County leaders want the state to reinstate the Local Ad Valorem Tax Reduction. The program was introduced to help local governments during difficult times, but the state has withheld funding for the past 20 years. Kansas, grappling with economic challenges, introduced the Local Ad Valorem Tax Reduction (LAVTR) in 1937 to alleviate the burdens on local governments during the Great Depression. For the last 20 years, the state has withheld that funding. Today, a measure to reinstate the funding is gaining traction. During the economic turmoil of the 1930s, the state faced a dire situation, with Kansas being hit especially hard by the Dust Bowl. LAVTR was conceived to stabilize and reduce local property taxes by channeling surplus state sales tax revenue to struggling counties. By its design, the funds paid for such services as police and fire protection, parks, streets, jails, elections, and many other services county governments are required to provide. Allen County would have received $529,100 in LAVTR funds in the most recent payout, had LAVTR been in effect. In 1965, the funding became law. Considered a demand transfer, two payments were made – Jan. 15 and July 15 – based on the formula set in statute: 65% is distributed based on population, while 35% is distributed based on property tax valuations. The 1990s brought changes, with amendments allowing reductions in transfers if the state’s ending balance fell below a certain threshold. The early 2000s saw the end of increased distributions, setting the stage for a steady decline in LAVTR funding. In 2001, the amount for distribution in fiscal year 2002 was set at $27,340,335.50. In 2002, the amount for distribution in fiscal year 2003 was set at $26,246,722. Less than half of what it was supposed to be. Between 2001 and 2022, Kansas counties have lost over $1.7 billion in revenue from LAVTR alone. “While LAVTR is the focus, we’ve also lost out on billions in County and City Revenue Sharing funds and Special City-County Highway Fund (SCCHF),” noted Allen County Commissioner Bruce Symes. “All three lost amounts total $3.5 billion to counties and cities.” THE INTENT behind LAVTR was not to eliminate local property taxes entirely, but to provide stability and potential reductions during economically favorable periods. However, the lack of funding over the years has shifted the burden back onto property taxpayers. Fast forward to 2023, and there is a glimmer of hope for LAVTR. On March 28, 2023, the Kansas House debated LAVTR funding as a potential budget amendment for the 2024 fiscal year. The proposed amendment, introduced by the House Minority Leader Vic Miller, aimed to fully fund LAVTR for the first time since 2000. Despite passing decisively with an 83-40 vote, the lack of support from the House majority party leadership and little momentum in the Senate has left the future of LAVTR uncertain.
Source: The Iola Register