December 17, 2024

Well, after receiving our property tax bill 2 weeks after the Nov. 5th election, now it is time to write the checks.  And everybody, everybody must pay their fair share, correct? 

That is true unless your business has been granted a property tax abatement through the gift of tax incentives.

A little history on the present epidemic of tax giveaways in Kansas. 

The most prevalent tax giveaways are Industrial Revenue Bonds (IRBs) and Tax Increment Finance Districts (TIFs). These tax giveaways are similar in nature to those offered across the United States. But where did this idea come from that the free market is no longer capable of providing the necessary capital for private development of industrial, commercial and now apartment projects?

In the 1800s, many transportation projects were funded in part by the U.S. government including the Philadelphia and Lancaster Turnpike and a steamboat line between New York and New Jersey.  In addition, railroads were given huge swaths of land to expand their lines westward.

Then in the 1930s, during the depths of the Great Depression the Italian Fascist dictator, Mussolini, came up with the “brilliant” idea of kick-starting private industry with government money.  It appeared to work so well that President Roosevelt (FDR) imported the idea and rebranded it as the New Deal. Thus, government began wading in to save the day and as a result the free market began to wither and the addiction to government subsidies/tax incentives began.

In Kansas, corporate welfare kicked into high gear after the passage of two constitutional amendments in August of 1986: Real Estate Reclassification and Equalization (the beginning of annual reappraisal) and Kansas Economic Development.

The Economic Development amendment gave the chosen few (which are becoming many) an exit ramp from paying their fair share of the ever-increasing property taxes REQUIRED to be paid by the rest of us.  

It was slick and brilliant marketing, talking us into annual reappraisal for “fairness” while giving local governments the authority to grant abatements and/or reimbursements through tax incentives. And so, the well-connected were given an “out” from having to face the repercussions of annual reappraisal.

But when did the idea of TAX DOLLARS paying for a portion of the 4 or 5 story apartment complex down the road from YOU begin?  When did subsidizing apartments become an appropriate expenditure of property tax dollars? 

It seems this phenomenon began to creep in about 15 years ago. Let’s look specifically at TIFs in Lenexa, which currently has over 3,300 apartment units subsidized through TIFs and or IRBs. 

According to the Lenexa 2023 Economic Development report, there is a total of 5 TIF Districts with over 40 project areas.  These project areas have been allocated nearly one-quarter of a billion dollars, $232,390,094 million.

Property taxes (paid by the projects) are set aside in a separate city fund until costs are submitted and verified. Then developers business owners and or the city are reimbursed for “horizonal” costs. 

Wouldn’t you love to have your property taxes set aside to replace your roof, driveway, redo your lawn or shrubs or maybe replace your sewer line?  

What a scam, diverting tax dollars from the County, JCCC, Shawnee Mission School District and Lenexa’s general fund for the grandiose plans of developers and business owners. 

In the Lenexa City Center TIF District there are an eye-popping 2,249 apartment units and 64 attached housing units receiving these subsidies. Yes, indeed, 2,316 multifamily units just within City Center, which are being subsidized by all of us. 

In addition, there are another 772 apartment units outside City Center which have also been given tax incentives through IRBs.  In Lenexa alone there are 3,088 apartment/multifamily units using tax dollars for their cost of construction.

The proponents of tax incentives state that incentives are necessary to promote growth and create jobs, which expands the tax base and decreases the tax burden for everyone.  However, Kansas Legislative Post Audit reports do not support this theory, the most recent, March of 2022.

So, I ask YOU, do tax incentives work?  Have YOUR property taxes decreased?  We all know the answer to that question is a resounding No!!!! Tax giveaways only work for those who receive them by reducing their costs at OUR expense.

None the less the tax incentive train continues to barrel down the tracks transferring wealth from you and me to the wealthy, well connected developers, bankers and lawyers. 

Corporate welfare: your city and or county’s gift to you this holiday season, higher property taxes. Merry Christmas & Happy New Year!