to restore it in a floor vote.

They lost, 16-108.

Steven and Ferris watched the debate from the House gallery, but they left before the final vote tally and could not be reached for comment.

Rep. Tom Sawyer, D-Wichita, argued that the measure was needed because dozens of health clubs have gone out of business in recent years, facing what he said was unfair competition from YMCA’s.

He said 40 percent of Y members are in on corporate plans and half make more than $50,000 a year, leading to an explosion of YMCA’s in the upscale suburbs.

"They’re building in the wealthiest zip codes in our county," Sawyer said.

"If we don’t make some kind of change, at some point there won’t be any private businesses" in the health and fitness field, he said.

Rep. Don Hill, R-Emporia, countered that all kinds of small businesses fail for a variety of reasons and health clubs are no different.

"You can pick any business you like, whether it be the sandwich shop, or the haberdashery, or even a pharmacy and get some depressing numbers," Hill said.

He said Genesis recently opened a large club in his community and appeared to be doing very well.

But he said if Genesis and other health clubs were exempted from property taxes, numerous other types of businesses that compete for customers with nonprofits would demand the same treatment.

"If we do that, it’s Katie bar the door," he said.

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