The Barton County Commission had a light regular agenda meeting Monday morning. That was on purpose.

Commissioners spent well into the afternoon holding the second of three rounds of budget meetings. These mark the first step in what will be a challenging budget year.

Sure, there are lingering effects of the COVID-19 pandemic’s economic downturn. But, a more troublesome issue is Senate Bill 13, approved just weeks ago by the Kansas Legislature. Dubbed by the Senate as the Truth in Taxation or the revenue-neutral bill, The aim was to make the state’s complex tax system more transparent.

But, county officials said, it could present a myriad of headaches.

“That’s going to be a big concern,” County Clerk Donna Zimmerman said. “It is going to be a big deal.”

In a nutshell, SB 13 prohibits all taxing entities from increasing their tax collections by more than they did the year previous. This means, if an entity’s valuation (the total value of all property) goes up, the mill rate would have to go down to collect the same amount of taxes.

In addition, it establishes a requirement of notices to taxpayers and public hearing for municipalities seeking to collect property taxes exceeding their revenue-neutral rate.

This supplants the property tax lid put in place by the legislature in 2016. It, among other things, imposed a restriction on the amount that municipal property tax levies could rise. 

The property tax lid required municipalities to obtain a majority vote of residents in order to pass property tax levies that increase more than the rate of inflation in the previous year.

The lid has been a constant source of consternation for cities and counties since it went into effect.

Best of intentions

“I think the intent was good,” Barton County Administrator Phil Hathcock said. However, there is always the law of unintended consequences.

Unlike the tax lid which only applied to cities and counties, this bill applies to all taxing entities. This includes cities, counties and school districts, as well as townships and cemetery boards, said County Clerk Donna Zimmerman.

To put that in prospective, there are 54 individual taxing bodies in Barton County, she said.

Each taxing entity will have to notify the County Clerk if it chooses to exceed its revenue-neutral rate. The County Clerk will then have to mail a notice to each taxpayer, notifying them which entities will exceed their rate on each property owned. 

However, the state realized the time crunch this year and postponed the notification requirement until 2022.

They will also have to set a revenue-neutral hearing. This is above and beyond the routine public budget hearings already mandated.

These entities must notify the County Clerk’s Office they will exceed the limit by Sept. 10. Normally, entities have until Aug. 25 to certify their budgets with Zimmerman, but if they plan to pass the neutral mark, that deadline is extended until Oct. 1.

Unintended consequences 

The one-year reprieve on notices helps for now, Zimmerman said. It falls to her office to mail out all of the notices for all the taxation units.

There is also a cost involved in this mailing. The state has said it would cover this expense for the first two years, but county officials are skeptical that will happen.

Another problem is the county’s valuation time line.

“We will find out our preliminary valuation numbers on June 1,” Hathcock said. These figures are used to calculate the budget which historically had to be adopted by August.

But, the final valuation totals won’t be known until October. 

So, at that point, if an entity realizes it will be in violation, it will have to (starting next year) scramble to send notices and schedule a hearing.

If they fail to notify the Clerk’s Office by the deadline, each entity is responsible for refunding any overages to taxpayers.

There are other deadline at play as well, Zimmerman said.  

Taxes are due and payable Nov. 1 with the deadline for the County Treasurer to mail statements by Dec. 15.

All of this creates a chaotic nightmare for county officials.

“It’s a mess,” she said. “I don’t know how we’re going to do that.”