Joco 913

July 29, 2014

Kansas lawmakers call out county commissioners over proposed tax increase

Four state lawmakers and the chairman of the Kansas State Banking Board say the state’s phase-out of the mortgage registration fee should not be to blame for the proposed Johnson County property tax increase.

Kansas legislators came calling at the Johnson County Commission budget hearing Monday night to tell commissioners they did not care much for being painted as the bad guys in the county’s first mill levy increase in eight years.

Four state lawmakers and the chairman of the Kansas State Banking Board came prepared with a press release and documentation asserting that the state’s phase-out of the mortgage registration fee should not be to blame for the proposed 0.683 mill increase.

“I just want to make sure the public knows this is a sham,” said Kurt Knutson of Overland Park, the banking chairman.

Sens. Mary Pilcher-Cook and Greg Smith and Rep. Keith Esau and some others in the audience took the podium to yield their time to Sen. Jim Denning, who made their main case. They also outlined their objections in a press release that was signed by 18 legislators.

Denning, of Overland Park, is also the brother of Johnson County Sheriff Frank Denning.

Fourteen people spoke at the hearing. Others came to laud the Sheriff’s Department and Johnson County Enterprise Center and to give their thoughts on how Heritage Trust Fund money should be spent.

Bankers and real estate companies pushed for an end to the mortgage registration fee, but it has been controversial with the commissioners because of its fiscal impact. County Manager Hannes Zacharias has said the loss of fee revenues could cost the county $49 million over the next five years.

But lawmakers at the hearing Monday disputed that. The fee, charged at closing as a percentage of the amount borrowed, is being phased out over a 5-year period. In its place will be higher fees on individual pages of mortgage documents filed. That plus $10 million in increased revenue from higher home values should more than make up for the loss of the fees, they said.

Commissioners have doubted publicly that those fees will make up much of the loss because people will tend to file fewer documents to save money. Sen. Denning, however, disputed that, saying the page filings would not decrease in real estate’s secondary market.

The legislators put the first-year impact to the county budget at $1.7 million.

Kansas Sen. Greg Smith of Overland Park said he was disappointed that the county manager portrayed the mortgage registration fee as the culprit for a tax increase. “At best, his comments are in error,” Smith said.

“Make no mistake that this budget is a tax increase on the citizens of Johnson County,” Smith said. “I caution the commissioners to remember that the money belongs to the citizens. It doesn’t belong to the commission.”

Sen. Denning argued a few other points as well. He said it’s too early to know for sure whether changes in the rules for contesting property values will negatively affect county revenues.

He also took issue with the county’s plan for a 3 percent salary raise pool for its employees. The Kansas State Extension service did not give its employees as large an increase, so during budget discussions the commission decided to include $18,622 for extension employees.

“That just doesn’t smell right,” said Denning. “If we had that damn much money to do things like that then let’s take another look at our property tax. I just don’t think we need to pull the trigger in ’15.”

The budget currently under discussion is changed a bit from the county manager’s proposal of early June. The original proposal was for a tax increase of 0.814 mills, bringing the total county levy to 24.061 mills. The commission lowered that increase after a series of meetings with department heads. Now the increase brings the total mill levy to 23.930 in 2015 over the current 23.247. That translates into $1.64 a month more on the average $249,000 house.

Also included is a 6.25 increase in wastewater charges and a $5 fee for renewing a motor vehicle in person.

The tax increases are for the general part of the budget and not parks or the library system. Those departments have their own levies, which remained unchanged.

The total county budget for 2015 is $873 million, with $697 million in expenditures and $176 million in reserves.

The commission made several changes before approving its final spending figures in early July, most notably in the sheriff’s department. Sheriff Denning ultimately got approval to hire 22 new deputies, as he had requested earlier in the spring. The commission earlier had approved hiring 20 civilians and spending $1.3 million in overtime. Instead, the $1.3 million will be used to hire the deputies.

Sen. Denning mentioned the controversy over the sheriff’s department funding, saying his brother was made a scapegoat to justify property tax increases and to draw a challenger the next time he runs for office.

Sheriff Frank Denning is not up for re-election this year.

Sen. Denning repeatedly told commissioners he didn’t understand why they wouldn’t include a $5 fee to register vehicles. Such a fee would improve the budget and lessen the need for property tax increase, he said.

In fact, the $5 fee has always been part of the 2015 budget proposal.

Other speakers came to support the sheriff’s department. “Sheriff Denning’s staff cannot run operations on a shoestring,” said Sherry Cross, an Olathe resident who volunteers at the department.

And three board members of the Heritage Trust fund urged the commission to allow them to distribute reserves to various groups that apply for grants. The commission decided during budget talks to put the reserves, estimated to be $700,000 to $800,000 by 2016, toward the Johnson County Museum.

The commissioners did not discuss the budget or take any action. They will vote on a final budget on Aug. 14.

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