The Unified Government Commission took a straw vote at Monday night’s budget meeting to ask Administrator Doug Bach to come back with a budget containing a 3-mill tax reduction.
On a show of hands, the commissioners asked Bach to show them what a budget would look like, in terms of programs that can be funded, if there were a 3-mill tax cut for 2017 instead of a 1-mill cut. Bach’s original budget presentation included a 1-mill tax cut for 2017 and a 2-mill cut for 2018.
The action followed Commissioner Hal Walker’s request at the last budget meeting for a discussion on a larger mill levy reduction for property taxes. He said he would not vote in favor of a 1-mill cut.
Walker said that an earlier UG commission had made a commitment to the taxpayers that when the sales tax revenue bonds from Village West are paid off, that they would receive reduced taxes.
Bach said his original budget was a fairly conservative outlook. In his budget message he talked about building up internal funds from which the UG had borrowed in earlier years, and also said that the budget included purchases of equipment that had been delayed for years. Some of the anticipated $12 million from sales tax in Village West would not come in until the end of the year, and he recommended not spending money until they received it.
Commissioner Walker said he didn’t think anything less than a 4-mill reduction would be sufficient. Commissioner Melissa Bynum suggested a 2-mill cut the first year and 2-mill cut the second year.
UG officials confirmed that a tax cut is only happening on the Kansas City, Kan., side of the UG budget, not on the county side. With a 2.6 percent increase in assessed value, a homeowner of a $100,000 home could be paying $14 more per year with the original budget proposal, according to UG officials.
“I think we should cut taxes and also increase services,” said Commissioner Jim Walters. He thought perhaps a 5- or 6-mill cut would be in order.
Commissioner Brian McKiernan said he agreed philosophically. But he said such a reduction is “fool’s gold” because it throws money at the problem and doesn’t solve it. He said a fundamental shift was necessary, and that it would come about when there are more buildings in the tax base with increased value that pay taxes. A mill levy reduction could be a good faith gesture, he agreed, but what was necessary was a long-term solution.
Mayor Mark Holland commented that tax rates were lower in neighboring Johnson County because it has eight times the valuation of Wyandotte County, with many more buildings, worth more money. Wyandotte County’s median residential property is valued at $67,000, he said, while Johnson County’s median is $210,000, more than three times the value on residential properties. That allows them to have a lower tax rate.
He also talked about how the proposed budget has funding for blight reduction, which is intended to help property values increase. The mayor agreed that a 1-mill reduction was not enough, and suggested 2 one year then 2 the next year. He also advocated for a “thoughtful and deliberate” policy, where there wasn’t a sudden large drop. He cited the state of Kansas as an example of a tax cut that was too large.
Commissioner Angela Markley said, while she is happy to agree with the commission on a tax cut, that if the commission reduces taxes by 4 mills, it might as well not talk about all the items it has scheduled to talk about in upcoming budget meetings.
Bach said to maintain a level of security, the UG needs to keep its fund balances higher than where they were a few years ago. The sales tax funds from Village West, while a constant stream of funding, is more volatile than the property tax, he added.
Commissioner Harold Johnson said he favored a deliberate and disciplined approach to tax reduction.
Commissioner Gayle Townsend said she supported a reduction in the mill levy. “It’s just a matter of how much and when,” she said. She added she didn’t want to start off with a big mill levy reduction, then turn around and next year have to raise it. She favored a slower and progressive reduction.
Commissioner Walker said in every resident survey, reduction of property taxes has been No. 1. “People deserve tax relief,” he said.
Commissioner Mike Kane suggested a 3-mill reduction this year and not worry about next year’s rate right now – do it next year.
Commissioner Ann Murguia said valuation has been growing in her district with new developments, so it would be paying more taxes. Unless the tax rate goes down a lot, they will be writing larger checks for taxes, she said. She added dissatisfaction in her district has decreased in recent years, with residents seeing some services.
Commissioner Jane Philbrook said no one on the commission was more affected by the Village West boom than she was. She lost her house and 10 acres, and she was told they would get a big tax reduction when the boom came in. As a commissioner, now she is riding on the back of that, she added.
“So I would ask this commission to never make those kind of guarantees to those people when we don’t know what’s going to happen in 10 or 20 years,” Commissioner Philbrook said.
After the recession of 2008, the UG started borrowing from funds internally to make ends meet, using older equipment and not replacing it. Now it’s trying to play catch-up, she added.
Now, as a business owner, she doubted if she will get to see much of a tax reduction, as businesses will be revalued. She would like to give the whole windfall back in reductions, but there’s a need for curbs and sidewalks and making sure employees are getting paid.
UG officials pointed out that a property tax lid has been mandated by the state. If they want to raise taxes the following year, residents will have to vote on it.
The straw vote taken on Monday night is not binding, and the UG Commission is scheduled to adopt the budget and set the final mill levy on July 28. A public hearing on the budget will be after the 5 p.m. meetings on Monday, July 25, in the fifth floor meeting room at City Hall, 701 N. 7th St., Kansas City, Kan.
Several other budget items were discussed at Monday night’s meeting. Another budget workshop is scheduled at 5 p.m. July 21 at the same location.