Pub. 3 2014 Issue 1

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 6 P REPARATION FOR THE 2014 STATE legislative session began in earnest immediately following a unanimous decision last summer by KBA’s Board of Directors to pursue eliminating the mortgage registration fee (tax) in Kansas. Over the last four months, KBA leadership and staff have been reaching out to leaders within the Kansas legislature, and we’ve also reached out to allies and adversaries that we believe will also want to weigh in on this issue. While much of the heavy-lifting on this initiative will begin on Monday, January 13th when state lawmakers convene the 2014 state legislative session, KBA has already made huge strides in educating policymakers, stakeholders and taxpayers in general regarding the unfair nature of this statutory fee that has been deemed a tax by Kansas courts. As expected, local government officials aren’t very enthused about losing a funding source that might cause them to tighten spending at the county level. In spite of their opposition to eliminating this fee, KBA staff has initiated conversations with the Kansas Association of Counties and the Kansas County Officials Association in the hopes of finding common ground. A number of state lawmakers we’ve met with have expressed a desire to find the right policy mix that will provide counties with an appropriate level of funding for the services they provide while eliminating or phasing-out a fee (tax) that is overwhelming viewed as simply unfair. Thus far, the primary argument county officials have been making for retaining the mortgage registration fee (tax) is that without the revenue it generates from borrowers, property taxes will certainly need to be raised for all Kansans. A closer look at the amount of revenue generated from the mortgage registration fee (tax), which amounts to only 1% to 3% of any given county’s annual revenue, and the fact that those same counties have been increasing property tax revenue annually at a 7.6% clip (over the past 15 years) raises more questions than answers for local government officials. First, it’s hard to see how the presence of a mortgage registration fee (tax) is keeping property taxes in check based upon property tax data recently obtained from the Kansas Department of Revenue (see link below). Second, if the original purpose of the mortgage registration fee (established back in 1925) was to keep property taxes in check, then it’s clear that purpose isn’t being realized today. While KBA’s objective in the weeks ahead will be to focus state lawmakers on the unfair nature of the mortgage registration fee (tax), it now appears a much bigger debate over the dramatic property tax increases Kansans have endured the past decade will also be center stage at the statehouse. County officials will likely find themselves defending their ability to raise mill levies and property valuations without more transparency and input from the property owners that are footing the bill. In short, county officials might find that threatening to raise property taxes wasn’t the best approach to take with state lawmakers that might just have something to say about that process. To view a summary of property tax mill levy and revenue increases over the past 15 years. Go to http://www.ksbankers.com/userfiles/uploads/ KansasLocalGovtPropertyTaxData.pdf Tax Policy Leaders at the Kansas Statehouse Deliberations on the mortgage registration fee are expected to begin with hearings before the Senate Assessment and Taxation Committee, which is chaired by Senator Les Donovan (R-Wichita). Senator Donovan, a 15-year veteran of the state legislature, is the founder of Donovan Auto and Truck Center, a business he founded in 1977. A tough-minded businessman, Senator Donovan won’t shy away from tackling challenging issues that merit review. Senator Donovan’s counterpart in the Kansas House of Representatives is House Tax Committee Chairman Richard Carlson (R-St. Marys). First elected to the Kansas House in 2005, Rep. Carlson also brings a wealth of business and investment experience to the statehouse. With respect the mortgage fee issue, Carlson will also be able to draw upon his experience as a former Pottawatomie County Commissioner. Donovan and Carlson respect each other and have a track record of working well together to solve problems. They will undoubtedly be looked to for leadership by their peers as the mortgage registration fee and other tax policy matters are considered in the next few months. TAXING MATTERS WHY COUNTY OFFICIALS MIGHT REGRET THREATENING PROPERTY TAX INCREASES By DougWareham, KBA’s SVP-Government Relations Chairman Carlson Sen. Les Donovan