Tax exemption proposal would jolt all wallets



INDEPENDENCE — All Montgomery County taxpayers would be saddled with a property tax rate hike of at least 38 percent — with taxpayers within Coffeyville city limits facing as much as a 45 to 50 percent increase in property taxes — under proposed legislation that is expected to be debated in the 2013 Kansas Legislature, which convenes in early January.


That was the assessment from a Coffeyville certified public accountant Monday as he spoke to Montgomery County commissioners about anticipated legislation dealing with the tax classification of manufacturers and industries.

Larry Wright, a longtime Coffeyville accountant who also serves as the commission’s budget preparer, raised alarms Monday when he presented a spreadsheet from the Kansas Association of Counties showing the estimated tax impact of legislation that, if passed, would alter the definition of “personal property” as it applies to manufacturing businesses and industries in Kansas. That legislation was instigated by CVR Energy, the parent company of the Coffeyville Resources refinery and nitrogen fertilizer plant, and lobbied heavily by the Kansas Chamber of Commerce and Industry during the 2012 legislative session. However, the legislation was stalled in committee after the Montgomery County delegation in the state legislature sought more time to study the ramifications of the bill. Legislative leaders ultimately agreed to seek an interim study on the legislation’s tax impact. That study is expected to be released in March 2013.


However, the KAC’s spreadsheet, which was sent to all Kansas counties on Nov 28, gives a preliminary view of what the legislation would do to local pocketbooks if it is passed and signed into law by Gov. Sam Brownback. Local taxpayers’ share of county-only property taxes would likely increase by as much as 38 percent because the legislation would grant a sizable tax break to manufacturing-related industries, thereby forcing the tax levy to increase due to a drop in property valuations, Wright said.


Because all taxpayers pay a portion of their taxes to county-only programs and services, all Montgomery County taxpayers could see their county levies rise from 42.177 mills to 58.191 mills, or 38.10 percent, according to the spreadsheet.


The spreadsheet showed Montgomery County having the greatest increase in tax shift of any Kansas county. Wright said he assumed the volume of increase was due to Montgomery County having several major industrial manufacturers, including a refinery and a nitrogen fertilizer plant. Montgomery County is the only county in Kansas to have a refinery and a nitrogen fertilizer plant, he said.


The volume of tax increase would be greater in the Coffeyville area, which is home to the Coffeyville Resources nitrogen fertilizer plant and refinery. The proposed legislation, if enacted, would dramatically alter the tax bases not only for the county but also for city, school, community college and all other tax-supported governments. If those taxing entities have to adjust their tax valuations due to the tax breaks that will be granted to the manufacturers and industries, then tax levies would have to increase to make up the difference.


So, what would the impact be for a Coffeyville city property owner? Wright projected, using numbers that he said were “best estimations,” that the total ad valorem tax rate for a property owner in Coffeyville would increase from the current 166 mills to about 245 mills — which is a 47.5 percent increase.

He showed the impact of the legislation using his own house, which is located outside the Coffeyville city limits. Wright said his current property taxes were about $2,810 per year (based on a total ad valorem mill levy of about 133 mills). If the legislation is passed, then Wright’s property taxes would increase to $4,000 per year (based on an projected mill rate of 188 mills) — which is an increase of 41 percent.

“We’re talking about major, major shifts in taxes,” said Wright.


The KAC spreadsheet showed all Kansas counties experiencing some form of property tax shift — and ultimately a property tax hike — under the proposed legislation. However, most Kansas counties would see an increase from anywhere from 2.35 percent to 10.0 percent. Large-population and heavy-manufacturing counties would experience the greatest shifts with Montgomery County experiencing the greatest burden.


For more details, read the story that appears on page A1 of the Dec.  6 edition of the Montgomery County Chronicle.


Two more stories accompany that story.

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