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Kansas Property Tax Limits

by Brian Cox, Dallas, February 2016

 

Property taxes are the largest source of tax revenue in Kansas. A new law that limits property tax increases is set to be implemented on January 1, 2018. The bill's sponsor is now working to have the law become effective earlier on July 1, 2016.

 

Senate Bill 316

 

SB 316 mandates that any revenue generated by increased property valuations over and above inflation must be either put to a public vote or returned to taxpayers. It states, "the governing body of a city or county must conduct an election for an increase in property tax to fund any appropriation or budget." There are exemptions such as spending to cover bond payments, finance new infrastructure, improve roads, or pay legal judgments.

 

The law is in response to data collected from the Kansas Department of Revenue Property Valuation Division, which shows that property taxes increased 112% between 1997 and 2014. One reason for the increase in the property tax levy is the phase-out of taxes on business machinery and equipment purchased after June 30th, 2006, which partially shifted the tax burden to other taxpayers. The legislature is also phasing out a mortgage registration tax in favor of lesser fees to counties, further shifting the tax burden to make up for lost revenue.

 

Both Sides Speak Out

 

The Kansas Association of Realtors said enacting the restrictions earlier is its top legislative priority. The plan is also supported by the anti-tax group Americans for Prosperity.

 

Critics of the property tax restrictions contend that the state is infringing on the power of locally elected officials to manage local affairs. Groups representing city and county officials plan to ask legislators to repeal the restrictions before they take effect.

 

At Marvin F. Poer and Company, we are in favor of legislation that would lessen the burden on the taxpayer. However, this legislation could ultimately pressure county appraiser’s offices to be more aggressive in their appraisals to make up for the loss in tax revenue. We will continue to monitor this situation and report the final legislative actions once enacted.