Joco 913

August 18, 2014

Joco commission backtracks on property tax increase

Johnson County Commission votes 5-2 to cut new positions, tap into reserves to reverse a planned property tax increase.

There won’t be a county property tax rate increase next year after all.

Johnson County commissioners on Thursday abruptly abandoned a plan they’d advertised in public meetings and in the published budget for a mill levy increase. Instead, they kept the estimated tax rate at 23.247 mills, the same as last year.

Commission Chairman Ed Eilert and Commissioner Jason Osterhaus put forward the new budget in the last meeting scheduled before the deadline for getting the tax into the books. It was approved on a 5-2 vote, although not all voting in favor said they were pleased. Voting against were Commissioners Michael Ashcraft and John Toplikar.

The $870.1 million total budget includes $696.1 million in expenditures and $174 million in reserves. Thursday’s decision does not affect plans for a $5 fee to renew a vehicle registration in person at the Department of Motor Vehicles, or a 6.25 percent rate increase for Johnson County Wastewater. Plans to add deputies to the sheriff’s department also are unaffected.

It also does not affect the revenue stream for libraries or parks. Both those departments have their own separate levies, which remained unchanged from last year.

The commission originally planned for a 0.683 mill increase they said was needed because of changes made during the last legislative session to mortgage registration fees imposed on property buyers. The legislature decided to phase out the mortgage registration fee over five years, replacing the lost revenue with higher per-page document filing fees. The mortgage registration fee had been based on the amount of money borrowed.

Commissioners decried the idea from the beginning, saying the loss of that revenue would create budget havoc. Commissioners and state lawmakers differed wildly on how much would be lost. County budget analysts put the number at $49 million over five years, while state lawmakers said it would be more like $20 million.

Much of that disagreement had to do with the effects of the higher filing fees. County officials theorized that as fees went up, property buyers would tend to file fewer pages. But state legislators said that would not be the case because many of the county’s mortgages are through federal programs that call for the paperwork.

Since announcing the tax increase, the commission has been under heavy pressure from Johnson County’s statehouse delegation to reverse course. State lawmakers dominated the budget public hearing, debating the county’s estimations point by point, and Kansas Sen. Jim Denning was back again a week ago asking for a meeting with the county manager to heal what he termed an unhealthy relationship.

Ultimately, lawmakers got their way.

The new, unchanged mill rate is possible in part because the commission has decided to accept the state lawmakers’ budget projections. Eilert said there’s so much uncertainty about the effects of the new fees that it’s impossible to tell whether the state or county analysts are correct. But he was convinced that the commission should give the mortgage registration changes a year to work before going for a property tax increase.

The different projections weren’t the only changes the county had to make, though. The county also had to find some other areas to cut. As part of the package Thursday, the commission eliminated funding for four new 911 dispatchers not part of the sheriff’s department budget and two new hires for the appraiser’s office in anticipation of changes to the property value appeals process.

Funding also was removed for three new employees in the mental health center. The center, which is recovering from a fiscal crisis last year, may be able to hire them with its own revenue, but doing so could slow that recovery, said county budget director Scott Neufeld.

Most controversial at the meeting was the decision to dip into three reserve funds to save $1.9 million. The new budget takes money from public works reserves and from the Heritage Trust Fund reserves that might have been used to help the county museum in 2016. It also uses money from risk-management reserves, which are used for insurance coverage, not including health care.

Taking from those reserves shouldn’t hurt the county’s bond rating, Neufeld said, because bond raters typically look at the general fund instead.

But using reserve money was troubling to some. “I really think this is a perilous path to use reserves for this kind of purpose,” said Commissioner Ed Peterson. “Once it starts, it’s going to continue.”

The new budget, “probably isn’t perfect,” said Osterhaus. “I think it reaches the overarching goal not to have a mill levy increase. I think this is a good compromise.”

Peterson reluctantly voted yes on the final vote as a show of solidarity with the rest of the commission. But he said, “We’re putting ourselves in a position where it’s mathematically impossible for ordinary growth in the property sector to pay for ongoing expenditures.” That prevents the county from dealing with future problems, he said.

Ashcraft said he would have liked the county to reduce the mill levy by “doing things better, smarter, quicker and more efficiently.”

Eilert said the budget would keep the mill levy from increasing while the county maintains its level of service to residents.

Sen. Denning said the decision came as happy news. “I applaud them for listening to citizens and looking at the data in a different way,” he said. “We are just coming out of a recession and the last thing we need is to start taxing folks. They need to recoup their losses.”

The commission also gave final approval to the appointment of Dr. Joseph LeMaster as county public health officer. The appointment process became stalled this summer when anti-abortion group Kansans For Life objected to the first candidate proposed, Dr. Allen Greiner. Greiner had been an expert witness in support of another doctor who provided second opinions necessary for some late-term abortions done by the late Dr. George Tiller.

Both Greiner and LeMaster are affiliated with the University of Kansas Medical Center.

The public health officer is the county’s chief advisor on public health issues such as bacterial outbreaks at swimming pools and vaccinations.

Commissioners Peterson, Toplikar and Steve Klika voted against the appointment, though not because of any problem with LeMaster or his credentials. Peterson and Klika objected to the process and politicization of the post. Toplikar said he voted no because he didn’t understand why the county needs a university-affiliated doctor for the post.

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