City, county officials should share half of COVID relief money with taxpayers | Commentary
Cities and counties across Kansas are receiving $1.1 billion in additional COVID relief this year and next, which can be used for “immediate economic stabilization for households and businesses.” Cities and counties can also use the money replace their lost revenue and pay for more government spending.
This funding through the American Rescue Plan Act comes on top of hundreds of millions of dollars cities and counties received last year, so elected officials should declare how much of their $1.1 billion windfall they will devote to economic stabilization for households and businesses.
We suggest they pledge to share at least half of their windfall with taxpayers through property tax rebates. A property tax rebate avoids the creation of a cumbersome application system, avoids concerns over favoritism, and quickly gets the relief money in taxpayers’ hands.
Sedgwick County is getting $100 million and the Department of Revenue says the county is collecting $156 million in property tax. Sharing half of the county’s windfall, about $50 million, equates to 32% of county property taxes paid this year. The city of Wichita is collecting about $125 million in property tax and is getting $73 million; sharing half of that relief money equates to a 29% rebate on city taxes paid.
Homeowners in Wichita would get about $229 for every $100,000 of appraised value; the owner of a $300,000 home would receive $688. The owner of a commercial or industrial facility in Wichita would get almost $5,000 for every $1 million of appraised value.
These estimated rebates are the combined amounts of city and county rebates and are based on mill rates and property tax collections provided by the Kansas Department of Revenue.
Sedgwick County Commissioners just approved using $20 million for employee bonuses and has allocated $23 million for other projects. The city of Wichita has only committed $3 million, so both entities have enough uncommitted money to share half of their COVID relief money with taxpayers.
Taxpayers need property tax relief
Share-half rebates would provide some necessary property tax relief.
The city of Wichita increased property tax by 149% between 1997 and 2020, while inflation was 53% and the population grew by 5%. That makes the property tax increase 2.6 times the combined growth in inflation and population. The 2022 budget just approved by City Council includes a 2% property tax increase this year.
Sedgwick County has done a better job of controlling spending and taxes over that time frame, but taxes are still higher than necessary. The 121% property tax increase is 1.7 times the combined growth in inflation and population. The budget just approved for 2022 includes a 3% property tax increase.
Tax increases imposed by city and county officials have made Wichita very uncompetitive. According to the Lincoln Institute of Land Policy, the effective property tax rate on commercial and industrial property in Wichita is the 15th highest in the nation. To put that in perspective, a property in Wichita would pay about twice as much as the same business in growing states like Utah and Tennessee.
Cities and counties sharing half of their $1.1 billion windfall won’t come close to offsetting the enormous and unnecessary property tax increases imposed on taxpayers, but that is least local officials should do to ease the financial pain.