Kansas Republicans say changes to 'the most hated tax' are top priority for next year

For months Kansas Republicans campaigned on promises to take action on property taxes as soaring home values in recent years enraged voters.

Now comes the time to deliver.

After Republicans bolstered their supermajority in the Legislature in last week’s elections, lawmakers have begun weighing plans for the 2025 session that begins in January. They are emphatic that property taxes sit at the top of the to-do list.

“We’ve sort of got a mandate from voters,” said Sen. Virgil Peck, a Havana Republican who sits on the Senate Tax Committee. “The property tax relief issue, I think, is urgent. That is the most-hated tax in the state of Kansas.”

But whether they can coalesce around a single proposal or package remains unclear.

GOP lawmakers in recent sessions have been divided among themselves over the best way to combat property tax frustrations. Some favor cuts and limits to the statewide mill levy that helps fund public schools, while others want to limit annual property valuation increases – a plan critics warn could lead to sharply divergent tax bills between neighbors.

“Property tax relief is a top priority in 2025,” Mike Pirner, a spokesman for Senate President Ty Masterson, an Andover Republican, said in a statement. “The details of that will be ironed out in the weeks ahead as we approach session.”

Republicans are hopeful they can enact some form of property tax change. The continuing House and Senate GOP supermajorities mean the party can potentially override vetoes by Democratic Gov. Laura Kelly.

Kelly went back and forth with lawmakers over tax cuts this spring as she vetoed multiple bills over cost concerns. The governor and the Legislature eventually settled on a package that included a modest reduction in income tax rates with expanded tax deductions and exemptions. They included only a single substantial property tax provision, which exempted the first $75,000 value of a home from the statewide mill levy. Previously, the first $40,000 was exempt.

While Republicans had a supermajority this spring, a handful of GOP lawmakers voted against overriding Kelly’s vetoes to the frustration of party leaders. Several of them will not be in office next year, however, potentially making it easier for lawmakers to enact property tax changes over the governor’s objections.

Kelly has appeared cautious about entertaining any additional tax cuts in 2025. The governor told The Kansas State Collegian, the K-State student newspaper, earlier this fall that she has asked lawmakers to “hold off” on more tax cut proposals until the full financial effect of the just-passed legislation is felt.

A Kelly spokesperson echoed that sentiment in a statement on Thursday.

“The full impact of the income tax cuts from Senate Bill 1 will likely not be reflected in state revenues until the latter half of 2025 at the earliest,” Kelly spokesperson Grace Hoge said, referring to the tax cuts bill.

“Given this timeline, it is important we continue to prioritize long-term fiscal responsibility and exercise caution with any potential future tax cut proposals.”

‘Room for improvement’

Three variables are at the core of the property tax system and help determine what homeowners pay. The first is the appraised value of a property, based on its fair market value. Values of many homes have risen sharply in recent years to the consternation of taxpayers and homebuyers.

The second is the assessed value of the property, or the percentage of the appraised value that is taxed. In Kansas, the assessment ratio for different categories of property is set in the state constitution. Residential property is assessed at 11.5% of appraised value, agricultural land at 30% and commercial property at 25%.

The third is the mill levy. Counties, cities, and school districts each set their own mill levy, with one mill constituting $1 per $1,000 of a property’s assessed value. Kansas also has a statewide levy of 20 mills that helps fund public education.

Some state senators have championed a constitutional amendment that would limit annual valuation increases on residential property. The Senate in 2023 passed an amendment that would place the limit at 4%.

The plan wouldn’t guarantee local property taxes, but would curb large valuation spikes year to year. Local governments would still be free to raise mill levies to compensate.

“As with most systems, there is room for improvement in the appraisal process,” Sen. Caryn Tyson, a Park Republican who chairs the Senate Tax Committee, said. Tyson has supported a constitutional amendment in past sessions.

“There is an effort to make improvements,” she said. “It will take some time.”

The amendment, which would require a statewide vote if approved by the Legislature, concerns local officials. They fear the limits would lead to imbalances within neighborhoods if property values only reset to market value when a home is bought or sold.

Individuals and families who stay in their homes the longest would benefit the most from slow, predictable valuation increases. Those who move more frequently would surrender any tax advantage.

Over time, similar homes in the same neighborhood could have dramatically different valuations depending on how often they’ve been sold.

“We worry about that because we want people to invest in Kansas … and we’re worried if the market gets too imbalanced, then you’re going to be less likely to want to buy property, invest in property, renovate property, all that good stuff that comes with that,” said Spencer Duncan, government affairs director at the League of Kansas Municipalities.

Revenue-neutral concerns

How far lawmakers go may depend on how much friction they are willing to risk with their local governments and school districts. Most property taxation occurs at the local level, with cities, counties, schools and other entities relying on the revenue to help fund services.

“I disagree that all municipal governments are operating as efficiently as possible,” Peck said. “Some are, and kudos to those who are. And some of them need to answer to taxpayers a little bit stronger than what they do.”

Duncan said municipalities in general want the state government to not impose property tax changes it’s not willing to abide by itself. The revenue-neutral rules lawmakers require localities to follow stand out as a prime example.

State lawmakers have added pressure and scrutiny to city, county and school district budgeting through the revenue neutral requirement, a process that installs increased disclosure and shortened timelines whenever a taxing authority expects to collect property tax monies higher than in the year prior. In many Kansas City communities, tax rates have stayed fairly flat, but annual bills have still increased as home values soared.

One complication: Costs for local governments, especially larger ones, will always rise as inflation boosts expenses on goods and as government employees receive even the most modest cost-of-living adjustments. The state law does not take such factors into account.

The state requirements have led to tense and detailed discussions at the local level about property taxes as a means to fund essential public services.

In Wyandotte County, for example, elected leaders governing two major taxing authorities — the Unified Government and Kansas City, Kansas Community College — decided to craft smaller budgets for 2025.

For the Unified Government, which funds Kansas City, Kansas, police and fire, the county sheriff’s office and other key services, commissioners cut roughly $15.4 million in proposed spending, bucking the advice of top staff, in response to pleas from residents about the local tax burden.

Mill levy cut?

Rep. Adam Smith, a Weskan Republican who chairs the House Tax Committee, said he is looking at several possible plans for the upcoming session. Smith isn’t a fan of the constitutional amendment on valuations, raising concerns about value imbalances within neighborhoods.

Smith instead plans to focus on cutting the statewide mill levy and possibly making the levy revenue neutral. The statewide mill levy generates upwards of $800 million annually.

“For three or four years now we’ve had revenue neutral policy in place for local governments but we haven’t done that ourselves at the state level,” Smith said.

Smith said the exact size of a mill levy reduction would depend in part on the next consensus revenue forecast. He said he would like to see the levy set at around 17 mills if possible.

The forecast, a public projection of how much revenue Kansas is expected to collect in the coming months and years, is developed by state officials and economists and released twice a year. A new forecast is expected next week.

Smith acknowledged concern that cutting the levy could endanger funding for K-12 schools but said any reduced revenue from the levy would be backfilled by general funds.

Leah Fliter, a lobbyist for the Kansas Association of School Boards, said her organization is keeping a close eye on any effort to cut the statewide mill levy. She said that education officials often receive assurances that any lost revenue would be made up by general revenue.

“But if you have a recession or a depression or something like that, what’s the first thing that happens – it’s we start trimming the general fund,” Fliter said.

Even lawmakers prepare to sort through concerns and potentially controversial proposals, Republicans describe an almost overwhelming demand from constituents to act on property taxes.

Rep. Mike Thompson, Bonner Springs Republican, advised the Wyandotte County-KCK Unified Government commissioners during a decisive August meeting to stem the rising tax bills, saying residents in his district cannot afford them.

“It’s the same story,” Thompson told The Star by phone Thursday.

“When I go door to door, I hear nothing but property tax. … We’re crushing the people, especially elderly people.