Legislation raises residential exemption to $100,000 of assessed value
By TIM CARPENTER
TOPEKA — Passage of property tax legislation in the Kansas Senate would exempt $100,000 of the assessed value on residential property from the 20-mill tax used by the state to finance public schools and would result in a decline of nearly $150 million annually in state revenue.
Since 1997, state law has required the first $20,000 of assessed value to be exempted from the statewide mill levy for K-12 education. Under Senate Bill 431, that exemption from would be five times larger starting in tax year 2022.
A lobbyist for Kansas realtors endorsed the bill Thursday. No one stood in opposition to the measure. It was introduced by Sen. Caryn Tyson, a Parker Republican who chairs the Senate Assessment and Taxation Committee. She is seeking the GOP nomination for state treasurer in 2022.
The Kansas Department of Revenue estimated the bill would curtail state property tax revenue by $147 million to $149 million each year.
To sustain state aid to public schools, the Legislature and Gov. Laura Kelly would need to increase appropriations from the state treasury by a corresponding amount.
Mark Tomb, of the Kansas Association of Realtors, said the organization endorsed the bill because the $20,000 exemption was no longer “meaningful” because it failed to keep pace with inflation in the price of homes. He said the real estate sector was burdened with excessive taxes by state and local government.
“While we realize the importance of many programs funded through property tax revenues, we believe tax revenues should be equitably collected from a variety of sources and encourage taxing jurisdictions to consider the negative impact to the housing market associated with any potential increase in property tax rates,” he said.
Jim Karleskint, a former state legislator representing United School Administrators, said the organization was neutral on the bill. However, he said, legislators should be wary of potential financial challenges of shifting away from a stable source of tax revenue for K-12 education to the state general fund subject to economic fluctuations and tax revenue twists and turns.
He recommended the Senate committee consider a gradual increase in the exemption to $40,000 or so rather than take the full step to $100,000. He said a potential sharp decline in overall state tax revenue could lead to legal challenges based on the school finance formula.
“We wish all citizens have the opportunity to reduce the amount that is paid in property taxes,” Karleskint said. “We encourage the committee to be cautious in their actions on this legislation.”
The Legislature is working on a wide array of tax reform bills intended to chip away at a projected $2.9 billion revenue surplus driven by federal emergency relief and resurgence of the state economy in wake of the COVID-19 pandemic.