Written by Patty Decker Tuesday, 28 February 2012 16:04
Area lawmakers talked about several big ticket issues Saturday at the annual legislative coffee in Marion.
State Sen. Jeff Longbine of Emporia and State Rep. Bob Brookens of Marion reviewed bills overhauling the school finance formula, reducing individual income tax, redistricting, reforming the Kansas Public Employees Retirement System and Medicaid.
The two legislators came to Marion after holding a similar session in Hillsboro earlier in the morning where they discussed the same issues. (See Page 1.)
Longbine, addressing a group of 40 constituents at the Marion Community Center, said any one issue could consume an entire legislative session.
“Hopefully, we will get resolution if not on all, at least most (of these issues) by the end of session,” he said
Farm equipment exemption
Beyond the issues addressed by the two legislators, meeting participants raised several issues of their own.
Brookens was asked, with the income tax rate possibly decreasing, whether it is likely that farm families are looking at recouping personal property tax exemption on farm equipment.
“Not a chance,” Brookens said.
“If it is appropriate to exempt the aluminum we put on airplanes, then it is just as appropriate that the income costs for fertilizer and seed farmers put in is exempt,” he added. “I think it is a sound exemption.”
Marion City Administrator Doug Kjellin asked about the reclassification of production machinery from personal property to trade goods.
“On the economic development side,” he said, “it is a great boon for business, but also causes municipalities to have to raise mill levies to make up for the loss of personal property tax.”
Longbine said this reclassification started in Montgomery County with the appraiser reclassifying property in a refinery town.
“What had been classified as machinery and equipment as personal property, which the legislature exempted a number of years ago, the county appraiser in Montgomery County said, ‘No, this is a real estate tax and should be treated as real property,’” Longbine said.
The issue went to the Kansas State Board of Tax Appeals, he said, and was upheld.
Longbine cited a concrete company in southeast Kansas that currently pays $3.5 million in property tax per year.
“If this is upheld and new rules applied, their property tax will go from $3.5 million to $25 million, effectively putting them out of business,” he said.
The legislature will be talking further, he said, about defining what is real property and what is personal property.
Motor vehicle taxes
Marion County Commissioner Dan Holub asked Longbine about a motor vehicle tax bill being proposed that would reduce property tax on vehicles.
Holub said the bill is expected to increase sales, thereby generating more sales tax to offset loss of revenue from property tax.
“That is a broad statement,” he said. “In Wichita that may very well do something like that, but what about counties with no car dealers or counties with less sales tax than the city of Wichita?”
Holub said those counties will have reduced revenue, which would force a tax hike that would go back on residential owners and small businesses.
Longbine said the bill is still in the Senate Tax Committee, but it will shift the property tax on automobiles and increase sales.
The bill was introduced by State Sen. Les Donovan of Sedgwick County, who is also a car dealer, as is Longbine.
Longbine said the bill offers one technical and one substantive amendment. The substantive amendment changes the depreciation schedule on vehicles by allowing 15 percent depreciation in the first three years, 12 percent the next three years and 10 percent annual depreciation thereafter.
Holub said the Kansas Association of Counties estimated that by the fourth year, local governments would see a $58 million loss with the amendment, but still a hefty reduction with it.
Longbine said new-car dealers in Kansas contribute 17 to 20 percent of all sales tax collected.
“My industry (cars) is constant,” he said.
Holub added that he sees the bill as helping car dealers sell cars and all the counties and municipalities are going to pay the bill.
“That is wrong,” Holub said.
Marion County Republican Chairman Todd Heitschmidt also wanted to remind everyone that the Republican Caucus is Saturday, March 10, at the Marion Community Center.
Doors will open at 8 a.m. with registration and the caucus will begin at 10 a.m., when the caucus is called to order and representatives read support letters.
The legislative coffee in Marion was sponsored by the local Chamber of Commerce.