Vowing that “we’re going to give tax relief”, Kansas House Speaker Dan Hawkins floated a property tax cut proposal to reduce the state-mandated 20 mill rate for school funding, filling the gap with revenue from the State General Fund (SGF).
Hawkins also took aim at the Local Ad Valorem Tax Reduction Fund (LAVTR), unfunded for the last 20 years. Before 2003, the state provided revenue to counties to theoretically reduce property taxes. The speaker charged that counties banked the state funding instead of using it for property tax relief, labeling it a “slush fund for counties,” and promising to repeal the law in the 2024 Legislature.
Hawkins called for legislation on the measures within the first two weeks after the House returns in January.
The two initiatives may put the speaker and his colleagues on election-year collision courses with school districts, wary of a state freed from the 20-mill property tax commitment to fully fund schools post-Gannon, and counties urging lawmakers to fill the coffers of the LAVTR in the wake of statewide condemnation of rising property assessments and taxes.
Speaker Hawkins appears undaunted at the prospect of legislative battles next year:
“Property taxes are the most hated tax and we want to be able to get tax relief directly to Kansas homeowners. One of the best ways to do that is by trimming the state’s 21.5 mills. (1.5 mills goes for construction and maintenance of buildings at state universities, veterans facilities, state hospitals and the schools for the blind and deaf.) Folks are strapped right now due to Bidenflation and skyrocketing valuations, so trimming a couple mills at the state level then backfilling from the SGF for what we need to sufficiently support schools will truly give folks some significant property tax relief that I know they need right now.
“The counties are stirring folks up over the LAVTR like it’s the answer to property tax relief when the truth is, it never worked to lower property taxes in the first place because counties didn’t use it for that. Property taxes rose at a higher rate when LAVTR was funded than when it wasn’t and that money was used instead to simply pad the county budget bottom line. Right now, LAVTR is simply an excuse for them to fall back on instead of taking a hard look at spending, so that legislation really just needs to be repealed at this point.”
County property tax history confirms Hawkins’ position that counties didn’t use the money to reduce property tax. Counties increased property tax by an average of 7.6% over the last five years they received LAVTR funding, but just 3.9% over the most recent five years, according to data from the Kansas Department of Revenue.
Reducing the mandatory school tax would have no effect on school funding. The state uses the money generated by the 20 mill tax to provide a portion of state funding, so collecting less from that source just means that more would be provided from other tax revenue that flows through the state General Fund. The money that schools receive would not change.