The House Taxation Committee yesterday approved a bill that will lead to property tax increases for many Kansans by eliminating revenue-neutral and rewarding local units of government for tax increases.
HB 2745 repeals the revenue-neutral law that prompted 49 counties and 271 cities not to increase property taxes last year. Rep. Ken Corbet proposed an amendment to reinstate revenue-neutral, but only four of the committee’s 23 members voted for the amendment. Revenue-neutral is replaced by a protest petition provision that allows taxpayers to attempt to stop property tax increases of more than 3%, plus numerous loophole exemptions. The 3% limit initially exempted new construction and voter-approved debt payments, but an amendment by Rep. Robyn Essex made the bill more favorable to local governments by expanding the exemption list to include all debt payments, expiring TIF districts, other subsidy programs, and a few other items.
The bill also exempts school districts from the protest petition limit.
Another provision of the bill gives local governments a pro rata payment from a new $60 million fund if they keep their property tax increases below the loophole-ridden 3% limit.
In addition to the local governments that held revenue-neutral last year, another 49 cities and 21 counties had tax increases that were below 3%. By eliminating revenue neutrality and adding the government bonus provision, HB 2745 virtually guarantees that taxpayers in 69 counties and 320 cities will face a tax increase.
The original version of HB 2745 required voter approval to exceed the cap. Local governments said that was not workable, so the committee adopted an amendment by Rep. Dawn Wolf to eliminate the election provision in favor of the protest petition.
The amended bill is expected to be voted on by the full House of Representatives later this week.
Resurrecting failed policies
The amended HB 2745 has two features that the Legislature eliminated in prior years after determining that they didn’t work.
The revenue-neutral law passed in 2021 replaced a “tax lid” that was so riddled with loopholes that governments were able to easily avoid it.
In 2024, the Legislature repealed the Local Ad Valorem Tax Reduction program that gave cities and counties about $60 million for theoretical property tax relief. LAVTR hadn’t been funded since 2003 because it didn’t work.
