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Notes from Commissioner Howell:
Sales Taxes Have Substantially Lowered Property Taxes
I think most people would say property taxes are the worst of all the taxes. Property taxes seem subjective, and potential unfairness causes a lot of taxpayer angst. People don’t generally track how much they pay in income or sales tax per year, but when you write a huge property tax check, it’s painful. The only good thing about this experience is it provides an opportunity for every taxpayer to recognize what government costs.
Sedgwick County asked voters back in July 1985 if they would support a 1% sales tax for two purposes: infrastructure and property tax relief. The referendum passed 54% to 45%. Next year, in 2024, this sales tax is projected to provide nearly $140 million in revenue, which gets shared by the county’s municipalities based on a formula. 100% of that revenue is used for infrastructure and services that could only be funded through property taxes if the sales tax was eliminated.
Sedgwick County plans to retain nearly $40 million of that revenue from sales and use taxes for 2024. Since one mill in Sedgwick County generates about $6.431 million, this sales tax revenue reduces the county mill levy by more than 6 mills.
Wichita’s 2024 budget anticipates $87 million in revenue from the countywide sales tax. Since 1 mill in Wichita generates about $4.631 million, that sales tax revenue essentially lowers Wichita’s property tax by more than 18 mills. Taken together (city + county), a Wichita resident will pay 24 mills less property tax because of the countywide sales tax.
Zillow says the average home value in Wichita is $186,032. That 24 mill property tax reduction means that average home in Wichita has already enjoyed a $385.08 reduction in their city property taxes and another $128.36 reduction in their county property taxes because of the voter-approved 1% countywide sales tax. Together, their total tax bill is $513.44 lower because of the countywide 1% sales tax.
Derby’s proposed budget estimates $6.7 million in revenue from the countywide sales tax, which effectively offsets Derby’s property tax by 21 mills, since one mill in Derby generates about $319,150. The Derby Difference sales tax provides another $4.2 million, which lowers the mill levy another 13 mills. Together (city + county), Derby residents enjoy amenities and services funded through sales tax revenue equivalent to 40 mills property tax.
Zillow says the average home value in Derby is $264,553. That average home already has a $638.90 reduction in their city property taxes and another $182.54 reduction in their county property taxes because of the voter approved 1% countywide sales tax. That home would also have a $395.50 reduction due to the Derby Difference 0.5% sales tax. In total, that homeowner will have their property tax bill reduced by $1,216.94 because of those three tools to lower property tax. If you want to see how many property tax dollars you have saved, just take your Derby home value and multiply that by 0.0046.
In a related discussion, there are three state funding programs designed to lower local property taxes. Unfortunately, the state legislature has chosen to defund two of these programs since 2004 and the third one since 2009. Because the state continues to ignore the statutorily required funding, Sedgwick County has had to cover the full cost of county-based services by using revenue from property taxes and local sales taxes. That’s a shame. If the state chose to fund these programs, Sedgwick County residents would share in the $24,156,690 in property tax relief, and more specifically, the Sedgwick County mill levy would be reduced by about 3.5%, a little more than one mill. Unfortunately, the legislature won’t fund those programs because state lawmakers believe the funds would be wasted and the mill levy wouldn’t be reduced. They need to study the data. We have already lowered the mill levy with self-imposed relief. The assumption that the state funding to local government would be frittered away is not based on history or knowledge. It is based on the negative opinion that local government is inefficient and has a lot of wasteful spending. Strangely, the legislature believes they must control local government spending, even though local officials and state legislators are elected by the same people.
As commissioners wrapped up the 2024 budget adoption, a small reduction in the mill levy was made. We cut 0.370 mills out of the planned 29.370 mills. It was a small tweak, but at least it’s something. If anyone wants us to advocate for less local property taxes, please encourage the state to fulfill its legal responsibility. We also appreciate any help finding inefficiencies and trimming waste.
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