Archive for Thursday, November 16, 2006

Interim committee looks at valuation cap

November 16, 2006

I was in committee at the State House the last week of October and I wanted to share with you some of the information that was discussed. Additionally, I wanted to provide further detail on two of the issues that most directly affect you.

The interim committee for assessment and taxation discussed seven issues concerning taxation on Kansas taxpayers. The topics included the Homestead Program Evaluation, Truth in Taxation Local Budget Law, residential property tax valuation cap, city development excise Taxes, state and local tax policy, qualifications and employment of Kansas State Board of Tax Appeals members, and tax incidence/tax base erosion. The committee heard testimony from several people who were also asked to respond to questions from the committee about these complex topics.

A residential property tax valuation cap has been discussed for several years, and we know this issue is of utmost importance to people in the state. The Legislature is charged by the Kansas constitution to provide a uniform and equal basis of valuation and rate of taxation.

The House Tax Committee in the 2006 session discussed constitutional amendments that would limit the annual property valuation increases to the rate of inflation for residential parcels. The discussion centered on setting aside the tax liability for older Kansans that meet various income/asset requirements.

Motor fuel tax at the Kansas border is an issue that has generated a great deal of interest. The crux of the issue is that two of our four bordering states -- Missouri and Oklahoma -- have lower gas taxes than we do here in Kansas. For example, Kansas has levied a motor fuel tax of 24 cents per gallon while Missouri's motor fuel tax is only 17 cents per gallon allowing stations in Missouri to price fuel 7 cents a gallon cheaper than competitors less than a half mile away in Kansas. Fuel retailers in communities close to these states have a difficult task competing with these out-of-state retailers.

The proposed legislation would allow communities that are within 3,000 feet of the border to reduce the motor fuel tax to that of the bordering state.

There are some inherent difficulties involved with this discussion: 1) Kansas wants business to compete with businesses across state lines; 2) Kansas does not want to set tax policy based on actions of other states; 3) Fairness and equality are also affected -- a gas station located 3,005 feet from the border is not eligible to participate in this legislation; and 4) A statewide reduction of seven cents in fuel tax would place Kansas in line with Missouri but would also take approximately $60 million out of the highway fund.

If you have any questions or comments on these issues or if you would like to discuss them in more detail, do not hesitate to call me at 542-2293, or e-mail me at

I look forward to your comments.

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