A Kansas House bill could considerably affect property taxes in McPherson County.

A Kansas House bill could considerably affect property taxes in McPherson County.

A bill that would change the definitions of what constitutes personal property and what constitutes real property could exempt some industrial machinery in McPherson County.

The bill is out of committee and could come up for debate on the House floor at any time, said Rep. Don Schroeder of Hesston in an email Wednesday. However, local taxing bodies will not know how much the legislation will affect local taxpayers until the bill is passed. Schroeder said he thought too many questions about the bill’s effects remained unanswered and it would be inappropriate to pass the bill at this time.

“I think it would be best for the tax chair to request an interim committee to study the issue over the summer and fall months and make a recommendation to the Legislature,” he said.

Schroeder said he was concerned exempting some commercial property will shift property taxes from commercial businesses to small businesses and homeowners.

A computer analysis run by the Property Valuation Division showed a 24 percent change in McPherson County tax rate if the bill is passed, Schroeder said in his email.

Nick Gregory, McPherson city administrator, said the bill has been city officials’ highest concern this legislative session. The city has submitted written opposition to the House Taxation Committee, and Mayor Tom Brown met with the governor to express his concerns about the bill.

A similar piece of legislation was proposed last session but did not pass. At that time, the city estimated the bill could cost the county as much as $4.5 million in lost tax revenue.

With the bill in its latest incarnation, Gregory said the city’s losses still could be in the hundreds of thousands of dollars. However, he said it will be hard to put a specific number on the bill’s effects until the end of the session.

If the city loses tax revenue, it would be forced to cut its budget or raise taxes or both, Gregory said.
“If the cuts are significant, we would have to maybe raise taxes. We don’t want to do that. We would want that to be a last-ditch effort. At this point, we will have to evaluate if the bill ends up passing.”
Any taxing entity in the state could ultimately be affected by the bill.

McPherson County Administrator Rick Witte said he is taking a wait-and-see approach. He said anything that would reduce the county’s tax base would affect the county’s budget.

“We would have to cut spending or find a way to increase additional revenue,” Witte said.

Chris Ruder, USD 418 superintendent, also expressed concerns about the bill. The bill could affect the district’s assessed valuation, which could affect the amount raised by the local option budget, he said.