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
*
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.
*
– JOHN MARSHALL
(Next: A fruitless chase)
