The Senate Committee on Assessment and Taxation on Thursday advanced a bill to the full Senate that would effectively end Kansas’ tax lid law but substitute another in its place.
Senate Bill 294, which would take effect Jan. 1, 2021, if passed, advanced from the taxation committee after an hour-long hearing Thursday that involved a number of other bills. The tax lid law was enacted in 2015 and took effect with the 2018 budget year, which municipalities put together in 2017. The law limits property tax increases beyond the Consumer Price Index without a public election.
Labette County commissioners have been vocal about disliking the law.
SB294 is considered a transparency bill but it essentially forces cities and counties and certain other taxing entities to keep budgets even from year to year. Going above a revenue neutral rate, a term added to the bill on Thursday, would require notification of affected property owners and a public hearing. Failure to follow the procedures in the bill, if it becomes law, means the county or city would have to refund to property owners the taxes collected over the revenue neutral rate.
The committee approved several amendments to SB294 on Thursday, according to an audio recording of the hearing on the Legislature’s website. One introduced by Sen. Dan Goddard, a Parsons Republican, would exempt from complying with the law those taxing entities whose budgets collect less than $20,000 from property taxes. The idea is this would apply to cemetery districts or other entities with limited funds or means to comply with the law. The exemption was originally $5,000 before Goddard raised it in his amendment. Sen. Tom Holland, a Baldwin City Democrat, asked about the need for the amendment because the bill allows counties to take on that burden for taxing entities anyway.
Holland thought taxpayers should know every entity that has a hand in their pockets.
Committee members heard that Kansas has 4,100 tax entities. Of those, 400 raise $10,000 or less from property taxes and 750 raise $50,000 or less.
The committee passed Goddard’s amendment.
Another amendment changed dates that relate to the county clerk. One change gave the county clerk until June 15 to calculate revenue neutral rates for each taxing subdivision and gave governing bodies until Sept. 20 to certify budgets to the clerk.
Another amendment introduced by the committee chairperson, Sen. Caryn Tyson, a Parker Republican, would repeal the 2015 tax lid law, with SB294 replacing it. The committee approved the amendment.
Committee members thought it risky. Sen. Julia Lynn, an Olathe Republican, said if the tax lid law is removed and SB294 fails to pass the state is where it was before the tax lid law was in place.
Tyson said she understood the risk.
“I would have preferred to have it in place, but I am showing an effort of good faith and we’re hoping that the other side will do that too, the opposition of the bill,” Tyson said.
Sen. Holland said he supports the amendment and wanted to visit with his constituents before it is discussed on the Senate floor.
The committee also removed schools from having to comply with SB294. Sen. Tyson said K-12 schools are funded by a statewide 20 mill levy and they have additional taxes levied locally for capital improvements and the local option budget. They fall under other guidelines as far as elections and law, she said.
Sen. Holland said this would avoid problems because such a change may move the state out of compliance with school finance rulings.
Sen. Vic Miller, a Topeka Democrat, said he was concerned that the bill does not address growth. The bill was patterned after similar measures in Utah and Tennessee, but Miller said Utah’s bill factored in growth. He said he would support moving the bill out of committee but will try to fight for that language another day.
“I hope that you will reconsider that. We have done everything we possibly can to make this the best legislation possible. I think we’re moving a good bill out of committee,” Tyson said.
On Friday, Sen. Goddard said the bill could be further amended on the floor of the Senate and it runs the risk of not passing.
He said he hadn’t heard much from constituents on SB294.
“I’ve heard more on Senate Bill 295, which is the one that would not allow an assessed value to increase as the result of normal maintenance (on a home). And that bill also passed out of committee.”
The Kansas Association of Counties, which lobbies for counties in the Legislature, wants to study SB294 as amended.
Bruce Chladny, KAC executive director, and Jay Hall, legislative policy director and general counsel, said the KAC and its member counties have advocated for the removal of the tax lid. Amendments made to SB294 would do this and the KAC supports that amendment.
“KAC and its member counties are still evaluating the numerous other amendments that were introduced while the bill was being worked to understand the potential effects that this legislation would have on counties overall, as well as on county clerks, who would be tasked with implementing this legislation if passed,” the KAC statement concludes.