(Updated to reflect final action vote with comments on Thursday from the House speaker and lawmakers)
The Kansas House on Thursday agreed to a plan giving taxpayers power to fight local government spending in an effort to hold down their property taxes.
The House voted 76-45 to pass the bill with 11 fewer votes in support of the legislation than it had when the House advanced it to final action on Wednesday.
The bill also was eight short of the 84 needed to override a veto. Four House members – three Democrats and one Republican – were absent and didn’t vote.
The bill gives taxpayers a tool – a protest petition – to force local governments to hold their spending down when property tax revenues are more than 3% from the year before. Schools are not included.
As the bill was approved by the House, it no longer includes a $60 million fund for local governments that held their property tax revenues below a 3% threshold.
The House also amended the bill to lower the bar for the number of signatures required to get a protest petition and void the local budget when property tax revenues grow by more than 3%.
Unlike typical protest petitions that initiate elections, the bill allows taxpayers to sign a protest petition to veto a local government budget that raises more than 3% in property tax revenues from a year earlier if enough voters sign the document.
The bill allows for a protest petition if it’s signed by not less than 5% of the voters who cast a ballot in the last general election for secretary of state in the local taxing jurisdiction where the budget was approved.
As originally proposed, the bill allowed for a protest petition if it was signed by not less than 10% of the voters who cast a ballot in the last presidential election in the local taxing jurisdiction where the budget was approved.
If a sufficient number of voters sign the petition, the local government’s budget would be voided and it would return to the maximum 3% increase allowed under the law.
The bill eliminates a new process enacted in 2021 that requires local cities and counties to hold a public hearing and vote when they want to collect extra revenue from a so-called windfall that comes with increased property values.
“This bill tackles the problem at its source,” House Speaker Dan Hawkins said in a statement after the vote.
“By setting clear limits and giving voters real authority to push back when local governments want to spend more, we’re putting taxpayers back in control.”
Passage of the House bill came a day after the Senate approved a constitutional amendment that would cap property tax assessments at 3% with some limited exceptions.
The two chambers are expected to run each other’s property tax bills with the goal of resolving their impasse over how to best address property taxes.
Republican state Rep. Samantha Poetter Parshall of Paola opposed the bill because it eliminated the so-called revenue neutral process and excluded revenue from the expiration of tax breaks when the property returns to the tax rolls.
While there were efforts to improve the bill on the House floor, Poetter Parshall said the bill remained “deeply flawed.”
She said eliminating the revenue neutral hearings reduced transparency and accountability.
She said allowing local governments to recover revenue from tax-exempted properties as they come back on the tax rolls allows them to collect money outside the 3% cap.
“I refuse to vote for legislation that guarantees property tax increases, pads local governments pockets with corporate welfare disguised as economic development and permanently straps every day Kansans with the bill,” she said.
Democratic state Rep. Linda Featherston of Overland Park opposed the bill without the $60 million fund that was intended to encourage cities to reduce property taxes.
“I have long advocated for the state to fill the unfunded mandates it places on local governments in order to reduce property taxes,” Featherston said.
“With the removal of that funding, it is clear (the bill) only serves to interfere with my local government’s ability to fund affordable housing, law enforcement and quality-of-life amenities such as the neighborhood pool that my constituents have made abundantly clear that they want rebuilt,” she said.
Republican state Rep. Adam Smith of Weskan, chair of the House tax committee, said local governments’ claims of reducing the property tax rate – as property values climb – don’t necessarily translate into an actual reduction in property taxes paid.
“We need to get away from talking about mill levies because mill levies can be a little disingenuous,” Smith said during floor debate on Wednesday.
“If you keep the mill levy the same, it kind of implies you haven’t raised taxes. If you lower the mill levy, it kind of implies that taxes are going to go down,” he said.
“That’s simply not the case,” he said.
“Taxpayers understand and they can relate to dollars. They don’t always understand what a reduction of two mills or an increase of two mills would mean for their taxes.”
Smith said the bill was an attempt to “thread the needle” to find support from a broad cross section of the Legislature.
“With almost every single provision in this bill, there are folks that feel it goes too far, and there are people who feel it doesn’t go far enough,” he said.
As it came out of a committee, the bill created a $60 million fund that would have been allocated among the local governments that held their property taxes under 3% growth.
The $60 million would have been renewed annually with 2% growth.
But lawmakers removed that from the bill, saying the state couldn’t afford the extra spending.
They further said local governments shouldn’t have to be enticed to keep their property taxes in check.
“When you actually think about it, we’re actually subsidizing lower property taxes with higher state sales taxes and income taxes, and I just don’t really think that makes sense,” said Republican state Rep. Brett Fairchild of St. John.
“I just don’t really think that’s the best approach to deal with the issue of property tax reform,” Fairchild said.
Smith said the $60 million fund was included in the bill to make up for past decisions that have cost local governments money over the years.
He noted last year that the Legislature passed a bill that exempted certain personal property from taxes that cost local governments between $13 million and $14 million.
In 2014, Smith said the Legislature eliminated the mortgage registration fee, which reduced revenues at the local level by about $45 million, although lawmakers did allow for an increase in filing fees that offset that amount by about $25 million.
He also alluded to a law passed years earlier that exempted industrial machinery and equipment from property taxes that cost about local governments about $185 million.
The $60 million relief fund, he said, was a way to partner with local governments and acknowledge how past state actions have affected their tax base.
He stressed that this wasn’t the same as the old local ad valorem tax reduction fund, which was distributed to local governments regardless of whether they cut taxes.
Republican state Rep. Sean Tarwater of Stilwell supported eliminating the $60 million fund.
The bill in its original form, Tarwater said, was essentially paying local governments to reduce taxes.
“We’re incentivizing local municipalities to raise taxes by 3% every year,” he said.
“Does that really makes sense when the No. 1 issue is property tax?” he said.
“We’re paying them to raise taxes 3%,” he said. “We don’t need to be incentivizing local governments to do the right thing.
