Kansas should reform its property taxes. Assessment limits aren’t the way to do it | Opinion

Kansas lawmakers have ushered in substantial tax reform over the past few years, but legislators say the state still has more work to do. Specifically, Topeka is eyeing property tax relief.

Policymakers are right that Kansas has an opportunity to reform property taxes while providing long-term relief. But one idea gaining traction in the statehouse — which would introduce assessment limits that artificially cap valuation increases — would be a step backward. As currently drafted, one proposal would increase the burden on farmers and businesses, and neither assessment limit proposal would prevent local taxing jurisdictions from simply recouping the lost revenue by raising property tax rates.

The Sunflower State is unique when it comes to property taxes. It is one of the few states without any formal statewide property tax limitations in place, giving local taxing jurisdictions free rein to raise property taxes whenever — and however much — they want to. The only backstop is Kansas’ Truth in Taxation law, which requires local taxing entities to notify taxpayers and hold a public hearing before collecting more property taxes than they did the previous year.

Before Truth in Taxation, a property tax lid attempted to limit local property tax collections’ growth, but the lid had too many loopholes that rendered it ineffective and led to its repeal in 2021. Since then, the Truth in Taxation “revenue neutral” limit has prevented property tax increases in some jurisdictions, but property taxes have increased substantially in others, and taxpayers want solutions.

Seemingly, Kansas lawmakers are introducing new proposals every week on this front, including some structured as assessment limits and some as levy limits. If the state wants to succeed in providing property tax relief, assessment limits need to be off the table.

Assessment limits are often limited in scope to just residential units, but some lawmakers are looking to impose a 3% assessment limit on all classes of real property — ranging from factories to doctors’ offices to farms — as well as manufactured homes. Unusually, valuations would not reset when a property is sold, so older properties would benefit from the assessment limit while newly built properties would not.

This would shift more of the property tax burden onto newly built properties. Over time, older homes could end up selling for more than newly built homes because of to the lower assessments accompanying older properties. This could further dampen the already sluggish market for newly built homes and discourage families from relocating to Kansas.

Another assessment limit plan coming from Topeka, meanwhile, would apply only to residential properties. But this doesn’t necessarily make the assessment limit any less harmful. Over time, as residential properties’ assessed values would be artificially constrained, more of the tax burden would shift to farmers and businesses.

Kansans want predictable, stable tax bills, yet assessment limits would not actually prevent property tax increases, since taxing entities can simply respond to lower valuations by raising mill levies. Instead, these proposals are short-term Band-Aids that guarantee no long-term relief. When cities, counties and school districts decide more revenue is needed, it’s property taxpayers who will have to foot the bill.

New proposals recently emerged that shy away from assessment limits, instead opting for a levy limit that would give voters the opportunity to approve or reject proposed property tax increases on the ballot, or a protest petition that would give Kansans a chance to rally to overturn increases after they are adopted. The levy limit proposal is a strong step in the right direction. A slightly modified levy limit that allows growth for inflation and new construction only — with no other exemptions — would truly fix the root of Kansas’ property tax problems. It would also put the onus on governments, rather than taxpayers, to keep property taxes in check.

This would be a structurally sound reform that would focus on the actual problem at hand: the fact that local spending is unrestricted. In situations like the one taxpayers face today, where residential properties’ assessed values have risen substantially, a levy limit that allows growth for inflation and new construction only, with no other exemptions, would require local taxing authorities to respond to rising valuations by adjusting property tax rates downward — or else seek voter approval to collect property taxes that exceed the level of allowable growth. Such a proposal would strike an appropriate balance between providing long-term relief to property taxpayers and allowing budget increases when voters agree they are sufficiently justified.

Kansas should reform its property tax laws, but taxpayers should know that assessment limits won’t solve a spending problem. As the legislative session winds down, lawmakers should focus on the root of the problem and adopt a tighter property tax lid that offers a sustainable, long-term solution to taxpayers’ concerns.