It’s a small fee that homebuyers may not even notice in the flurry of closing costs. But the mortgage registration fee and a proposal in the Kansas Legislature to eliminate it is causing major angst among members of the Johnson County Commission.
By ROXIE HAMMILL
Special to The Star
If banks and real estate lobbyists are successful in getting rid of that fee, it will cost Johnson County $16 million to 17 million a year in operating expenses and force a property tax increase of 13 percent on all residents to maintain services, said County Commission Chairman Ed Eilert.
Eilert and some other commissioners on Thursday blasted a proposal to get rid of the one-time fee paid when a mortgage is taken out, saying it will shift the burden for county services to property taxes and could hurt future growth in the county.
The commissioners then approved a resolution urging the Legislature to keep the fee. In doing so, they joined 40 other counties and the Kansas Association of Counties in opposing the fee’s elimination.
The mortgage registration fee equals 26 cents for every $1,000 borrowed. Twenty-five cents of that goes to the county general fund and 1 cent to the Heritage Trust Fund. This year, groups supporting bankers and real estate agents have mounted a campaign to do away with it.
Supporters say getting rid of the fee will put money back into homeowners’ pockets and banks say the registration fee puts them at a disadvantage against federally sponsored farm credit banks that don’t pay local taxes.
But county commissioners said its absence could destroy the county’s record of preserving growth without increasing the mill levy. Commissioner Jim Allen said the loss of that income and concurrent rise in property taxes could harm the economic engine that drives the rest of the state — namely Johnson County.
“Here we are, the most successful county in the state of Kansas, producing more than 30 percent of revenue from the state and we are continually getting banged on and getting accused of not operating efficiently,” he said. Allen noted that Johnson County has the lowest mill levy in the state.
“This mortgage registration tax clearly affects Johnson County more than anyone,” he said. “We fund a lot of programs across the state and to come back and slap us in the face on something like this is just a continual deal.”
Eilert said the mortgage registration fee represents the smallest component of the various fees paid at closing. For a $200,000 home, the fee is $520 and for a $300,000 home it is $780, he said.
Buyers pay the fee one time, but if it is eliminated, county residents will be paying every year to make up for the loss in revenue, Eilert said, even though they may have paid the fee already.
“This is going to have a negative effect on the community and will go against what the state is trying to do, which is promote growth,” added Commissioner Steve Klika.
Five of the seven commissioners voted for the resolution. Commissioner Michael Ashcraft abstained and John Toplikar was out of the room.
In other action, the commission appointed Assistant County Manager Maury Thompson to oversee the county mental health department in the coming months of transition. Thompson replaces Chad VonAhnen, head of county developmental supports. VonAhnen’s 90-day appointment ended Monday.
The mental health center, which provides services to some of the county’s poorest individuals, ran into severe budget troubles late last year and is being bailed out from the county’s reserve funds. In the aftermath, its executive director stepped down, the county commission disbanded its governing board and is now taking a direct role in the center’s operations.
The commission, acting as the county mental health board, will hire a new executive director and appoint a new mental health advisory board that will include people whose families have been touched by mental illness. Commissioner Michael Ashcraft, who is on a subcommittee searching for advisory board members, said 10 people have said they are willing to serve.
Chairman Ed Eilert said the advisory board will likely have 11 to 13 members and may be announced by Feb. 1.