Approaches to Property Tax Limits

Property tax relief is commonly sought through targeted policies intended to reduce the tax burden for individual taxpayers, such as exemptions for fixed- or lower-income individuals. Other policies aim to provide more broad-based property tax relief by limiting the growth of the components used to determine the amount of tax paid. Approaches to tax relief that fall under the latter are the subject of this article.

Ad Valorem Taxation of Real Property in Kansas

In Kansas, real property—which includes real estate and associated property rights—is subject to ad valorem (according to value) property tax as a source of revenue for county and local governments. The tax to be assessed in a given year is determined by multiplying together the values of three components, as follows:

• The value of the property as determined by each county appraiser each year according to constitutional and statutory requirements;
• An assessment ratio, as defined by the Kansas Constitution, according to use classification; and
• A mill levy rate (or millage rate) determined by dividing the total amount of revenue to be levied by the total value of property to be taxed within the jurisdiction.

Approaches to Property Tax Limits

Policy approaches that attempt to broadly limit property tax growth include levy limits, rate limits, and assessment limits:

• Levy limits (or revenue limits) limit the amount that total property tax collections made by a taxing jurisdiction may increase from one year to the next;
• Rate limits restrict growth of millage rates that taxing jurisdictions can set and may be applied by setting an absolute maximum rate or by limiting the relative amount that rates may grow from one year to the next; and
• Assessment limits restrict the amount that a property’s valuation may increase from one year to the next.

Rate and levy limits often have exemptions that enable the limits to be exceeded under certain conditions, such as when authorized by voter approval or when certain conditions of the purpose for revenue increases are met.

Among states that utilize assessment limits, a common exception is that the limitation does not apply in years where certain events transpire, such as improvement or sale of the property, among others.

Approaches to Property Tax Limits in Kansas

Kansas does not currently impose direct limitations on levies, mill rates, or valuation increases; however, Kansas has had both levy limits and rate limits throughout much of its history.

From 1908 until 1933, statute provided that individual taxing entities could not increase amounts levied in any year by more than 2 percent, with a similar limitation placed on the aggregate amount levied by local governments beginning in 1933. In 1970, the Legislature enacted temporary limits on growth of operating budgets for all taxing entities (a form of levy limit), while making reforms to the earlier levy limits that persisted in largely the same form until the repeal of the so-called “tax lid” in 1999. For most of that period, tax levies could be increased beyond limits (up to a maximum rate increase) if approved by voters.

Legislation referred to as “truth in taxation” was adopted in 1999 that imposed a general limit on any levy increase from one year to the next without the adoption of a resolution or ordinance, unless the increase was attributable to new improvements to real property, increased personal property valuation, newly applicable taxing jurisdictions, or changes in the use of property.

A new form of the tax lid, adopted in 2015 and repealed in 2021 by the adoption of SB 13, generally limited increases in levy amounts to the rate of inflation unless approved by voters. Since that time, Kansas has applied a requirement that mill rates beyond what would generate the same amount of revenue as in the previous year (the “Revenue Neutral Rate”) require special notice and a public hearing afforded to taxpayers.

Recent Legislative Proposals

More recently, the Legislature has considered policies that would have imposed limits on valuation growth. 2023 SCR 1611 would have amended the Kansas Constitution to limit the annual growth of the valuation of a parcel of real property to 4 percent, except in years when certain events occur, including when new construction or improvements have been made to the property or when the title to the property is transferred, changed, or conveyed to another person. Similar approaches have been proposed in additional legislation, including 2024 SCR 1621 and the 2024 Special Session resolutions SCR 1603 and SCR 1604.

During the 2023 Interim, the 2023 Special Committee on Taxation considered property valuation issues, including those related to the subject matter of 2023 SCR 1611 and additional items. Among the recommendations made by the Committee was that the Legislature consider implementation of tax levy limitations or a possible hybrid of SCR 1611 and the limitation approach utilized in Florida, which imposes similar limitations but includes a component allowing taxpayers to retain a portion of their growth limitation benefit, even when changing residences.