Wednesday, January 11, 2012

KDWP&T Poor Proposal

Disclaimer:  I am not anti-tax or against government, the better part of my livelihood is dependent upon revenue derived from taxes and government imposed fees.  To some it may seem like a great hypocrisy that someone whose paycheck comes from the tax payers could complain or try to avoid a specific tax.  However, I do support equatable taxation and sound fiscal policy.  

In the midst of tough economic conditions, governmental agencies have been forced to critically assess their operations and find ways to streamline operations and do more with less.  The nationwide financial crisis has been brought down to a state level by major budget cuts to state agencies. No amount of streamlining can change the fact it takes a significant amount of money to sustain operations.  The Kansas Department of Wildlife, Parks & Tourism is certainly no exception.  The Department has been realigned in an effort to improve efficiency and operations have been downsized to provide only minimal levels of service.  With insufficient funding and the prospect of further budget cuts to KDWP&T as the State Legislature convenes the 2012 session, the agency has begun looking internally for much needed revenue.  A proposal brought forward during a recent KDWD&T Commission meeting seeks to remove the long standing exemption on annual hunting/fishing licenses for those 65 years old and older.  The proposal aims to increase the amount of revenue derived from annual license sales by expanding the number sold each year.

Another reason cited for removing the exemption is to increase the states share of federal aid derived from the Federal Aid in Wildlife Restoration Act, popularly know as the Pittman-Robertson Act.  The purpose of the Act is to provide funding for the selection, restoration, rehabilitation and improvement of wildlife habitat, wildlife management research, hunter education training and the distribution of information produced by the projects.  Funds are derived from an 11% Federal excise tax on sporting arms, ammunition and archery equipment and a 10% tax on handguns.  These funds are collected from the manufacturers by the Department of the Treasury and are apportioned each year to the States by the Department of the Interior on the basis of a formula which considers the total area of the state and the number of licensed hunters in the state.   

For as long as I can remember, residents of Kansas who reach the age of 65 have been exempt from having to purchase an annual license.  The problem I have with the proposal is the agency is requesting those currently exempt not be grandfathered.  I understand the average age of the core population of sportsman is increasing and licenses sales among younger sportsman is on the decline, but to not grandfather those who have reached the exemption age and now require them to purchase an annual licenses is poor policy.  

Take my Grandpa for instance, who will celebrate his 70th birthday in September.  He has been exempt from buying annual licenses for nearly five years, keep in mind he is still required to purchase big game tags, migratory bird stamps and turkey permits.  Next to getting a senior discount at Golden Corral, my Grandpa's excitement about turning 65 was focused on the fact he would no longer be required to purchase an annual hunting/fishing license.  Under the current proposal, this privilege would be stripped and after a five year hiatus, my 70 year old grandpa would be required to purchase a fishing/hunting license.  Also, consider individuals who made a decision not to purchase a lifetime license because they were 15-20 years from turning 65 and it would not have been cost effective to spent $400-$600.   

There is no doubt the KDWP&T is underfunded and must seek out means to generate additional revenue to sustain current operations and plan for the future.  In my opinion, the proposal to remove exemptions from those 65 years old and older is not viable.  As an alternative, to increase the number of licensed hunters (to receive a greater share of Federal funding), establish a special licensing fee ($1-$2) for those 65 years old or older.  I would further recommend KDWP&T tackle the "elephant in the room" and recommend wide-sweeping change to Kansas Personal Property Tax Statutes as it relates to the taxation of boats as a means to generate revenue.

In Kansas, boats are taxed at a much higher rate than vehicles, real estate, campers and other personal property. Each county uses a marine blue book to get an appraised value of the boat. This value is taxed at 30 percent to give you the assessed value. That figure is then multiplied by the local mill levy and this is the amount of taxes you pay.  For me, on my 2008 boat ($24,000 appraised value) the Kansas property taxes would have been $1,193.  This is more property tax than I pay on both 2007 Dodge Ram ($20,000 appraised value) and 2011 Toyota 4-Runner ($44,000 appraised value).  By storing my boat in Oklahoma (primarily used at Lake Texoma & Grand Lake), I pay only $150 per year!     

Below is an excerpt from an excellent article written by Marc Murrell, published in the Topeka Capital-Journal on January 15, 2011: 

Some say boats are a “luxury” item but I guess I don’t buy it. I know guys with boats that are 15 years old or cost $500 and the taxes paid on these are still way too high comparatively. Boats are lumped in with helicopters, hot air balloons, airplanes and other property. If a guy had his own helicopter, I guess I could consider that a luxury. But you wouldn’t catch many fish out of it or pull the kids tubing.
It’s almost like you’re being penalized for having or wanting a boat, especially looking at other items taxed in Kansas. To give you an example, I paid $879.63 for taxes and tags for the 2010 tax year on a 1999 Chrysler Sebring, 2000 Mercury Sable, 2003 Chevy 2500 HD 4x4, 2005 29’ Wildcat camper and a 2006 Chrysler Town and Country van. I bought a new 2010 Lund boat last June and the taxes on the boat alone are roughly $1,200 per year!
Granted, those four vehicles and camper aren’t new and have depreciated, so here’s a more timely comparison. If I bought a brand new 2011 Chevy 2500 HD Crew Cab 4x4 with a sticker price of $52,000 I’d pay only $721.89, or nearly $500 less for something a year newer and considerably more expensive than my boat.
These exorbitant taxes are causing some boat owners to skirt or break the law according to officials with the Kansas Department of Wildlife and Parks (KDWP).
“We’ve got boat owners registering their boats in other states to avoid paying property taxes in Kansas,” said Dan Hesket, assistant director of law enforcement for the KDWP. “Boats must be registered where they are used the MAJORITY of the time, so if an individual uses their boat in Missouri, Nebraska, Oklahoma or wherever they register it more than Kansas, then that’s fine. But if that boat is used in Kansas more, they’re breaking the law.”
Hesket said the KDWP has only written a handful of tickets on improper boat registrations over the years.
“We asked a couple guys with boats registered in Oklahoma when the last time they used their boat in that state and they said, ‘Never,’ so those were pretty easy,” Hesket said.
KDWP enforcement officers have no way to prove where a boat owner uses their boat, and as long as it’s properly registered when checked, it’s fine, according to Hesket.
“We can’t do anything about it,” he said. “Several of our surrounding states don’t have any personal property taxes on boats, so apparently it’s easy to do.”
The KDWP officials estimate about 10,000 boats are registered to other states. Oklahoma has nearly half of these. This costs Kansas’ counties hundreds of thousands of dollars in taxes. Even assuming a modest figure of $300 per boat, that’s $3 million.
The KDWP loses money, too, in boat registrations to the tune of about $300,000. This money would be available for matching money from federal funding sources also, increasing this figure dramatically. Hundreds of thousands of dollars could be used to improve boat ramps, docks, restroom facilities, law enforcement and boating education.
Is it right Kansas boat owners register their boats in other states?
Do you blame them?
Not really.
I blame the high rate of taxation on boats. If personal property taxes on boats were more in line with vehicles, campers and other personal property, it would alleviate many of these problems. Granted, there will always be those who don’t want to pay ANY taxes, but that isn’t the problem. This inequity in taxation on boats causes normally law abiding citizens to find a loophole.
So what’s the answer?
“It’s got to be changed legislatively,” Hesket said. “We’ve tried in the past but failed. Boat owners need to get organized and talk to their senators and representatives and tell them they want to see it changed.”
With the 2011 session of the Kansas Legislature kicking off last week, here’s a place to start.
You often hear politicians talk about wanting to help the “Average Joe” but in many cases their hands are tied. Not in this one. Someone could introduce a bill that could lower taxes for boat owners, while at the same time generating more money for counties and the KDWP. In addition, 70 percent of registered Kansas boats are 13 years or older. Bringing the property tax into reason may spur an economic boost to the Marine Boat Dealer industry and allow boaters to be in modern, updated vessels that are safer and more practical for the environment.
Individuals wouldn't be as inclined to break the law and money would be distributed where it should be if boats were taxed in a more equitable manner, or at least on par with campers and vehicles. It might encourage more families to get outside and enjoy Kansas waters fishing and boating. Boat owners aren't asking for a free ride, just one that doesn't sink them every year when they pay their personal property taxes.                              

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