Tax fund that hasn’t been used since 2003 would reduce property taxes

Prior to 2003, nearly 4% of state sales tax was distributed to local governments to reduce property taxes.

TOPEKA, Kan. (KSNT) — The Governor’s Council on Tax Reform met Tuesday to make recommendations to Governor Kelly ahead of the 2020 legislative session.

The council is recommending that a tax reduction fund be restarted after not being used for nearly 17 years. The Local Ad Valorem Tax Reduction Fund has been in place for years, a percentage of the state sales tax is supposed to be distributed across the state.

“That goes to the local governments in order for them to reduce mill levies and reduce the property tax in local governments, whether they’re cities or counties,” explained Steve Morris, Chair of the Governor’s Council on Tax Reform.

However, the state government has not funded this program since 2003. As Kansas taxes continue to be some of the highest in the nation, residents say any tax relief is welcome.

Abbey and Wade Wostal have made Topeka their home for the last 20 years. Now, they co-own Wostal Realty and work to get others homes in the area. But the high property taxes in Kansas can make that difficult. Abbey says many people from out-of-state don’t realize how much they will be paying.

“They don’t see that other places and so it’s…I’ve lost clients that decide to go to different communities because they don’t have that and it’s very unfortunate,” said Abbey.

Prior to 2003, 3.63% of state sales tax was distributed to local governments. If the fund is restarted, that money will once again go toward reducing property taxes across the state.

“It would be nice. We need to invest in our communities and tax dollars are important, obviously, but so is homeownership,” added Abbey.

According to Morris, if the Governor and the legislature decide to restart the fund, there is a formula that determines how the money is distributed to communities.

At the tax reform meeting, other recommendations included a food sales tax refund program. Low to mid-income Kansans would be able to fill out a form with their income tax return that would refund them based on the number of people in the family. The council considered eliminating the sales tax on food completely but decided against it due to the cost.

“Take the whole thing off and it’s about a 400 million dollar hit to the general fund and the state can’t really afford that at this time,” said Senator Morris.

The council also made recommendations on internet sales tax.

The first would allow the state to collect tax on third-party online vendors. For example, a website like Amazon sells items from third-party sellers. Right now, those items are not taxed. This recommendation could make those items taxable. The second recommendation would allow taxation on ‘digital products’; this could include items such as buying an e-book online.