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June 15, 2013
Sedgwick County eyeing tax abatement for tornado victims
Dion Lefler, The Wichita Eagle
Sedgwick County commissioners say they’re interested in exercising some newfound authority to abate property taxes billed on south Wichita-area homes after they were destroyed in an April 2012 tornado.
But they’re not sure yet how exactly that will work.
A new provision in state law will allow county commissions to abate property taxes for the rest of the year when the property in question is mostly or completely destroyed in a disaster.
“I’m glad we got that provision so they can do that,” said Gov. Sam Brownback, who had promised measures to help the tornado victims when he toured the shattered Pinaire Mobile Home Park after the tornado. “Those people lost everything they had, so that’s great that that could help people.”
The provision was added at the last minute to the state tax bill that passed the Legislature early this month and was signed into law by Brownback on Thursday.
On Friday, commissioners said they’ll start work on a process to relieve the tornado victims’ taxes.
“There does seem to be a certain inequity in requiring people to pay (property taxes) for property that no longer exists,” said Commissioner David Unruh. “I think if we get requests, we’ll have to evaluate them in the best way we can. I really need to see the law and what it allows us to do and if there’s any restrictions on it.”
In addition to Unruh, Commissioners Jim Skelton, Karl Peterjohn and Richard Ranzau also expressed interest in coming up with a process to relieve taxes for the families who lost their homes in the disaster. Commissioner Tim Norton was out of the office Friday, but has previously expressed his strong support. A tortuous course.
The new law fixes a problem that was brought to the fore in a Wichita Eagle story last December, said Sen. Michael O’Donnell, R-Wichita, a key player in shepherding the proposal through the Legislature.
The Eagle reported on homeowners who were billed for a year’s worth of property taxes, although their homes had been destroyed in the tornado that hit the south Wichita-Oaklawn area the night of April 14, 2012.
County officials said at the time they felt that taxing the destroyed homes was unfair, but they had to because of a state law that sets the appraised value on Jan. 1 as the basis for the full year’s property tax.
Now that that’s changed, “I certainly hope they go ahead and abate these people’s taxes,” O’Donnell said. “This was a tornado affecting Sedgwick County, and Sedgwick County needs to have the tools to help these people.”
The bill took a tortuous course through a legislative session marked by deep disputes over tax policy and budget issues.
O’Donnell and fellow Wichita Republican Mike Petersen led the charge in the Senate with Wichita Democrat Oletha Faust-Goudeau.
Reps. Joe Edwards, R-Haysville, and Brandon Whipple, D-Wichita, pushed for a separate bill in the House.
The Senate passed its bill 40-0 in a rare show of bipartisan unanimity and the House bill got a committee hearing.
But both bills languished as House members grappled with larger statewide issues of rewriting income tax policy and extending part of an emergency sales tax passed during the recession in 2010.
The breakthrough came late in the session with the broader tax bill facing an uncertain vote in the House, O’Donnell said.
He said he and Petersen offered their bill as a way to potentially sway some Sedgwick County representatives who were on the fence to vote for the tax bill.
He said they contacted the head of the House tax negotiating team, Rep. Richard Carlson, R-St. Marys, who agreed to attach the tornado relief bill as a provision in the bigger tax bill.
The full bill passed in the early morning hours on June 2, after a Saturday-into-Sunday legislative marathon that marked the 99th and last day of a session that had been expected to run 80 days.
Matthew Ratlief, who was billed $189 for property taxes after his family’s mobile home was destroyed, expressed delight that the state took action to help him and his former neighbors.
“Right on!” he said. “That’s awesome.”
Ratlief, a tattoo artist at the Body Ink and Steel parlor in Newton, rode out the tornado in a harrowing night in a shelter at the Pinaire park with his wife Shay and son Caine, then 2.
The family emerged to find that their home and virtually all their possessions had been destroyed. They now live in an apartment and have struggled financially as they try to replace their lost belongings.
The Ratliefs are the kind of people that the county needs to step in and help, said Skelton, who represents the area at the heart of the tornado damage.
“A lot of those people don’t have a lot of money,” Skelton said. “Taxing them on homes that were destroyed just makes it that much harder for them to get back on their feet.”
Ratlief said he plans to apply for a tax abatement as soon as the county can come up with a mechanism for it.
The commissioners said they expect the process to begin with meetings between county management staff and officials of the appraiser’s office, the county treasurer and the county clerk, all of whom will probably need to be involved in designing the policy and mechanism to abate the taxes.
“In initial discussions, there was a lot of interest and sympathy for trying to come up with an equitable solution,” Peterjohn said. “I don’t think that’s gone away.”
Abating the taxes would cost the county some money, but how much isn’t known yet.
According to the appraiser’s office, the tornado completely destroyed 134 mobile homes and 11 site-built houses.
The total damage from the tornado was estimated at $146«million, enough to trigger federal disaster aid to help the state and city clear debris and restore public services. But the damage was not enough to qualify for direct federal assistance to the displaced residents.
The cost to abate roughly eight months of taxes for the affected homeowners would be only a very small fraction of the overall cost of the disaster, officials said.
Ranzau said he thinks the county will probably end up with additional property tax revenue in the end, because a lot of the destroyed mobile homes were very old and the replacement homes will likely be newer models that will increase the tax base.
All the commissioners agreed that there will need to be some sort of application process and a way to check claims to make sure the tax abatements go to those who suffered real losses.
For example, mobile home owners who got an insurance settlement and quickly replaced their homes probably won’t qualify for an abatement, because they’d be liable for taxes on the new home anyway, commissioners said.
“The details need to be worked out,” Skelton said. “We have the list and we know what homes were destroyed. That’s a place to start.”
More work ahead
The state lawmakers acknowledge that although the bill they passed is adequate to address the south Wichita problem, it’s a less-than-perfect solution going forward.
Their thinking was that Sedgwick County, with a large population and tax base, can probably afford to absorb the lost tax revenue on the relatively small number of low-value homes that were destroyed in the April 2012 storm.
But if the next such incident happens in a poor and small-population rural county, it’s unlikely that local commissioners would be able to give up the tax revenue without busting their budget.
The senators and representatives who worked on this year’s effort said they plan to come back at the next session in January with a bill that would allow the state to pick up the tab for abated property-tax income in future disasters.
That’s more like the approach that was taken in the House version of the disaster tax-relief bill this year.
That bill would have set up a system for homeowners to claim a state income tax credit to offset property taxes they paid after the destruction of their home.
O’Donnell said if the Senate plan hadn’t gotten through as part of the tax bill, the people affected by the April 2012 storm would have been out of luck.
“If we waited until the next session, we’d have been two years out” from the tornado, he said. “That would have been too late.”
Paid for by Michael O'Donnell for Sedgwick County, Linda Kizzire, Treasurer.