Revenue Neutral Process

KSA 79-2988 requires, on or before June 15 of each year, each county clerk to calculate the revenue neutral rate (the mill levy that would yield the same amount of property tax revenue as the prior year) for each taxing subdivision. These calculations are required to be performed annually, and any decisions made by a taxing subdivision are only for the year in question.

Process

In order to raise revenues in excess of the revenue neutral rate, the governing body of a taxing subdivision must adhere to the following process:

Notice of Intent

On or before July 20 of each year, the governing body of a taxing subdivision shall notify their county clerk of the subdivision’s intent to exceed the revenue neutral rate and provide the date, time, and location of the public hearing on the proposed tax rate. Notice requirements must be made by both the governing body and the county clerk no less than 10 days before the public hearing and comply with the manner and content required by law.

Such notices are required to be mailed by the county clerk directly to each taxpayer’s last known address. Statute also allows for an alternative where the county clerk may transmit notice to a taxpayer by electronic means if the taxpayer and county clerk have written consent for electronic notification.

Public Hearing

All public hearings to consider exceeding the revenue neutral rate must be held between August 20 and September 20. The hearing may coincide with the proposed budget hearing, and the governing body is required to allow public comment and may impose reasonable limits on speaking time and number of conferees. The governing body will then hold a vote at the conclusion of the public hearing on an ordinance or resolution to exceed the revenue neutral rate. The hearing is not permitted to be suspended for completion at a later date. Note: Statute exempts school districts from following this process if the only property tax revenue increase is due to the 20 mills levied on behalf of the State.

Complaints

Statute allows for any taxpayer, or their authorized representative, of a taxing subdivision to file a written complaint with the State Board of Tax Appeals (BOTA). The complaint must contain the facts as to why the complainant believes the taxing subdivision did not comply with the revenue neutral law. If BOTA determines the alleged process was non-compliant, the taxing subdivision is required to refund any property tax revenues collected in excess of the revenue neutral rate.

Revenue Neutral Example

Below are examples of the fictional City of Oz choosing to maintain and exceed the revenue neutral rate in varying manners. (The City of Oz and all numbers used within the examples are fictional and are not meant to represent any community or budget within Kansas.)

Revenue Neutral Rates in the City of Oz Maintaining 2024 Revenue Neutral Rate for 2025-2026
	2024	2025	2026	2027
Valuation	$500,000,000	$525,000,000	$550,000,000	$575,000,000
Mill Rate	20	19.05	18.18	17.39
Property Tax Revenue	$10,000,000	$10,000,000	$10,000,000	$10,000,000
Maintaining Revenue Neutral Rate in Two-year Cycles
	2024	2025	2026	2027
Valuation	$500,000,000	$525,000,000	$550,000,000	$575,000,000
Mill Rate	20	19.05	19.05	18.2
	$10,000,000	$10,000,000	$10,477,500	$10,477,500
Property Tax Revenue Exceeding Revenue Neutral Rate Every Year
	2024	2025	2026	2027
Valuation	$500,000,000	$525,000,000	$550,000,000	$575,000,000
Mill Rate	20	20	20	20
Property Tax Revenue	$10,000,000	$10,500,000	$11,000,000	$11,500,000
Maintaining Revenue Neutral Rate for Two Years and then Exceeding
	2024	2025	2026	2027
Valuation	$500,000,000	$525,000,000	$550,000,000	$575,000,000
Mill Rate	20	19	18.2	20
Property Tax Revenue	$10,000,000	$10,000,000	$10,000,000	$11,500,000