Vague law could bar tax increase
Whether Marion legally will be able to adopt a proposed 5.814% increase in its tax levy Monday may come down to a ruling on a new state law that even state officials admit may be unknowingly vague.
At stake is whether the city will have to live within the same amount of revenue it received this year. Under a new law, if the city charges more for taxes, it might have to send taxpayer refund checks later this year in an equivalent to 3.951 mills.
Repeatedly asked how the city planned to address the situation, no city official would return emails or phone calls. Several additional calls went directly to voice mail and a mailbox that was too full to accept additional message.
The question is whether taxpayers received sufficient notice that the city, which has contended that it is not increasing taxes, plans to increase its tax levy for the coming year.
Notices published in this newspaper adhered to notification standards. However, newly required individual letters to each property owner may not have been delivered in time.
They were mailed Thursday, but a new state law (KSA 79-2888) requires 10 days’ notice. Inquiries by the newspaper discovered that none of the notices arrived in Marion until Monday, just seven days before the city’s hearing on increasing its tax levy.
County clerk Tina Spencer’s office sent the notices to a Wichita firm — Postalocity, the same firm that mails city utility bills — and received an affidavit acknowledging that they were mailed Thursday at a cost to the state $9,000.
Spencer said that information she had received from the state indicated that such an affidavit would be sufficient evidence that 10 days’ notice had been provided.
“I feel like we’ve followed the statute,” Spencer said Tuesday.
However, David Harper from the taxation division of the Kansas Department of Revenue said he couldn’t determine whether the law intended that notices be mailed 10 days in advance or be received 10 days in advance.
He said government couldn’t control for postal delays. However, it’s common knowledge that mail rarely if ever is delivered overnight between Wichita to Marion. That’s what would have been needed for taxpayers to receive 10 full days to review the notices.
Unlike mail sent to ZIP codes beginning with 67 in the county, mail sent from Wichita to Marion and other ZIP codes beginning with 66 must deviate several hundred miles to a sorting center in Kansas City.
The Postal Service routinely informs bulk mailers such as Postalocity that it takes on average two to three days for a first-class or standard-rate letter to be delivered from Wichita to Marion.
An item mailed on a Thursday thus would not be expected to arrive until Saturday or Monday at the earliest, clearly missing a Friday deadline for a hearing the following Monday, if that was the law’s intent.
While not addressing this specific issue, state administrative manuals and such things as absentee voting procedures, which the clerk’s office enforced as recently as last week, require that items be counted as on time only if they bear a postmark indicating that mailing occurred before the deadline.
The tax notices, mailed under a bulk permit instead of with stamps, were not postmarked. As numerous state web pages warn, mail that is not postmarked must be delivered before the due date to count.
In this month’s election, for example, 10 absentee ballots that arrived late but were postmarked in time were counted. Two that bore no postmarks were not.
Among all taxing units in the county, Marion chose the earliest possible date for conducting its hearing under the untried new system requiring mailed notices, leaving little leeway for problems.
Under law, hearings must be conducted between Aug. 20 (Saturday, usually a day off for hearings) and Sept. 20.
The only city pushing the deadline as tightly as Marion is Burns, which scheduled its hearing for this coming Tuesday.
So far as the newspaper has been able to determine, Marion’s city council has not changed its plan to conduct its required budget hearing, including a separate required hearing on exceeding the so-called revenue-neutral tax rate, Monday night even though that date may no longer be within the statutory 10-day window.
The law requiring notices about so-called revenue-neutral rates has been controversial statewide with county clerks, one of two groups charged with enforcing it.
It’s the Kansas incarnation of a nationwide movement designed to stop what proponents believe is back-door bracket creep in spending by local governments that rely on property taxes.
Proponents of so-called revenue-neutral rates contend that local governments often hide increased spending behind increases in property valuation.
Many property owners, even without improvements on their property, see their appraisals go up, so they pay more taxes even if the tax rate stays the same.
Improvements made elsewhere in the taxing district also increase appraised value, adding even more money to the amount a government unit can collect while claiming to hold the line and keep tax rates constant or lower.
Tax rates — commonly referred to as mill rates — are only estimates at this point in the annual budget cycle.
The only thing fixed by budgets at this time is the overall amount to be raised — the tax levy.
“Mill levy,” a term commonly heard from local politicians, is a bastardization of the two terms and has no actual meaning.
Mill rates are not set until much later — in fall, by which time final valuation numbers are known.
Budgets passed at this time of the year may include estimated mill rates, and they often seem to be lower than previous rates, but by the time final valuation figures are calculated, they generally end up different, often rising higher than the previous year’s rate.
Revenue-neutral rates are an attempt to counter these problems by stating that no taxing unit can impose a mill rate greater than whatever rate would collect the same amount of money as was collected in the current year unless the taxing unit conducts a hearing specifically on that issue and then votes immediately after that meeting to exceed the rate.
The notices were designed to general additional publicity for those hearings to encourage taxpayers concerned about government spending to attend what usually are sparsely populated budget hearings.
By including actual valuation numbers and applying estimated mill rates to them, the somewhat confusing notices let taxpayers see exactly how much their tax bill would change because of each taxing unit’s proposed budget.
The notices stress that they are not bills. Final bills cannot be prepared until appraisal figures are completed and all tax units vote on their final budgets.
Proposed budgets presented at this time of year may not be increased but can be decreased by action of the governing body at its budget hearing.
A second part of the notification plan required by KSA 79-2888 is that any local taxing unit that regularly updates a website most post select information above the revenue-neutral rate and proposed mill rate on its website.
Marion seems to have complied with that requirement, albeit not in an obvious way.
To find Marion’s notice, a taxpayer must go to the city’s website, find a section labeled “City Council Packets,” and then know to select one labeled “City Council Packet June 27 2022” and scroll down 20 pages within the 59-page document found there to find the brief notice, which rather confusingly is labeled “Page No. 15.”
Two pages later, a narrative signed by Mayor David Mayfield claims that the city is planning a tax decrease — from 71.944 mills to 71.911 mills.
The narrative does not make mention of the fact that a rate of 67.960 mills would generate the same amount of money as the 71.944 mill rate did this year.
So, while the city is proposing an estimated rate decrease of 0.459% — well within the margin that might be wiped out by appraisal changes between now and fall — it actually is proposing a 5.814% (or 3.951 mill) increase in taxes it imposes.
Reporters Phyllis Zorn and Deb Gruver contributed to this story.