Property taxes in Kansas: the tissue and torment of government

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Part 1:
For governors and government in Kansas, the Carlin era

can be seen as the most productive and accomplished in

recent history. Progress, however, didn’t happen overnight.

Having defeated incumbent Republican Robert Bennett in

1978, Democrat John Carlin took office in 1979 and by the

end of his second year in office, a dismaying cycle of swings

between unemployment and inflation had pushed across

America and into Kansas. Interest rates soared into double

digits; banks were paying 15 percent interest on certificates of

deposit and charging 18 percent or more for consumer loans.

A 13 percent mortgage was considered a bargain. Prices

heaved upward for everything – gasoline, groceries, home

loans and savings accounts, automobiles, clothing, consum-
ables, durable goods, oil and gas, you name it.

A national recession had begun. In Kansas, the legislature

faced special, heavy pressures on programs for schools and

Carlin wanted to avoid adding new burdens to the property

tax, already overloaded as a revenue source for all things

local, starting with the operating budgets for cities, counties

and school districts. The governor instead proposed an eight

percent severance tax on oil, gas and coal, estimated then to

raise $200 million in new revenues for education and high-
way construction and maintenance.

This issue, aggravated by an overworked property tax,

prompted a bitter, grinding debate that consumed the major

part of three consecutive legislative sessions; it was resolved

with the 1982 general election, in which Carlin was chal-
lenged by Republican Sam Hardage; the contest was seen

clearly as a referendum on the severance tax.

As the debate roiled the property tax loomed: how much

more could it take, and how much more could people stand?

Legislators who opposed relief through a severance tax

proposed to raise the state sales tax from three to five percent,

and the eight cent gasoline tax to 11 cents a gallon.

Carlin saw the issue another way: “We’re either going to

have property taxes go through the roof, or we’re going to

have increases in sales and gasoline taxes,” he said, “or we’re

going to have the mineral production (severance) tax. When

you compare it to the Legislature’s tax proposals, or to doing

nothing, which puts it all on the property tax, there’s no com-

Voters agreed with Carlin. He won reelection by a wide

margin and the severance tax was approved by the 1983 legis-
lature. (The severance tax remains today at 8 percent, but car-
ries a 3.67 percent tax credit, for an effective 4.33 percent tax

on the gross value of oil and gas produced. Until the recent

fall in oil prices, the tax had generated between $95 and $100

million in annual revenues. It’s now about half that.)

THE SEVERANCE tax is one example of reform prompted

by pressures on the property tax. What of others? Why do we

have a property tax?

Of all the countless words and prudent phrasing woven into

the Kansas Constitution, none have caused more pain and

frustration than the string of them that empowers the property

tax. One burst alone embodies at once the tissue and torment

of government in Kansas: “…shall provide for a uniform and

equal rate of taxation…”

On July 29, 1859 at Wyandotte, the territorial Legislature

enacted the Constitution and with it Article 11, section 1 – in

one paragraph, the birth of our property tax. So important

was this principle that it had been chiseled into territorial law

18 months before Kansas joined the union of states.

Such a levy was seen as essential, envisioned as the fuel

for public services in growing settlements across the plains.

It was 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 sup-
posed 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 imag-
ined. And the productivity of land was, after all, the promise

of Kansas.

It is an irony of time and events that a tax once written into

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our Constitution to make town and township life more livable

had, by the beginning of the Carlin era, become so exasper-
ating, the scorn of renter and owner, merchant, farmer and

banker – a burr under the state saddle.

In the decades since 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.

And land was valuable for what was under it as well as

what could be grown in it or built on top of it. Coal, oil and

gas had been discovered as early as 1855 but continuous

commercial ventures were not producing until the 1890s in

eastern Kansas; oil and gas were not commercial in the west

until the 1930s.

Over the years, the value of land has fluctuated against

demands and uses so unpredictable that no law of appraisal

approached reality. Even the keenest assessors would discov-
er that they could only hack at the edges of the 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.

It would be the railroads, who profited most from the

development and settlement of Kansas land in the 1870s and

1880s, who would, a century later, lead a charge against the

tax. It would be the railroads – which once had acquired more

than 10 million Kansas acres, much of it free from the gov-
ernment – who would claim the tax on land defied the law of

that land. The railroads would usher yet another issue into the

Carlin era for resolution.

IN 1980, a year into John Carlin’s first term, 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. It

never really happened. Only utilities in Kansas were paying

taxes on property assessed at 30 percent because in their case,

the state – not counties – did the assessing. County appraisers

were never able to 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 if ever

approached even a double digit, much less 30 percent in any

city, township or county.

Now and then the state would embark on a massive reap-
praisal ordered by the courts or the legislature. This prompted

little change and lots of protest. The legislature would amend

a patch of fine print, again yielding little more than lower col-
lections or higher taxes.

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 assess-
ments were far below state levels. Strict assessment against

railroads alone was not “uniform and equal” treatment, and

not constitutional.

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, farm-
land 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, but exempted farm machinery and equipment, mer-
chants’ and manufacturers’ inventories, and livestock. The

voters approved.

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– JOHN MARSHALL

(Next: A fruitless chase)

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