Kansas budget trickle-down under Brownback crimps Johnson County and its cities

It was a bit of a surprise, in the middle of an otherwise idyllic morning along Indian Creek trail in Overland Park.

City officials and history buffs had gathered to celebrate a new type of trail marker illustrating the area’s history. There were the usual acknowledgments and good-natured jokes.

Then this, from Overland Park City Council President Richard Collins to the Kansas Legislature: “We know how to grow, we know how to organize ourselves, we know how to create revenue to help our city grow. I guess the message that I would give to those folks — I think you know whom I’m referring to — is just leave us alone....

“We would encourage you folks there in Topeka, once you have straightened out your house then maybe we will listen to you, but until then let us continue to grow, let us continue to thrive, let us continue to be the community we have become because of our predecessors.”

Five years ago, remarks like that might have seemed jarringly inappropriate. This year, they are almost commonplace, as local government leaders fume over what they consider unfair state requirements and no way to adequately pay for them.

Collins is far from alone among Johnson County leaders who have railed at consecutive years of state cutbacks in programs now coupled with a lid on property tax increases.

Collins’ colleague on the council, Terry Goodman, delivered a much longer complaint as the city prepared to ask for a mill levy increase for streets and police. And Johnson County Commission Chairman Ed Eilert led his state of the county speech with the assertion that the tax lid will slow economic development.

In 2012, the Kansas Legislature eliminated a major source of revenue when it got rid of income tax for many small companies. To deal with the shortfall, the lawmakers increased the sales tax and made massive spending cuts.

But many Johnson County government leaders say the state’s collective budget actions the past couple of years have only passed the ball to them. And state-level changes intended to shrink government and keep taxes low have met up with the law of unintended consequences when it comes down to the local level, they say.

In Johnson County, where services and niceties like parks, libraries and good roads are expected, local governments are doing more and taxes are in some cases going up.

In Fairway, the city is taking over operations to keep the Shawnee Indian Mission open after the state cut the Historical Society budget. At county motor vehicle offices, residents will pay an extra $5 for vehicle title work to make up for budget losses caused by the closing of a state office in Topeka. More cities are signing up to pay for a “co-responder” program meant to compensate for cuts to mental health services.

Property tax rates in two of the county’s cities — Overland Park and Shawnee — are going up next year. The county raised its tax levy a year ago. The impending tax lid wasn’t the main cause, but anxiety over possible changes in it hurried things along.

The Shawnee Indian Mission

Nowhere is the fallout from the state budget more evident than in Fairway, home to the Shawnee Indian Mission.

The historic school that dates to 1839 has for years been trying to raise funds to renovate its west building, the second-oldest building in the state. So it was a blow when the state historical society budget was cut in 2014, leaving the site with a budget that required it to close from October through May.

But Fairway was not comfortable with that because the seasonal shutdown would make it more difficult to raise money to improve the site. So this year, the city signed agreements with the state and the mission’s fundraising arm. As of July, the city is responsible for the daily operations and maintenance at the 12-acre site, which will still be under state ownership.

The state will make some payments for three years, starting with $36,000 next year, $26,000 in 2018 and $16,000 in 2019. The city also expects contributions from the Shawnee Indian Mission Foundation, from $10,000 next year rising to $35,000 by 2018.

The city has not dedicated anything in its budget for the operations, said Mayor Jerry Wiley, but some staff time will no doubt be spent to support the site. He couldn’t put a dollar amount on that time yet.

The long-range plan is to create an endowment that will make the site self-sustaining by the end of 2018, he said. If $5 million can be raised, the site could operate off about 4 percent of that each year, and be a better attraction, Wiley said.

The historic site will also need a master plan, and that may involve consultants, Wiley said. But he is committed to improving the mission “without spending a dime of Fairway taxpayer money.”

In a way, the state cutback has been an opportunity to help the historic complex of buildings, which has struggled under the state budget, he said. The west building has been vacant for 30 years, and other improvements are needed.

“This mission needs to come alive,” Wiley said. “How we go about doing that is going to become the challenge.”

In the meantime, fundraising will be crucial. The next biggest fundraising opportunity will be the fall festival Oct. 8-9.

If the endowment plan fails, the operations would go back under the supervision of the state of Kansas, “exactly what we do not want,” Wiley said.

A new fee at the DMV

Johnson Countians who register their vehicles next year will pay an extra $5 fee, a ripple effect from the state’s decision to outsource work that had been done at a state office in Topeka.

The office provided a quick turnaround on dealers’ registrations. When the state closed it in January, a private company took over, with permission to charge extra fees. When dealers realized they could be paying significantly more, many started bringing their business to the Johnson County office instead, said Tom Franzen, county treasurer.

Although the work is not done in the same building that individuals use for title registration, it’s been a burden on the motor vehicle staff, he said, and will account for more hours worked. That will result in about $500,000 in unmet expenses this year.

The new $5 fee is expected to close that gap for 2017, Franzen said. But after that, all bets are off. Although the county treasurer’s office handles vehicle registration, the state sets the rules that govern it.

The fee cannot go up unless the Legislature approves it, he said. If expenses go up in the future without a change in fees, it could eventually mean longer lines at the DMV.

Mental health services

There were several ways the state cuts in mental health funding affected the county mental health department, said director Tim DeWeese. For instance, the county no longer can offer a questionnaire to clients that helps psychiatrists decide their treatment.

While the loss of a questionnaire may not sound like a big deal to some, DeWeese said that when the average appointment to check on medications is only about 15 minutes long, the questionnaire is a big help.

The county will cover the loss of a state grant to help prevent drug and alcohol abuse by minors, he said. “We decided not to eliminate those positions because the school districts and law enforcement said this is important,” he said.

In all, the county will add $4.6 million to cover expected losses to the mental health budget from Medicaid and other cuts for 2017. It will also eliminate eight staff positions.

The county is not the only government that will pay more for mental health, however. Cities cite the co-responder program as one way they’re taking up the slack for budget cuts to mental health services.

The co-responder program allows a county mental health worker to ride along on police calls and to help assess a situation in which mental illness may be involved. In the past, such calls might have resulted in a trip to the emergency room or even to jail. The co-responder can, instead, make a plan for the person that doesn’t involve a trip to the hospital.

While that may save cities on transportation costs, the cities still have to pay the county for the program. The program has only been in place since 2014 with Olathe, which typically pays about $90,000 a year. The county is finishing agreements with Overland Park, Lenexa and Shawnee. Nine cities in the northeast part of the county have also signed up.

“I don’t know any other place in the nation where cities are paying for mental health employees,” DeWeese said.

The property tax lid

The co-responders program has been viewed favorably by local officials, who say it is a way of keeping mentally ill patients out of jails. And elected officials have often proved willing in Johnson County to provide services and infrastructure they feel their constituents expect.

But state lawmakers crossed a line when they imposed a restriction recently on how to raise money for those services, some local leaders say.

Known as the property tax lid, it requires voter approval when tax revenue goes up beyond the rate of inflation. That applies not only to tax rate increases, but also to revenues going up as a result of increasing property values.

The law won’t be fully realized until cities and counties start writing their 2018 budgets next year. Already, it’s had an impact, though perhaps not the one lawmakers envisioned.

Two cities this year raised property tax rates, and the tax lid was mentioned both times as a factor.

In Overland Park, the City Council approved a 0.96 mill increase to raise money to repair streets and add police positions. In Shawnee, the rate was raised 2.07 mills to build and staff a new fire station and add a police officer, street inspector and codes enforcer.

Overland Park council members have said they don’t mind the idea of bringing tax increases to a public vote. It’s the changing details and the fact that the law was written without input from local governments that gets under their skin.

There are exemptions for spending on public safety, but for most of the budget-writing season, local leaders have been unclear on the particulars. And they’re still trying to work out how a referendum on tax increases figures into the deadlines they already have for their budgets.

Cities and counties generally complete their budgets for the following year in mid- to late summer so that the required public hearings and notices can be done by the state-mandated Aug. 25 deadline. If the budget has a revenue increase high enough to trigger a referendum, and if voters rejected it, cities would be hard pressed to revise their budget before it actually goes into effect on Jan. 1.

Calling a special election also comes with a cost. Shawnee council members researching a different issue recently learned a city-wide special election would cost them $120,000.

As a result, Overland Park and Shawnee council members viewed this year as the last chance to take care of pressing needs with the certainty they’d be within the law.

The issue has also rankled officials at the county level. County Manager Hannes Zacharias presented his recommendations for the county budget with subheadings “Last Local Control Budget,” and “Taking care of business while we still can.”

Councilman Jeff Vaught of Shawnee said the whole issue is frustrating. Cities need to spend to encourage growth, but it takes a while for tax revenue from that growth to kick in, he said. The law makes it hard for cities to effectively grow, he said.

He also disliked the short time for voters to educate themselves on whether a tax increase is needed. “If (voters) are not engaged they’re just going to vote no on property tax,” he said.

This story was originally published September 20, 2016 at 4:00 PM with the headline "Kansas budget trickle-down under Brownback crimps Johnson County and its cities."