fogFog/Mist, 29.0°

Lawrence residents on track to be hit with largest property tax increase in recent memory

I’m beginning to become confused about prosperity.

It seems like Lawrence is experiencing quite a bit of it. Yet, Lawrence residents soon may get a statement that causes them to wonder if it is true. Lawrence residents are on track to see their largest property tax increase in recent memory.

I tend to wince when people say that “growth doesn’t pay for itself” because I came from a community that has proved that decline definitely doesn’t pay well. But Lawrence leaders aren’t doing much this year to prove that growth pays its own way because we’ve certainly had growth. Here’s a look:

• Sales tax collections in 2016 grew by their largest percentage since 1998, and collections are in positive territory thus far in 2017.

• Lawrence home values are increasing significantly. Thus far in 2017, the average selling price of a home is up more than 7 percent from the same time period a year ago.

• Construction activity has been booming. In 2015 and 2016 the city issued building permits for about $450 million in new construction, the best two-year total in the city’s history.

• Our population also is growing. Since 2010, Douglas County has grown its population 7.7 percent, the highest population growth rate of any urban county in the state.

• To top it off, outsiders seem to be seeing it too. A North Carolina development company wants to build about 500,000 square feet of retail space in southern Lawrence.

In theory, all of those factors should increase the local tax base. A growing tax base should allow local governments to collect more in taxes without having to raise the tax rates on individuals or businesses. But that’s not the way it is shaping up this year.

Nothing is final yet, but the city, the county and the school district are all in the process of setting their 2017 mill levies, which will be used to fund their 2018 budgets. Those mill levies will determine how much you pay in property taxes this December.

If the city, the county and the school district follow the recommendations of their administrators and staff, the combined property tax rate will increase 5.41 mills. I’m sure there has been a larger local tax increase at some point, but it hasn’t been since 2012. To put the proposed increase in perspective, the combined mill levy increased by a total of 6.1 mills from 2012 to 2016. In other words, this one-year increase would be almost as much as the last four increases combined.

The Lawrence school district is set to contribute the largest amount to the increase — 2.4 mills — but it will do so with the blessing of local voters. The 2.4 mill levy increase was part of the deal when voters in May overwhelmingly approved an $87 million bond issue to improve school facilities.

The city of Lawrence and Douglas County aren’t seeking any such voter approval. The county is proposing a 1.76 mill increase and the city is proposing a 1.25 mill increase. The city has a variety of capital projects it wants to fund with the increase, but the one drawing the most attention is the beginning phases of a new police headquarters building. Voters in 2014 rejected a sales tax proposal to fund a police headquarters facility. The city is changing the plans of the building, but, importantly, it also is changing strategies. It doesn’t plan to ask voters for approval. They’ll just fund it through a property tax increase instead.

The county also has several items it wants to fund with additional tax revenue, but improvements to the community’s mental health system account for a lot of the increase. Improving the mental health system has been part of a larger discussion at the courthouse related to expanding the Douglas County Jail. Improved mental health services may reduce the number of people with mental illness who are in jail. The entire project could cost $30 million or more. It likely would require a vote of county taxpayers, but it appears the county is comfortable moving ahead with some of the mental health projects without a vote of the public.

In terms of what this means to your pocketbook, it varies. A 5.4 mill increase on a $200,000 home will amount to an extra $124 in taxes for the year. If you pay your taxes as part of your mortgage, your monthly payment probably will go up about $10.

For some of you, that may not be the only tax increase you experience. The state of Kansas is raising income taxes for the first time in awhile. A previous analysis by the Journal-World found that a couple who jointly earn $100,000 per year and have two kids will experience an income tax increase of $292 for the year. If they happen to own a $200,000 house, they would be paying an extra $416 in local property and state income taxes. A couple who jointly make $50,000 per year, have two kids and own a $125,000 home would see a $77 increase in property taxes and $91 in income taxes for 2017, although their income taxes would start to go down in 2018 as a child care tax credit starts to phase in.

It is not for me to say whether any of these proposed increases are burdensome. Everybody has to make their own judgments about that. I’m also not saying, at the moment, that what the city, the county and the school district are asking for in increased taxes is unreasonable. Everybody will have their own arguments to make on that, and certainly not everything is all roses in Lawrence and Douglas County. There are problems that likely will take money to address. (Although, affordable housing is presumed to be one of those problems, and this tax increase likely won’t make housing any more affordable.)

But I do think it is important that local taxpayers understand the context of these proposed tax increases. They are the largest in recent memory, and they are coming at a time when the community is experiencing quite a bit of prosperity. It raises a natural question: Where is the prosperity dividend?

We’ll be asking elected officials that in the coming days and weeks as they finalize their budgets.

Comments

Steve Jacob

Add to that next year our home valuations will go up many percent (average home listings are 16 days, that's insane)

7 months, 3 weeks ago

Report

Ralph Gage

So, what will the tax rate be, and how does that compare with previous years? I believe the school district has said that its levy will not exceed previous years' levies, even with the year-to-year increase...

7 months, 3 weeks ago

Report

Chad Lawhorn

Hi: I'm not sure I'm following you on the comment about the school district. In the 2013 bond issue school leaders promised that would be a no-tax increase bond issue, and it was. But for the 2017 bond issue they told voters to anticipate a 2.4 mill increase to pay for the additional debt added by the bond. They didn't make any promises this time that they were going to reduce other parts of their budget by a commensurate 2.4 mills. Thanks.

7 months, 3 weeks ago

Report

Zoe Flowers

As far as state taxes, how much will it go up for couples with no children. Some of us don't get dependent credits.

7 months, 3 weeks ago

Report

Chad Lawhorn

The simple answer is likely between 15 percent and 22 percent, depending on your income. Here's the article we did on the subject. Look to the side of the article, and there is a graphic that you can click on that gives you more details. http://www2.ljworld.com/news/2017/apr...
Thanks.

7 months, 3 weeks ago

Report

Stephanie Hull

Hi Chad -- that link goes to an article about the school bond issue. Is there another article about the state income tax increase?

7 months, 3 weeks ago

Report

Chad Lawhorn

Sorry. Here is the link to the state income tax article.
http://www2.ljworld.com/news/2017/jun...

7 months, 3 weeks ago

Report

David Holroyd

Tax hike? Oh it's just a cheeseburger, a pizza or even a couple tacos now and then.

It is a tax hike with no return on the investment. It is employment security for governmental employees, city, county and school district to start with. Now they will be back for a raise when their property taxes go up....

7 months, 3 weeks ago

Report

Jim Eckler

As a retired old person that has no children living at home I think that we should be exempt from all these taxes ,also a veteran ,why do we have to support this?we need a military and senior discount?

7 months, 3 weeks ago

Report

Deborah Snyder

Woh, Woh WOH HORSIES! Mr. Eckler, you had children?!? Well, then YOU had old geezers helping to pay school taxes, property taxes and income taxes at the time, rrriiiight?? And because you were in the military, EVERYBODY in the nation helped pay for your uniform, your equipment, your MOS training, your deployment, dude and your meager salary. And, if you did your 20, they helped pay for your retirement benefits, too. So WHAT were you just bitchin' about??

7 months, 3 weeks ago

Report

Francis Hunt

"And because you were in the military, EVERYBODY in the nation helped pay for your uniform, your equipment, your MOS training, your deployment, dude and your meager salary." Lady, are you kidding me? Yes, our nation paid for Mr. Eckler while he was serving our country. I guess you take his military service lightly and think we did him a favor simply because you don't understand service and sacrifice. Fortunately for you there are men and women willing to defend your right to complain about it.

7 months, 3 weeks ago

Report

Rae Hudspeth

Mr. Eckler paid for all of the above with his service, his sacrifices, and the sacrifices of his family when he was in service and quite possibly at war. He paid for his retirement benefits, the same way anyone else did, with the years he put in.
He wrote a blank check to this country, payable with heart, body and soul.
What have YOU done for this country, Ms. Snyder?
One of those soon to be "old geezers" who didn't have children but am paying higher taxes for a home that costs us more every year for upkeep. I'd like them to show me where my home is worth so much more for taxation.
... proud product of a career military family to boot.

7 months, 3 weeks ago

Report

Richard Heckler

=== Lawrence home values are increasing significantly. Thus far in 2017, the average selling price of a home is up more than 7 percent from the same time period a year ago.

Who decided this? Our local real estate executives? How can this be. Lawrence is still an always low wage community.

=== Construction activity has been booming. In 2015 and 2016 the city issued building permits for about $450 million in new construction, the best two-year total in the city’s history.

THIS IS DANGEROUS! This does not indicate that every rooftop will have tenants. Booming has been underway just before home loan scams surface then suddenly market values drop significantly. Are whatever loan regulators watching the lending industry with an eagle eye?

Paying boomtown prices for homes is paying too much money. It is risky beyond
reality. Risky lending must be back on the table.

How many taxpayers want to forced for the third time to bailout criminally managed lending institutions?

Jeb Bush defaulted on a $4.56 million loan from Broward Federal Savings in Sunrise, Florida. After federal regulators closed the S&L, the office building that Jeb used the $4.56 million to finance was reappraised by the regulators at $500,000, which Bush and his partners paid. The taxpayers had to pay back the remaining 4 million plus dollars.
http://www.dailykos.com/story/2014/12...

--- Conservatives DELIIBERATELY CRASHING THE ECONOMY
http://www.guardian.co.uk/commentisfr...

--- Conservatives Reagan/Bush Savings and Loan Heist http://www.dailykos.com/story/2014/12...

--- Conservatives Use "Rebuilding America's Defences," to openly advocate for total global USA military domination. http://www.sourcewatch.org/index.php?...

--- Conservatives Bush/Cheney Wall Street Home Loan Heist
http://www.dollarsandsense.org/archiv...

http://www.dailykos.com/story/2009/02...

--- What Did Conservatives Do With $700 billion of bank bail out money?
http://www.democracynow.org/2009/9/10...

--- Still A Bad Idea –The Conservative ENTITLEMENT Package for the wealtiest 1% and is still producing a dysfunctional economy.
http://www.dollarsandsense.org/archiv...

7 months, 3 weeks ago

Report

Steve Jacob

What a weird comment first. Home prices are up 7% this year, how can you dispute that, do you think they made it up? Watch TV, mortgage commercials are on all the time, realtors can't get enough homes to sell. Do you see as many open houses like a couple of years ago. People want to live here, and that's a good thing.

7 months, 3 weeks ago

Report

Deborah Snyder

Look, the issue here isn't the "perfect storm" on state and local taxes ... you need to look at the value in land-use for housing prices in Lawrence. We are officially UPSIDE DOWN on owner-occupied homes vs. rentals, and THAT is what is driving the inflation on home prices.

Douglas County and city officials have a vested interest in staying out of land use planning and preservation of modest owner-occupied housing, because they gain literally millions of dollars in assessments from inflated values.

And a two-income $50k family cannot compete against three and four unrelated (or more, if so-called relatives co-rent) renters, each paying $400 or more apiece to live in the same space.

And realtors and landlords learned their lessons from the early '90's when rental restrictions managed to make their way into city ordinances. They now occupy positions on Neighborhood Associations, City Commission, and elevated state lobbying to prevent anything more from dimi ishing single-family residential cash cows ... resulting in a rental dominated market.

So, why would *anyone* be surprised at the higher valuations (and higher tax assessments)??

Until I see an active effort to impose overlay districts on modest housing by city officials, and actually offer homestead-like benefits to owners occupation, ain't no reason to complain about what Centennial Neighborhood predicted would happen when it spearheaded a citywide survey on land-use conversion decades ago.

7 months, 3 weeks ago

Report

Kirk McClure


Chad –
You stated, “In theory, all of those factors should increase the local tax base.”

This is partly correct and partly incorrect. Here is what a great deal of research in urban and real estate economics teaches us:

Sales taxes: Sales taxes are drawn from the spending of the local population and the visitors. Growth in sales taxes from the local population does not grow the local tax base. Growth in spending by visitors does grow the local tax base. So the tax base grows only to the extent that the “pull factor” grows.

Home values: This is correct, but it is the aggregate value of homes, not the value of new homes. If the aggregate income of households in Lawrence is unchanged, then the aggregate value of homes in the city unchanged. If we add homes without growth in aggregate income, then the new homes are only capturing value away from older homes.

Construction activity: This is incorrect. Construction activity often has no relationship to the scale of the tax base. Growth in incomes is what drives that tax base, not construction.

Population: This is correct. Assuming that these households have any income, the tax base grows relative to the income they added to the community. There are complications with the level of the incomes, but it is generally true that a growing population adds to the tax base. The exception is when the growth is among the impoverished.

Retail growth: This is incorrect. There is a need for new retail only if there is new spending for it. Without inflation adjusted growth in spending beyond the capacity of the existing retail stock to absorb it, new retail space will not expand the tax base. The new space will simply cannibalize spending and values away from existing space.

All the best,
Kirk

7 months, 3 weeks ago

Report

Zoe Flowers

Is the Oread Hotel still exempt, maybe just partially, from paying school taxes. I seem to remember the school board giving them a pass on taxes, just not sure how long it was for.

7 months, 3 weeks ago

Report

kathy white

I do not understand how we voted NO for a sales tax increase for the new police headquarters building and now the city/county is going ahead and raising property taxes to proceed with this project. Why bother voting on an issue if they can proceed with other taxes without a vote? And why are we going to pay more taxes when the city has not been responsible with the accounts receivable? Sadly I may not be able to continue to live here at this rate. Please educate me how this can happen.

7 months, 3 weeks ago

Report

Deborah Snyder

Umm, wait. "...if the aggravate *income* of households... does not change, the aggravate *value* of homes... does not change?!?!

Kurt, (btw, how nice to see your name again😃) I don't understand. Existing sf home values (particularly modest housing stock) are dramatically increased, because their land-use is more valuable as a rental.

If you can define "household income" then I'd like to understand how its status is related.

7 months, 3 weeks ago

Report

Deborah Snyder

Sorry, Kirk... fingers not connected to memory...

7 months, 3 weeks ago

Report

Richard Aronoff

Newsflash for Richard Heckler: Your home (or anything else) is worth exactly how much someone is willing to pay for it. No more - no less

7 months, 3 weeks ago

Report

David Holroyd

Did I miss something? "aggravate income of households".....Since when did income households become aggravate? Aggregate maybe?

I know many households where the wage earners get aggravated...at each other and soon become divorced.

Aggravate or aggregate? And to think some of these posters are at KU and learned folks.

Now then Ms. Snyder, get over the idea about tenants vs. homeowners and vaue of properties. Mr. Aronooff is exactly correct. The house is worth what someone wants to pay for it and right now, the most recent property I have been watching, knowing the owner, the house has again an offer under the county valuation which is used by the governing bodies to pump up their treasure chest.

So, in the end, this woman will sell for under the county value and I told her to appeal her taxes for 2016 and the prorated amount for 2017 as she is getting the royal you know what from the county.

To make it worse, the realtors gave her an "appraisal" nothing in writing. Just image! It is a gimmick to get the listing. You too Ms.Snyder will figure it out when you sell one of these days. As my Daddy said "sell it when you are alive or it will be sold when you are dead" Take your choice. Sooner may be better than later...in Lawrence.

7 months, 3 weeks ago

Report

Deborah Snyder

Sorry my spelling is atrocious. I thought I was spelling one thing, but ended up saying another.

I'm not giving up on what should be obvious to everyone, and that is the need for owner-occupied housing, particularly modest housing.

Given the example you offered, it's more than likely her home will be converted into a rental, because whatever her house may be worth, it's return on investment isn't on a 30-year lifespan, but for what cash it will generate each month, hand-in-hand with tax write-offs galore!

The whole concept of home ownership and single-family residential neighborhoods was to provide stability for the infrastructure built around it. As has happened in our neighborhood, that infrastructure is gone, because land-use was allowed to change.

If you actually believe that free market value for your home is based on what someone will pay for it, you're leaving your neighbors, your schools and churches, parks and sidewalks, street lights and family-oriented businesses that existed while you lived there completely vulnerable to whatever land-use changes the next buyer decides to make!

Home ownership makes NO sense if people risk putting 15 or 30 years of their lives into a home where the neighborhood around them becomes something completely different than what they thought it was when they signed the mortgage.

So, as a result of instability in sf housing, fewer buyers are looking to make that commitment, and since sellers are all about "free market" our city has more rentals (55 - 57%) than owner-occupied homes. And if landlords get tax breaks up and down the line, everybody else has to pony up more of their own to make up for it. How sustainable is that gonna prove to be, Mr. Halroyd?

7 months, 3 weeks ago

Report

Deborah Snyder

Oh, and to Hudspeth and Heckler: I am a 10-year veteran of the Viet Nam War. You betcha we paid our dues for the money paid by local, state and federal taxpayers to fund our existence. Ekler was shamed because in his old age, it's all about what benefits him, and I'll be dsnged if I'm gonna stand by and allow such selfishness. We all pull together, or not at all.

7 months, 3 weeks ago

Report

Rae Hudspeth

Fair enough, I'll stand corrected, and thank you for your service.

7 months, 3 weeks ago

Report

Steve Jacob

Let's not forget the state will be taking out more out of our paychecks next month. Think it used to be 2.7% up to 30K and 4.6% for the rest. Starting July 1 (retroactive to Jan 1) it's 2.9% up to 30K , 4.9% 30K-60K, and 5.2% over 60K for 2017, and goes up to 3.1%/5.25%/5.7% in 2018. And those are for married couples, cut those salary numbers in half if your single. Many employers will start withholding at the 2018 rate so you don't get hit up at tax time.

7 months, 3 weeks ago

Report

Commenting has been disabled for this item.

Full LJWorld.com site