TOPEKA — It might not be a perfect bill, Caryn Tyson said, but the phase out of Kansas’ mortgage registration fee is a good move.
Opponents of the change, however, think the legislation is further from perfect than the state senator thinks.
Steve Harris, Franklin County Board of Commissioners chairman, said the bill simply amounts to an increase in county taxes.
“It’s unfortunate that it was passed,” Harris said. “Not only will that impact our county, but it will impact every county in Kansas.”
The state senate passed Substitute for Senate Bill 298 Wednesday with a 26-2 vote. The bill would phase out the state’s mortgage registration fee over a five year period, but would also raise fee prices for document processing by the county registers of deeds over a four year period. It was supported by state Sen. Tyson, R-Parker.
An increase to county registers of deeds documentation fees was not included in the original bill, and was added to help offset the amount of money the counties would lose if the mortgage registration fee was eliminated. The original bill also would have repealed the mortgage registration fee completely by July 1, but the substitute bill changed the repeal to a phase out, making the fee decrease each year until it is completely eliminated in 2019. The bill now is in the hands of the House and received an informal hearing Thursday, Tyson said.
Tyson, who voted in favor of the bill, said the increase to county fees would help offset the amount of money lost locally.
“The fee on those documents went up in order to help eliminate the mortgage registration fee going away,” Tyson said. “The bill that passed, I know it’s not perfect, it does lower the amount of fees.”
The new bill was crafted to cut some of the fees charged to individuals using the service, Tyson said. If an individual has a mortgage of $75,000 or less, she said, the bill would cap the fee amount at $125.
“People who don’t have mortgage fees will be paying the document fees as well,” Tyson said. “So everyone [who uses this service] will be paying it.”
Harris said the substitute bill allows for the county to charge more on documents, but the loss of money from the mortgage registration fee is so great it won’t make much of a difference. He said the county would lose more than one mill, and its only choice to make up for the loss would be to raise taxes, specifically property taxes.
“They were trying to offset it, but it still will not make up totally for the entire amount,” Harris said. “I believe what will happen with the increase with page documentation fees, banks will find ways to use fewer pages in the documents that they present. So that will also reduce the income over time.”
With county taxes most certainly needing to be raised if the bill becomes law, Harris said, the state legislators will be the ones to blame.
“What the state legislators have done is basically voted on a tax increase for Kansas property owners,” Harris said. “There’s really only one way to make up for the loss of revenue, and that’s through potentially the increase of taxes, and that can be laid right at the feet of the legislators.”