Gov. Laura Kelly on Wednesday vetoed the Legislature’s attempt to lower property taxes, rejecting a bill that would have given power to voters to block a local government budget if it spent more than the previous year.
The governor immediately announced her own plan that called for cutting taxes on vehicles, providing an incentive for local governments to reduce their spending and doubling the exemption for property taxes paid on the state’s 20-mill tax levy for schools.
The governor revealed her plan to cut property taxes in an email sent one minute after House Republican leaders – Speaker Dan Hawkins and Majority Leader Chris Croft – sent an email blasting the governor and Democrats for standing in the way of property tax relief.
And just eight minutes before the governor revealed her plan, Senate President Ty Masterson sent out an email saying that Kelly and the Democrats have proven they are not serious about cutting property taxes.
“Kansans deserve real property tax relief,” Kelly said in a statement.
“To date, the Legislature – led by a Republican supermajority – has provided only lip service on this topic and has failed to deliver on the campaign promises and talking points they have been repeating for two years.”
“This session’s attempt,” she said, “does nothing to provide that relief.”
“Instead, the truth is that this bill will only restrict the ability of locally elected officials to be nimble enough to adjust to the unique needs of the communities they serve.”
The Legislature is set to return Thursday for a three-day session to override the governor’s veto on various measures and craft a new plan for cutting property taxes.
The bill that Kelly vetoed set up a process where voters could sign a protest petition when local governments, including schools, spend more than they did a year earlier plus the Midwest consumer price index up to 3% more, whichever was less.
Typically, protest petitions are used to initiate elections. This type of protest petition would veto a local government budget outright if it’s signed by enough voters.
The bill allowed for a protest petition if it’s signed by at least 10% of the registered voters as of Jan. 1 in the taxing jurisdiction where the protest petition was filed.
Critics said the bill would have created the “tyranny of the minority” and allowed small groups of voters to stop any new spending a local government might need in the future.
The bill did not exempt bond issues, which opponents said would limit a local government’s ability to raise revenue for needs it might be facing such as police and fire.
Already, a school district and two cities in south-central Kansas have delayed plans to issue bonds after the bill Kelly vetoed Wednesday passed March 27.
There are believed to be 25 school districts and local governments that are now working on bond issues that could have been affected by the bill.
“Multiple school districts and local governments have been notified that their bonds that were within days of closing have been terminated by the underwriters, due to the financial uncertainty that this piece of legislation creates,” Kelly said in a statement.
“This means that projects which have already been approved at the local level have been stopped dead in their tracks, as their funding source has been removed due to the passage of this bill,” Kelly said.
The House and the Senate have been at loggerheads over a separate bill that would cap property value assessments or appraisals.
The House failed to pass an agreement on a constitutional amendment that would have capped assessed values at 9% or less compared to the assessed value for property in 2024.
The proposal would have gone on the ballot this Aug. 4. It would have started in 2027.
The chamber used a procedural maneuver to keep the bill alive so it could be considered when the Legislature returned for the veto session Thursday.
The House had tendered an offer that would have capped appraised values based on a six-year rolling average or a 7.5% increase, or whichever was less. It would have started in 2028.
A constitutional amendment that already passed the Senate and failed to get anywhere in the House would have capped the taxable assessed property value at 3% with several limited exceptions, including new construction or improvements.
For tax year 2027, the final taxable assessed value of the property would not increase by more than 3% compared to the assessed value of the property for 2022.
Now, the governor has entered the property tax fray. Her proposal would:
- Provide for a one-time $250 vehicle tax credit for all vehicle owners in the state when they register their vehicle. The cost to cover this credit would be paid for by using surplus funds sitting in the state’s rainy-day fund. The proposal would cost an estimated $313.4 million.
- Create a fund to be distributed to cities and counties that demonstrate an ability to manage their budgets responsibly. The state would make an annual deposit into this fund, starting with $60 million in the first year and growing the deposit by 2% each year. Cities and counties that keep their annual budget growth at a reasonable level – recommended to be no greater than 3% – would be eligible to claim a portion of this fund.
- Double the $75,000 exemption on the state’s 20-mill property tax on the appraised value of a home. Current law exempts the first $75,000 of every home’s appraised value from the tax. This proposal would created a demand transfer from the state general fund into the school district finance fund to ensure that public schools continue to receive full funding. The cost is estimated at $118 million to $120 million a year.
Republican leaders had not had the chance to comment on the plan after their initial statements criticizing the governor for opposing property tax cuts.
“House Republicans have made property tax relief a top priority for over two years,” Hawkins said in his initial statement on the veto sent at 4:15 p.m.
“And for two years, while claiming they want to address affordability and property tax relief, the governor and her allies have done nothing but stand in the way of solutions.
“It seems they would rather campaign on the problem than solve it,” he said.
Later, Hawkins called the governor’s plan “a political play in the 11th hour.”
“This is no more than a half-baked, last-second shot to save face after blocking real property tax relief,” Hawkins said in a statement.
“Kansans are being taxed out of their homes, and this proposal does absolutely nothing to change that,” he said.
“Instead of fixing the problem, it protects the very system that’s causing it and gives the taxpayers crumbs,” he said.
“The only people who benefit are the taxing authorities that keep demanding more while families fall further behind.”
Masterson criticized the veto before the governor revealed her plan.
“Today’s veto continues to show our state’s desperate need for a Republican governor,” Masterson said in a statement that went out at 4:08 p.m., seven minutes after Kelly announced the veto but before she revealed her plan in an email at 4:16 p.m.
“Laura Kelly and the Democrats have proven they are not serious about solving the property-tax crisis that is driving Kansans out of their homes.
“Enough is enough,” he said.
“When I’m governor, the runaway appraisals and out-of-control local spending will come to an end,” Masterson said.
Later, Masterson called the governor’s proposal “completely disingenuous.”
“Earlier today, I said she’s not serious about reining in skyrocketing property-taxes. Her veto of real property-tax relief that we spent all session working on and this last minute ‘plan’ continue to prove my point,” he said.
“Our state desperately needs a Republican governor who takes this crisis seriously.”
