Tax-lid rule is ‘a mess’

State lawmakers who campaign on local control sure love to impose rules on local governments. The latest interference is a property tax lid so badly written that local officials can’t even figure out how it would work.

The new rule limits city and county property tax increases, including through rising property valuations, to the rate of inflation – based on a confusing calculation that adjusts for new construction or newly annexed areas, state mandates, bond payments or legal judgments.

For example, if a city’s property tax base increased 2.25 percent, but the adjusted rate of inflation was only 1.75 percent, the city would either have to lower its mill levy so that it only collected 1.75 percent more in taxes or allow the public to vote on whether it can keep and spend the extra 0.5 percent.

But the new rule also requires the public vote to be held in August or November – neither of which is workable.

Cities and counties typically don’t receive their tax base estimates until late June or July, which isn’t enough time to determine whether a public vote would be required, develop the ballot question and get it to the election clerk in time to be on the August ballot. And the November election is too late, as it comes after cities and counties must have finalized their budgets and after tax bills to support those budgets have been mailed.

“It is a lid with no escape hatch,” Douglas County administrator Craig Weinaug told the Lawrence Journal-World. “It is hard to see how you would ever be able to call an election that meets the requirement of the law.”

There is also uncertainty about when the lid goes into effect. It was originally set to start in 2018, but a “trailer” bill approved by the Legislature indicates the lid begins July 1.

“There is a whole lot of confusion,” said Sedgwick County chief financial officer Chris Chronis, who described the tax rule as “a mess.”

This is what can happen when a bill isn’t properly vetted and doesn’t go through the committee hearing process. In this case, a state senator thought up the idea during the overtime session and got it inserted into the state tax bill, which both chambers approved last week.

Local officials also resent the Legislature – which took 113 days to balance its budget – telling well-run local governments how to do their jobs.

“The state, which can’t manage its own money, is trying to drag me down with them,” Chris Lowe, city administrator for Baldwin City, told the Journal-World.

State lawmakers would be outraged if the federal government imposed a lid on state tax growth. Yet they had no qualms imposing such a lid on local governments – and did so, ironically, in the same bill that imposes the largest tax increase in state history.

What’s more, the Legislature exempted its own property tax revenue from the tax-lid requirement.

Apparently there is no lid on the Legislature’s hypocrisy.

For the editorial board, Phillip Brownlee

This story was originally published June 16, 2015 at 7:06 PM with the headline "Tax-lid rule is ‘a mess’."