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Kansas Moves Up Spending Cap

by Brian Cox, Dallas, June 2016

 

A new law moves up the implementation of a spending cap for Kansas cities and counties. It's an effort to prevent assessing jurisdictions from getting windfall tax revenues when property values rise.

 

Senate Sub. for HB 2088

 

Senate Substitute for House Bill 2088 moves up the implementation of a law first approved in 2015. The spending cap will now go into effect January 1, 2017 rather than January 1, 2018.

 

The legislation stipulates that starting with next year's budgets, local governments will have to limit their spending increases to a modified consumer price index to be calculated by the state. Any money collected beyond that will have to be refunded through property tax cuts.

 

If a city or county wants to increase its spending by more than the state-allowed percentage, it will have to schedule a public election and get voter approval.

 

Exemptions

 

There is a long list of exemptions associated with Senate Sub. for HB 2088. Under the new language, exemptions will apply for property tax increases attributable to:

 

  • Construction, remodeling, or renovation

  • Increased personal property valuation

  • Real property located within added jurisdictional territory

  • Real property that has changed in use

  • Certain bond and interest payments

  • Certain special assessments

  • Court judgements or settlements of legal actions against cities or counties

  • Expenditures mandated by federal or state law

  • Expenses relating to certain federal, state, or local disasters or emergencies

  • Expenditures for increased police, fire, or emergency medical services

  • Increases based on legislative action, judicial action, or Board of Tax Appeals rulings

  • Expiration of property tax abatements, tax increment financing districts, rural housing incentive districts, neighborhood revitalization areas, or other property tax rebate or redirection programs

An additional exemption from the mandatory election requirements applies when property tax dollars levied have declined in one of the three preceding years and the proposed increase for the upcoming year does not exceed the average rate of inflation for the three preceding years.