For years, property taxes have followed an upward trend that was scarcely noticed. The tax increase was disguised as a level mill levy. People might complain about higher taxes, but they were less likely to complain if the mill levy stayed about the same.
The mill levy is a property tax rate. Without more information, it is a number without meaning.
Kansas’ new property tax transparency law establishes a “revenue-neutral rate” which adjusts the tax rate (that is, the mill levy), for increases in assessed property value.
The revenue-neutral law means that when property valuations increase, property tax rates decrease. If a local taxing entity wants to exceed the previous year’s collection, the law requires that notices be sent to taxpayers. They will also be notified of public hearings where they can voice their support or opposition.
According to the Kansas Policy Institute: “When new property values are set this year, mill levies will automatically be reduced so that the new valuations bring in the same dollar amount of property tax to cities, counties, and school districts as in 2020. If local officials want to increase the revenue-neutral mill levy, they must notify citizens of their intent, hold a public hearing to accept input, and then vote on the entire property tax increase they impose.”
You’d expect this to be popular because the law also does away with the so-called property tax lid, which required public approval to increase property tax by more than inflation. But, Kansas Policy Institute notes, “The lid was rendered almost meaningless, however, by a long list of exemptions that allowed cities and counties to avoid the public vote requirement. The new Truth in Taxation law has no exemptions.”
KPI adds, “Property taxes increased far more than the rate of inflation over the last 23 years. The average county increased property taxes by 180% between 1997 and 2020, while inflation was 53% and the population grew by just 11%. ... Local officials have long maintained they have been ‘holding the line’ on property taxes, referring only to mill levy changes, while ignoring the property tax hikes due to valuation changes. This has created an ‘honesty gap’ in taxpayers’ minds.”
Great Bend raised property taxes 91% between 1997 and 2020 but the city mill rate went up by 12%. The difference is called an “honesty gap” of 79%. Barton County raised property taxes 194% during that time frame while the mill rate went up by 68%, for an honesty gap of 126%.
Honesty gaps are available online at KansasOpenGov.org for cities and counties.
Over at Barton Community College, the trustees like to keep the tax rate around 33 mills. Last year, the total valuation of county property was down, so a flat mill levy decreased the tax request by approximately $446,303, according to an early estimate from Barton’s Vice President of Administration Mark Dean. Some years you win with a flat mill rate and some years you lose.
Most years you gain.
In 2017, because valuations had increased, the college expected to receive $460,000 more in taxes than it did in 2016, with the same mill levy. Property values tend to increase over time.
The new law will create headaches for the governing bodies, and it may be fair to say that it isn’t necessary. After all, the public is free to attend budget hearings now, but almost no one ever does. And even if governing bodies don’t go out of their way to announce tax increases, the information is out there. It may not be transparent, but it certainly isn’t hidden.
