(First of three articles)
Most of us who think about what we read in the newspapers can feel at least a bit of the pain in Topeka. State legislators are now confronted with budget trouble that offers more frustration than resolution. When it comes to balancing that budget – a constitutional requirement – the question is, how?
The trouble began five years ago, when Gov. Sam Brownback directed the conservative Republican super majorities in the House and Senate to phase out the state income tax (that infamous “Glide Path to Zero”). A half-decade of budget cuts, staff layoffs, pension thefts, phony bond sales, cooked books and raids on the highway fund, among other chicanery, has brought us to a debt load of more than $6 billion and an operating deficit of more than $1 billion by the end of next year.
If legislators are serious about rebuilding government with balanced and equitable revenue sources, they will consider seriously a progressive income tax with multiple brackets and a sales tax that does not play the fool to our neighbors; next, they will stop looting fee-funded agencies such as the Insurance Department and Parks and Wildlife.
And the property tax, the state’s chief source for local school finance, needs a separate, longer look – beginning with its history.
On July 29, 1859 at Wyandotte, the territorial Legislature enacted the Kansas Constitution and with it Article 11, section 1 – in one paragraph, the birth of our property tax, so important that it was chiseled into territorial law 18 months before Kansas joined the Union.
The levy was envisioned as the fuel source for public services in growing settlements across the plains, the way to make roads of the trails and bridges over creeks and rivers. It would pay the sheriff and the school master. It kept the fire wagon ready.
The assessment of a “uniform and equal” levy was supposed to spread the cost of community improvements.
It was thought fair, then, because the extent of the tax reflected the productivity of the land, not its market value, real or imagined. And the productivity of land was, after all, the promise of Kansas.
But promise is fickle. Roughly a century later, that tax to make town and township life more livable had become a source of aggravation. By the beginning of the
1980s, property taxes were the scorn of merchant, farmer and banker, almost anyone who owned even a shred of property.
In the decades after the Homestead Act, land became wax for the molding of farmers, ranchers, developers and citizen leaders, town boosters and civil servants; they would increase the value of property by “improving” it.
Farms became productive and ranches fattened cattle.
Townships sprouted towns, settlements grew into cities that later would gobble nearby communities or grow whole new ones to be called suburbs.
Over the years, the value of land has fluctuated against demands and uses so unpredictable that no law of appraisal could reflect reality. Commerce now included coal, oil and gas. Irrigated farm land and massive feed lots in the west and the sprawl of suburbs in the east compounded the complexities. Even the keenest assessors would discover that they could only hack at the edges of a bewildering thicket of land use and value. The property tax had become the torture of politicians and constituents. Its practical application defied law, flying in the face of the Constitution of which it was part.
In 1980, a year into John Carlin’s first term as governor, the Santa Fe Railway sued the Kansas Department of Revenue, claiming that for property taxes, the railroad was assessed rates higher than other businesses in Kansas.
At the time, property was to be appraised at “fair market value” and assessed for taxing at 30 percent of that value. That didn’t happen. Only utilities paid taxes on property assessed at 30 percent because in their case, the state – not counties – did the assessing. County appraisers could never keep up with the 30 percent law. The result was that the ratio of sale prices (market value) to appraised value – known as the sales-assessment ratio – rarely approached even a double digit, much less 30 percent in any city, township or county.
Four years after the suit had been filed, the railroads and the state division of property valuation arranged through federal court a process by which the railroads were taxed at rates lower than proscribed by law. The courts ruled that railroads were entitled to lower rates because county assessments were far below state levels.
That seemed to settle the trouble between railroads and the state. But what of the others with cause for complaint?
In 1986, the last year of his two terms as governor, Carlin spent much of his time campaigning for six amendments to the Kansas Constitution. One of them ordered (rather than permitted) the Legislature to rewrite farmland assessment laws and enact use-value farmland appraisals; thus, farmland would be appraised by its ability to produce income. The amendment also provided for classification of real and personal property with assessment at different percentages of value; farm machinery and equipment, merchants’ and manufacturers’ inventories, and livestock were exempt. The voters approved.
Note: Parts of this article were in my column about property taxes published two years ago. – JM
(Next: A fruitless chase)
– JOHN MARSHALL
