The trouble with taxes lies in a principle of human nature. People tend to view government finance this way: Impose taxes so the other person pays them – or, a “fair share.” But with taxes on property, the system at times has seemed to lack all fairness.
By the middle 1980s, property assessments in Kansas seemed a product of throwing darts at a board in the courthouse boiler room, a system lacking any practical reasoning.
Assessments (thus, taxes) were often wildly out of line with the actual market values of most property, from housing and businesses to farmland, factories and inventories.
Gov. John Carlin and the Legislature recognized the distress and torment of property appraisal and decided to fix it. Their plan featured a constitutional amendment. It would classify property by use, assign it a value, and fix assessment rates in various categories – utilities, agriculture, residential, businesses and so forth. Before reform, assessments at the county level seemed more a matter of guesswork than a product of contemplation and judgment.
Carlin convinced legislators that an amendment would accomplish two things: first, a massive, statewide reappraisal of all property; next, a new listing of property classifications and their assessment rates. Among the key classifications and rates: residential, assessed at 11.5 percent of market value; mobile homes, 11.5 pct.; personal property, 25 pct.; businesses, 25 pct.; utilities, 33 pct., and others.
One other classification was critical, perhaps the Constitution’s most crucial: farmland would be appraised by its ability to produce income and assessed at 30 percent. The political and economic impact of this section was so significant that the entire amendment, covering a dozen classifications, came to be known simply as the “use-value amendment.”
This is because the amendment – approved by voters November 1986 – protects farmland assessments through use-value property appraisal; taxes were (and are) determined by the income derived from the land, not by its market value. The amendment was to prevent owners from being forced to sell land simply to pay the taxes on it. It was a critical reform, exposing a glaring issue with property taxes, a chief component in funding local schools.
Although the property tax was written into the territorial constitution ten years before Kansas became a state, the state income tax was not adopted until the early 1930s.
Property taxes are tied tightly to the premise of local control, although the income tax seems a more equitable source of state revenue for local government. This suggestion runs contrary to the feeling that local control is better, that friends and neighbors can manage their towns more reasonably than costly and troublesome bureaucracies. Usually they can.
But today’s friends and neighbors are no longer apt to be tomorrow’s. Consider the disparities in property values across Kansas, and the transience of Kansans today. Many programs such as welfare, Medicaid, and transportation have been on a state basis for years, supported by income and sales taxes.
This ran counter to Gov. Brownback’s dream in 2011 of a state with no income tax, a plan that invited a return to the past, and to heavier reliance on the property tax.
The school finance reforms of 1992 had created a statewide uniform property tax for schools, a central pool for allocating the revenue and a formula for aid to resolve wide disparities in districts’ property values. This was a momentous shift, the burden of finance to be shared more equitably. It revived the quest for a more balanced network of state finance.
Brownback’s plan countered those reforms. Kansas, with massive income tax cuts, began a return to the 1920s or before, shifting reliance back to state and local property taxes, before the roads were much good, before the farms had electricity and the cities had decent water, before Topeka shared revenue with cities and counties, and before the schools were consolidated.
The Brownback plan, embraced by a heavy Republican majority in the Legislature, brought the state nearly to bankruptcy with billion dollar deficits and a quadrupling of state debt.
The state corrected course in 2017 with the departure of Brownback and the election of pragmatic legislators who saw the difference between raw ideology and reality.
The income tax had relieved pressure on the property tax. It gave us the difference between SRS and the poor farm, between the one-room school and low-enrollment aid, between hunger and the school lunch, between walking or staying on the farm and a ride on the bus, between the teacher who cared and one who couldn’t afford to. Between a public that hoped, and those who had given up.
(Next: rural schools)