Businesses get break on equipment property taxes
Staff reporter
A controversial bill that would eliminate property taxes for machinery and equipment was passed last month by both the House of Representatives and Senate.
This bill will prove a property tax exemption for certain commercial, industrial, railroad, and telecommunications machinery and equipment that was acquired by a qualified purchase or lease after June 30, 2006. The equipment must be an honest transaction and not consummated for the purpose of avoiding taxation.
Machinery and equipment transported into the state after June 30 to be used to expand existing businesses or create new businesses also may qualify for exemption.
Marion County Appraiser Cindy Magill had reported earlier this year to Marion County Commission about the proposed legislation. Concerns were voiced about the impact these exemptions would have on the county's tax revenue.
In response to concerns voiced by county officials throughout the state, the state will offset lost revenue.
"The state will look at valuation amounts certified to county clerks in 2005 and then look at amounts certified in 2007 to determine lost revenue," said Magill.
In 2008, the state will refund 90 percent of lost revenue to each county, 70 percent in 2009, 50 percent in 2010, 30 percent in 2011, and 10 percent in 2012.
What does this mean to Marion County?
"My biggest concern is there will no additional property revenue coming into the county after July 1," said Magill. "There will have to be a shift to real property to cover the lost revenue."
She added that larger counties may be able to absorb the loss better than smaller counties, like Marion County.
"There's no way to absorb lost revenue because property owners aren't required to report purchases," Magill said.
Legislators went back to the drawing board several times to finally devise a workable solution.
The bill was first introduced in January, and passed with amendments by the ways and means committee in March. Additional changes were made, and then finally passed in both the House and Senate May 10.
Representative Don Dahl, and Senators Jim Barnett of District 17 and Jay Emler of District 35 voted in favor of the exemption.
Reasons for the adoption of the bill were to make Kansas a more business-friendly state and use the bill as an economic development tool.
Previous to the adoption of the bill, cities and counties could exempt new and existing businesses for new equipment purchases based on a cost benefit analysis. The analysis measured community benefits and costs during a specific time period. This particular bill will not require any taxes on certain equipment.
