Wichita area gave more than $209M in property tax breaks to businesses since 2010

Kansas local governments gave up more than $1.1 billion in property taxes to businesses in 15 years starting in 2010, the cost-benefit reports used to justify them were often wildly inaccurate and a lack of state agency oversight allowed Sedgwick County to fail to seek legally required state approval for up to 30 years.

Those are the top-line findings of a new audit of Kansas’ Industrial Revenue Bonds program, an economic development tool that allows local governments to act as a conduit to issue municipal debt on behalf of private companies. The companies benefit from lower interest rates while the municipal governments have limited risk. IRBs often come with full or partial sales- and property-tax breaks for 10 years.

In the Wichita area, local governments have offered up more than $209 million in property tax breaks to businesses through the program since 2010, data provided by Sedgwick County shows.

That doesn’t include tax breaks for 2026.

Most of that money would have gone to school districts and local governments.

Instead, it was used as an incentive for companies to build and renovate factories, warehouses, federally subsidized apartment complexes, a downtown culinary school, a nursing home, medical facilities and a plastic surgery center.

Auditors did not seek to find out whether the projects would have been completed without the tax abatements.

Researchers for the audit found local governments across the state issued approximately $18.3 billion in industrial revenue bonds over 15 years starting in 2010.

During that time, 2010-2024, businesses in Kansas got $1.1 billion in property tax breaks through the IRB program. About two-thirds of those forgone taxes were concentrated in three counties: Johnson, Sedgwick and Wyandotte.

The researchers were unable to report how much sales tax was abated, as the state’s tax system is not set up to track it. The auditors estimated that the inability to track forgone sales tax revenue for the economic development incentive program likely understates the cost of the IRB program to state and local governments by hundreds of millions of dollars.

Inaccurate reports

The audit also revealed that the cost-benefit analyses prepared for projects were often wildly inaccurate, based on a sampling of 23 projects it reviewed of the more than 1000 IRBs issued from 2010 to 2024.

Those are the reports city officials report to the public prior to a vote on issuing IRBs. They are often used to justify the tax breaks, saying the cost of forgone property taxes will be offset by the public benefit defined in the city’s economic development policies as job creation, capital investment in industries and private revenue generation, with extra points awarded for higher salaries and locations in economically distressed areas.

How inaccurate were they?

“The estimates in our selection were between -94% to 6,065% different than the actual amounts,” the audit report says.

And local government don’t seem to mind.

“Most of the local governments we talked to said that inaccurate CBAs (cost-benefit analyses) don’t significantly impact their decisions to offer a business an IRBX (the tax breaks tied to IRBs),” auditors reported. “One official said they mostly disregard the CBA and instead prefer to speak directly with businesses about their plans and expected outcomes.”

The audit recommended lawmakers consider changing the law to require and enforce standards for accuracy in the cost-benefit analyses or eliminate them entirely.

Local governments reviewed for the accuracy of their cost-benefit analyses included Lenexa, Olathe, Park City, the Shawnee County Board of Commissioners, and the Unified Government of Wyandotte County and Kansas City, Kansas.

“We initially included Wichita but removed them because their CBAs didn’t provide year-by-year estimates,” the auditors reported.

Sedgwick County reporting problems

Sedgwick County’s share of that $1.1 billion figure was just over $182 million, according to data from the county.

In 2025, which was not included in the audit, businesses in Sedgwick County received an additional $27 million in property tax breaks, data show.

The audit dinged the Sedgwick County Appraiser’s Office for failing properly submit the tax-break applications to the state for the past 30 years, as is required by state law.

“The Sedgwick County Appraiser’s Office reported to us that they recently discovered some IRBX-exempted properties had not been approved or denied by BOTA (Board of Tax Appeals),” the audit says. “They said that a former official accepted IRBX applications and classified the properties as exempt but then didn’t submit many of the applications to BOTA for approval. The former official sent some IRBX applications to BOTA but not others and current officials couldn’t explain why.”

Sedgwick County identified at least 112 tax exemption applications going back to 2015 that didn’t have BOTA approval, but the appraiser’s office told auditors that it was likely an issue for up to 30 years. The county was unable to determine how many properties granted tax breaks prior to 2015 didn’t receive BOTA approval because the 10-year exemption period is closed.

Sedgwick County also found 18 applications for the Economic Development Exemption — a different incentive program — had not been submitted to the tax appeals board.

“Officials from the Sedgwick County Appraiser’s Office estimated that the backlog of 112 IRBX and 18 EDX applications could take them 2 to 3 years to process,” the audit says.

Brent Shelton, deputy chief financial officer for Sedgwick County, told Sedgwick County Commissioners about the issue earlier this month.

“The specific things that came to light around Sedgwick County occurred more around process than the effectiveness, if you will, of the industrial revenue bonds,” Shelton said.

Shelton said the county appears to have properly added and removed properties from the county tax rolls but simply failed to forward applications to the Board of Tax Appeals.

“The first concern we had was are there any exemptions that are improperly being applied, are they being applied for too long a period of time — anything wrong with that, fiscally, to either the taxpayers, local governments? And we found no issues there,” Shelton said.

“The exemptions that we had on the books would have, in all likelihood, been approved by the Board of Tax Appeals, and we were applying them as though they had been approved by BOTA. So there’s really no fiscal impact to taxpayers in the county, no fiscal impact to these companies.”