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A setback for Kansas counties

New legislation will reduce revenue

By The Mercury

It wasn’t a surprise, but it was nevertheless disappointing that Gov. Sam Brownback on Wednesday signed legislation that will eliminate the mortgage registration fee over several years.

The new law, which had been supported by the Kansas banking and real estate lobbies, will save homebuyers who take out mortgages $2.60 on every $1,000 they borrow.  On a $100,000 loan, they would save $260. That’s not bad, but neither is it much of a windfall given the total costs involved.

Unfortunately, changing a law that has been on the books for decades — and that did much good at comparatively little cost — will likely hurt most Kansas counties more than it helps homebuyers.

That’s because revenue from the fees has gone to the counties in which the deeds are registered, and that explains why Kansas counties overwhelmingly opposed the legislation. Even provisions written into the law to offset some of the losses will leave many counties to decide whether to raise property taxes or scale back services. As was the case in many of the state’s 105 counties, the Riley County Commission formally opposed the legislation.

The governor’s signature on this bill roughly coincided with a more detailed report from Moody’s Investor Services, which last month downgraded Kansas bonds. Moody’s took that step largely because in its view, the zeal with which the Legislature has cut taxes has undermined the state’s financial integrity. And although the governor has insisted that the tax cuts will spur economic growth, Moody’s noted that economic growth in Kansas is not keeping up with the pace of most neighboring states.

Moody’s didn’t go so far as to call doing away with the state income tax a credit risk, but it did say that “eliminating a tax that has been in place for many years and has accounted for a large share of revenue entails risks.”

Unfortunately, some of those risks will be increasingly borne by local governments, which will find themselves cushioning the blow on residents who’ve relied on state services and programs that, because of the lack of revenue, are being cut back.

Now, apparently not content to slash state revenue, the Legislature and Gov. Brownback have taken to cutting revenue counties rely on. In eliminating the mortgage registration fee, the Legislature and governor have only added insult to injury.

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