County officials say legislators are illegally withholding over $130 million for Local Ad Valorem Tax Reduction (LAVTR) to theoretically reduce property taxes, and they’re pushing several false narratives to justify their demand. The facts show no law is being broken, giving cities and counties a portion of sales tax revenue so they could reduce property taxes didn’t work, and counties don’t need the money.
Mike Taylor, the Kansas County Commissioners Association’s lobbyist, inaccurately says K.S.A. 79-2959 is being broken by the legislature. The law plainly states that “No moneys shall be transferred from the state general fund to the local ad valorem tax reduction fund during state fiscal years 2022, 2023, and 2024.”
Taylor is essentially claiming counties are owed the money because the remnant idea of LAVTR transfers remains on the books while ignoring that the Legislature can change the law whenever it wishes with a majority vote. And that’s exactly what happened periodically over the last two decades. The last transfer was made in 2003.
Taylor, KCCA, and other local government officials know the law isn’t being broken, but they’re pushing the false narrative to get more money from taxpayers.
LAVTR didn’t reduce property taxes
The theory behind LVTR is that cities and counties would use the money to reduce property taxes, but that isn’t what happened.
Counties increased their property tax revenue by an average of 7.6% during the last five years that LAVTR was funded, compared to just 3.9% over the most recent five years.
There simply is no way to guarantee that the money will be used to reduce property taxes. Even if a county reduces its mill rate, such action could have otherwise occurred without the transfer. Many counties are reducing mill rates now in response to pressure from taxpayers; elected officials could claim that the rate would have increased if not for the state transfer of taxpayer money.
Local governments don’t need more money
Like all government entities, cities and counties can always make a case for wanting more money, but the data indicates that they don’t need more money to efficiently provide necessary services.
Comparing what counties spend on a per-resident basis is one way of demonstrating that elected officials could spend less. Johnson County budgeted to spend $1,335 per resident in 2023, whereas Sedgwick County budgeted $925 per resident. Leavenworth County, however, budgeted just $684 per resident.[i]
Some of the differences in per-resident spending exist because of differences in the type of services provided, but that cannot be used to justify spending as efficient or necessary. Taxpayers should have the opportunity to decide whether they are willing to pay taxes to have such services efficiently provided.
Some counties are also sitting on piles of cash reserves in their General Funds.
Johnson County estimates it will finish 2023 with a $234 million cash reserve, which represents a $146 million increase since 2017. That increase results from taking in more than it spent over the period, yet the majority of commissioners just imposed another 10% property tax hike. Every entity needs some degree of cash reserves, but many cities and counties hold far more than necessary.
Call the bluff
While the data shows that LAVTR transfers are not necessary, local officials will continue the false narratives to justify their demands.
So here is an easy way for legislators to stop the discussion. They should ask every county to show written documentation of examining their spending to identify inefficient spending and reducing the budget accordingly. Then we can talk about LAVTR.
That will be the end of the debate.
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[i] Spending excludes transfers identified in budgets. Net spending divided by 2023 population estimates for each county equals the net spending per resident.
