Many in Johnson County say prosperity comes from government services, not tax cuts

Early in life, Diane Meyers’ family hopscotched from one small town to the next while her father scouted for the lowest taxes.

Sometimes it seemed bleak. Not many pools. Few parks. Little recreation.

“When you move into a place with low taxes,” the Shawnee grandmother of three said, “there’s nothing to do.”

That’s not been a problem in Johnson County, where taxpayers regularly open their wallets to pay for comfortable living.

Such spending — and the taxes that make it possible — gave Meyers plenty of recreation outlets, first for her children and later her grandchildren.

“You get what you pay for,” she said.

Gov. Sam Brownback defines the path to prosperity quite differently. He argues for limiting government to basic services so taxpayers don’t have to dig so deep. Cutting taxes, he insists, feeds success stories like Johnson County’s.

“For small business, they want a better tax policy,” the Republican governor told a Johnson County audience this month. “That’s what we gave them and that’s why you’re seeing such growth in jobs in record numbers in the state of Kansas and you guys are leading the way.”

Not exactly.

For the last decade-plus, Johnson County has led the state in private-sector job growth while embracing steady spending and tax increases to pay for road upkeep, new justice centers, schools and some of the sundry suburban extras.

Local officials argue it’s those very amenities — parks, bike paths, ballfields, festivals, pothole-free roads and especially the well-regarded schools — that have drawn families and attracted employers.

In fact, people attracted to Johnson County’s suburban prosperity regularly approve higher taxes to pay for the bells and whistles that make life a bit nicer.

“Quality-of-life issues … have driven the success of Johnson County for the last 30 years,” said Blake Schreck, president of the Lenexa Chamber of Commerce and a longtime business recruiter in the county.

“In Johnson County historically, the lowest possible taxes are not necessarily the best economic development policy.”

Only recently has the patience of Johnson County taxpayers shown occasional signs of wearing thin. And Brownback may indirectly be responsible for the fresh onset of tax fatigue.

Working with conservative allies in the Legislature, the governor aggressively cut the state’s taxes and sliced what some see as budget frills — things such as funding for public broadcasting and the arts.

He also trimmed aid to the poor and left unrestored millions in federal stimulus money for education — although he has added back some money for schools, partly in response to a court ruling.

With state revenue dropping in the wake of sweeping tax cuts, less money is available from Topeka for critical needs such as roads and aid to local school districts.

That could pressure local governments to decide whether to pick up what the state trims — testing just how tax friendly Johnson County will remain.

“People just really want a nice quality of life,” said former longtime Overland Park city councilman Jim Hix. “There is some fear that with all these tax cuts, the money is not going to be there.”

Willing to tax, so far

Government in Johnson County is a billion-dollar business — a tax-powered draw steadily pulling private enterprise to its sprawling strip malls and subdivisions.

In the last 13 years, property taxes have increased across the county, including Overland Park, Lenexa, Gardner, Shawnee, Mission and Prairie Village.

Across Johnson County, property taxes for the county and the largest city governments increased on average 38 percent during the last 13 years.

Sales taxes also have increased. Almost 75 percent of the time, voters approved money for schools, police, streets, parks and bioscience research.

That’s come even as the county fought a border war with Missouri cities using tax breaks to lure individual companies across the state line.

A willingness to approve new taxes or extend taxes already on the books comes partly because the area has decidedly deep pockets.

High property values and a healthy retail base marked by box stores lining major thoroughfares help pay for top-notch schools and robust city governments with property tax rates generally lower than other parts of Kansas.

It’s simply easier to pay for more services in a place where the median household income is $75,000 a year and the average home sells for $281,000. That’s well above the norm for Kansas.

The wealthy tax base and voter willingness to tap into it explain why school districts can afford to spend. Those schools are a powerful magnet — particularly to families fleeing Kansas City’s perennially troubled school district.

Johnson County residents reliably agree, by overwhelming margins, to raise property taxes for schools as much as state law allows. One group of Johnson County parents is even suing for the right to pay more school taxes under state law.

They also spend on the extras. Parks and libraries are scattered generously across the county. Suburban city councils help bankroll festivals, theater, arts, fitness centers and sports programs.

Want to cool off in the summer? Johnson County has plenty of public pools. When it snows, the streets get cleared. When spring thaws come and asphalt cracks, potholes get filled. Police and firefighters are staffed well enough that residents can expect a quick response in a crisis.

The success story of Johnson County has been written not with an escape from taxes, some argue, but in large part because of them.

Yet Brownback said his tax cuts, especially those eliminating taxes for limited liability companies, deserve credit for Johnson County growth.

“Targeting tax cuts to small business is a very Johnson County-oriented tax policy,” Brownback told The Star. “That’s why so much of the growth in Kansas City — private-sector jobs — is on the Kansas side.”

At the same time, Brownback has almost conceded that Johnson County’s success isn’t always about tax cuts.

He’s campaigned for re-election touting a new law giving local school districts added power to increase property taxes, a measure that’s already led to raises for teachers. He’s talked about the heavy investment in local road construction, some of which is paid for with a sales tax increase approved by the Legislature.

The lost decade?

Brownback talks of a “lost decade” from 2000 to 2010, pointing to moderate Republican Bill Graves and Democrats Kathleen Sebelius and Mark Parkinson, all of whom served as governor.

Despite spending and tax increases during the decade, Brownback says, the state still lost 25,000 private-sector jobs. He called on the Legislature in 2012 to cut income taxes and limit the size of government.

“These reforms will set the stage for strong economic growth in Kansas,” Brownback told lawmakers.

But the same decade wasn’t so lost in Johnson County.

It remained a population magnet, adding jobs despite two economic downturns. Taxes and spending increased gradually.

The county emerged as the most populous in Kansas after the 2010 census, growing at a clip of nearly 21 percent.

It’s grown another 4 percent since, giving it 566,000 people as of last year. Some 26,000-plus workers in the county draw paychecks from public schools or local government.

While the state as a whole lost paychecks during that decade, Johnson County netted about 4,200 jobs, an increase of 1.6 percent.

The state, meanwhile, saw a 3.3 percent decrease, while the Kansas City region had a 5.6 percent drop.

“Given the fact that there were two recessions, we did relatively well,” said Doug Davidson, president of the County Economic Research Institute.

It is hard to argue that budget and tax policy cost Kansas the jobs it lost from 2000 to 2010, said University of Missouri economist Joe Haslag. That, he said, was the work of a national recession.

“There were too many big cyclical fluctuations that were driving the Kansas economy,” Haslag said.

Even amid the downturn, Johnson County continued corralling big-ticket development projects, including some large employers from Missouri — albeit with the help of tax breaks and other financial goodies.

Competition for new employers pitted the county against other cities and states. That included Texas, heralded by Brownback as an economic model because it doesn’t collect income taxes.

U.S. Bank, for example, chose Overland Park over dozens of locations nationwide when it decided to locate a service center employing 1,100. That followed a $120 million data center the company opened in Olathe in 2009.

The bank received tax breaks, but a top executive said the quality of the county’s labor pool and schools mattered as much, if not more, than tax bills.

Taxes needed to be attractive, said Mark Jorgenson, chief executive and regional president for U.S. Bank.

But he insisted good schools, for example, were critical. Jorgenson said it would be a “huge detriment” to attracting young professionals if the schools were financially starved.

“You have to balance quality-of-life needs against a lower tax structure,” he said. “To the extent that you can’t afford those things that are important to the quality of life that would be attractive for people, that’s when you have a problem.”

Spending on a better life

“Quality of life” knits together much of the county’s economic development fabric. Johnson County cities regularly rank nationally among the best places to live or raise children.

“The secret to their success is they provide good services,” said Peter Eaton, an economics professor at the University of Missouri-Kansas City. “They spend the money on public goods, and that attracts the public.”

While Johnson County cities have used tax breaks to snag some jobs, officials say general tax cuts can hurt the same services that make the county attractive.

“Sometimes, those (tax) incentives are the last little piece to put it just over the edge,” said Tom Robinett, a former Leawood councilman and lobbyist for the Overland Park Chamber of Commerce. “But if you don’t have all the other things up front, you won’t get anybody to move.”

In 2000, Johnson County government and eight of its larger cities spent about $632 million combined. By 2013, that had risen to about $1 billion.

Local governments care for more than 200 parks covering more than 10,000 acres with miles of biking and hiking trails. Those local governments also underwrite theater, festivals and arts programs.

Johnson County, for instance, spends about $105,000 on Theatre in the Park, which drew nearly 30,000 people this year. Overland Park puts $542,000 into its expansive 300-acre arboretum, which recorded 111,000 visitors last year. Olathe puts on a summer concert series and charitable fundraiser that costs $51,000 and attracts 13,000.

And residents sometimes resist cuts.

A handful turned out two years ago in Overland Park when a consultant recommended gradually closing four of the city’s smaller neighborhood pools to save money. In the short term, the city decided to close just its least-used pool after the 2015 season, leaving residents with five pools.

Parks, pools and the array of other activities are why Paul Hemenway and his family “wouldn’t want to live anywhere else.”

“People are drawn to that kind of stuff,” the Overland Park resident said. “If you don’t have it and don’t take care of it, (people are) going to move away.”

Indeed, some executives say they have no interest in moving.

“We want to make sure we’re going to set up shop in a place where people want to live,” said Vince Donofrio, head of shared services for Farmers Insurance, which employs 2,500 workers in Olathe.

Growth drivers

Supporters of Brownback’s approach — exempting a class of businesses from any income tax and slashing individual income taxes — say Johnson County’s growth is much more than a product of spending and taxes.

They argue Johnson County benefits because people often move in from Missouri in search of better schools or to escape Kansas City’s earnings tax.

It also draws from parts of Kansas where the population is dwindling and cultural offerings are slim.

“When you’ve got a large metro area, there are going to be things available that are not going to be available in Wichita and Manhattan,” said Steve Anderson, the governor’s former budget director. “If you’re young and on the way up, don’t you want to be where all the action is?”

University of Kansas economist Art Hall’s studies of property taxes across Kansas found that Johnson County cities tend to have lower tax burdens.

Some of Johnson County’s larger cities can keep property tax rates down compared with other parts of Kansas because of a big retail market — think Oak Park Mall — that generates plenty of sales taxes.

Its high property valuations, relative to the rest of Kansas, also means those rates generate more revenue than they would almost anywhere else.

Mixing those low tax rates with Johnson County’s affluent population and moderate government, Hall said, explains the county’s formula for success.

“People are wealthier, they’re doing fine, they don’t find the tax rates objectionable and they want the service,” he said. “You can make a case they’re getting value for the money.”

Supporting taxes, sometimes

Johnson County voters went to the polls 77 times to decide whether to raise taxes, renew taxes or approve more spending for schools since 2000. They sided 57 times with taxes and more spending.

Those taxes sometimes enjoyed support from the business community through chambers of commerce.

Even when city councils have raised property taxes unilaterally, they’ve done so at little political risk.

For example, Overland Park raised property taxes 46 percent in 2011. Some taxpayers protested at a public hearing. But at the next election, the mayor and four incumbents ran unopposed.

Similarly, Lenexa raised property taxes in 2011. At the next election, three incumbents were elected without opposition. A fourth won with 61 percent of the vote.

It’s not always that easy. Voters have occasionally ousted elected leaders over taxes.

Former Gardner mayor Dave Drovetta drew criticism for pushing through a 26 percent property tax increase in 2010 intended to protect the city’s bond rating. He lost re-election three years later.

After Mission imposed a “driveway tax,” a fee for street repairs based on how much traffic a property generates, two incumbents lost in the next election.

Still, local leaders say people are largely content to pay for more services.

Two years ago, the Overland Park Chamber of Commerce conducted a poll showing that more than two-thirds of voters and businesses in the county supported higher taxes for schools, roads, social services and sewers.

Support dropped off for amenities like parks and the arts, but about half still said they would support taxes for those kinds of amenities.

Commercial real estate broker Drew Quinn stood with those opposed to Overland Park’s 2011 property tax increase amid an ongoing recovery from the recession.

While attractions like the arboretum or the Deanna Rose Children’s Farmstead make Johnson County special, Quinn said, “governments never ever want to tighten their belt.”

Time and again, critics point to Johnson County’s $2 million purchase of the King Louie bowling alley in Overland Park as an example of excess.

It was bought as a potential home for a national museum dedicated to the growth of suburbia. It needs millions for renovations that the county has refused to approve.

“It was a very bad idea,” said Leawood resident David Vickers. “That’s the symbol for where things are going in Johnson County government.”

At a crossroads

Johnson County now exists in what one official called a “twilight zone” — somewhere between a willingness to invest more and an emphasis on budget cutting.

For years, said Johnson County Commissioner Ed Peterson, the county’s governments and voters have been willing to spend more. The recession and the rise of tea party activists, he said, forced leaders to pull back.

“It’s been seven years since the recession hit and we’re still reacting much the same way,” said Peterson, a former Fairway mayor who finished last in a three-way race this year to head the Johnson County Commission. “We’re not willing to invest. That’s very different from what Johnson County used to do.”

This year, the county retreated from a proposed property tax increase even though it was losing revenue from a mortgage fee eliminated by the Kansas Legislature.

The county eventually made cuts, including positions for new emergency dispatchers and new hires for the appraiser’s office.

Johnson County Commissioner Michael Ashcraft said that after the recession, government needs to approach spending more cautiously.

“The old norm was double-digit growth and whatever we want to spend money on, we spend money,” Ashcraft said.

In a “new norm,” he said, government can’t count on the economic growth that funded new spending for projects like the King Louie bowling alley.

“We have to set priorities,” Ashcraft said. “We need to learn to say no.”

This story was originally published September 27, 2014 at 5:29 PM with the headline "Many in Johnson County say prosperity comes from government services, not tax cuts."