Quinday: The Death of LAVTR

The elimination of the Local Ad Valorem Tax Reduction Fund, amidst a $1.9 billion surplus, Kansas abandons a crucial tool for property tax relief.

In the recent legislative session, a significant decision was made that profoundly impacted property tax dynamics in Kansas. The Tax Plan adopted by the Kansas House and Senate notably omits the Local Ad Valorem Tax Reduction Fund (LAVTR), thereby stripping a vital mechanism to alleviate the property tax burden on Kansas residents and businesses. This move not only breaks a longstanding promise to our cities and counties but also occurs at a time when Kansas boasts a $1.9 billion budget surplus.

Established in 1965, the LAVTR was a landmark initiative designed to return a portion of state-collected sales taxes to local governments, thereby reducing local property taxes on a dollar-for-dollar basis. This was a significant step towards ensuring equitable distribution of tax burdens and supporting local communities. Initially, LAVTR funding was halted when the State of Kansas faced financial constraints and could not afford the allocations. However, those financially restrictive times have long since passed, making the continued non-funding of LAVTR more difficult to justify, given current fiscal conditions.

Despite its potential, the fund has not received allocations for over two decades. This prolonged neglect underscores a missed opportunity, especially poignant, considering that Kansas cities and counties have foregone more than $1.7 billion in funding that could have directly reduced local property taxes. This is not just a loss of funds but a loss of potential for Kansas residents to have a lighter tax burden and for local economies to thrive. Furthermore, most cities and counties across the state have worked diligently to maintain or lower their mill levy, often doing more with less. Local elected officials and city staff, who pay the same property tax rates as their constituents, recognize the heavy burden that high property taxes place on families and businesses.

The recent legislative decision to remove LAVTR entirely from the statutes effectively abolishes a practical tool for tax relief, with no forthcoming alternative that adequately addresses the immediate financial pressures on local governments. This decision is even more difficult to reconcile with the fact that, during this time of fiscal abundance, the potential to fund LAVTR fully was feasible yet overlooked.

While the legislature faces complex fiscal decisions, these choices must prioritize the greater good. It is crucial to recognize that every dollar saved in property taxes is a dollar that can support family budgets, boost local economies and enhance community well-being.

In conclusion, our legislators face difficult fiscal decisions; however, eliminating the LAVTR during a time of surplus represents a significant step back in our efforts to provide genuine tax relief to Kansas residents. It is a disservice to both the spirit of equitable governance and the financial health of our local communities.

The promise of addressing high property taxes for all property owners should be fulfilled. There is still time. With Governor Kelly's veto of the Tax Plan, the legislature can override the veto, or work with the Governor on a compromise Tax Plan, which should not include the wholesale elimination of the Local Ad Valorem Tax Reduction Fund. Rather, leveraging our state's surplus and funding the LAVTR would substantially reduce the financial burden on our citizens.

(Written by Russell City Manager Jon Quinday.)