Opinion

L&T Publisher Earl Watt

A solid group of concerned citizens attended the Seward County town hall meeting Thursday, and they were reacting to their recent tax RNR statements that listed the potential of a 29 mill tax increase for Seward County. I’ll explain the 29 mills later.

The mill increase would result in a 71 percent increase in property taxes levied by Seward County alone.

The City of Liberal has a zero percent change in mill levy proposed, Seward County Community College is proposing a 0.7 percent, less than 1 percent, increase, and USD No. 480 is proposing a mill levy increase of 3.9 percent.

The massive increase at Seward County is mostly driven by a tax appeal case by Arkalon Energy that was already awarded a $1.2 million rebate for being overtaxed in 2018, 2019 and 2020. That was basically $400,000 per year for three years. If that same rate is carried out for 2021 through 2025, that would be an additional $2 million if the current rate adjustment is upheld in court.

That would make the total pay back to Arkalon Energy, which operates the Conestoga ethanol plant, $3.2 million.

In the off chance Arkalon Energy is awarded every dime they claim, and only in that drastic scenario would the number even get close to the $5.9 million Seward County is looking to raise through property taxes in an effort to make a one-lump sum payment if a decision is reached.

Indications during the town hall were that if a decision is not reached, Seward County needs to increase taxes by the drastic rate just in case that happens to be the decision later.

These are two very unlikely scenarios, both that Arkalon would be awarded their maximum claim on every item listed in their appeal, and that whatever amount is awarded that a payment would be demanded by a judge to be paid in full on the day of the verdict.

First, both Seward County and Arkalon can appeal the district court ruling. A change of venue has the case playing out in Sedgwick County.

That could keep the case in court for up to two more years.

Second, commissioners indicated at the meeting that they have started planning for the pay back and have set aside $1 million and are expected to set aside another $500,000 this year.

So why request the full $5.9 million when all indications are the final number won’t be close to that number, and even if it were it won’t all be due on Day 1?

Kelly Hill presented the idea of bonding the amount and paying that back over time.

Others have proposed negotiating with Arkalon Energy on a three-year payout. Either one would drastically reduce the proposed mill levy increase.

So how does the increase reach 29 mills when the county says it is a total increase of 25.868?

Because to stay revenue neutral, or to bring in exactly the same amount of revenue next year they did this year, the rate would be 40.49 instead of the mill levy rate of 43.414, which was last year’s rate. How? Because property values are up county wide, mostly in residential. When that happens, it means the mill levy can decrease to get the same amount of money from the taxpayers because their property value is higher. It’s pretty simple, 1 percent of 10 is higher than 1 percent of nine.

In other words, if the county left the rate at 43.414, it would still result in more money for the county.

This counters the argument that was made during the commission meeting that stated the need for the increase beyond the tax appeal was inflation. Keeping the mill levy the same was the equivalent of an additional $19,000 per mill. Would that have been sufficient for inflation? It would have resulted in an increase of $824,866 for the county, or a 7 percent increase without changing the mill levy at all.

In addition to the $824,866, the county is asking for 4.868 mills more for a total revenue of $1.4 million. Add that to the naturally occurring $824,866, and without the tax appeal case the county is asking for $2.232 million in more revenue.

Current inflation rates are running at 2.7 percent nationwide. The county is asking for a 19.4 percent increase in revenues not counting the tax appeal case and not counting road improvements, because in addition to the mill levy increase, the county will be proposing a half cent sales tax increase designed for road and bridge improvements which will generate $2.5 million per year for the next 10 years for a total of $25 million. Currently the county budgets $3.7 million per year to service the 683 miles of county roads and six bridges. That equates to an annual investment of $5,417 per mile per year. Should the half cent tax pass a public vote, that number would jump to $9,077 per mile per year.

While the county listed projects and investments it has made, it has not presented a plan for how the additional $2.5 million would be applied per year to what projects or equipment.

Both plans, the property tax and the sales tax, are based on what appears to be very high estimates of need without detail on use or options in the case of the tax appeal case.

And the request is for all of it now.

Would it not be more prudent to divide the real needs and realistic pay back plans?

At least explain how the proposed budget needs to be 41 percent higher between the property tax not including the tax appeal case and new sales tax. Even if the tax appeal never existed, a 41 percent increase in revenue to the county at one time is massive by anyone’s standards.

Whether past commissions did or did not practice fiscal responsibility, trying to address all of these issues and only claiming bad roads and inflation as the root cause won’t be enough to convince the public.

Transparency is not a campaign slogan. Vague increases will not suffice. These may be necessary, but we don’t have enough information yet.