Legislature quickly fixes conflict on property tax limits

TOPEKA – Kansas legislators moved quickly Friday to fix a technical problem with a new law for limiting local property taxes starting in 2018.

But they’re likely to face more debate next year over whether the policy should be modified or repealed before it takes effect.

The law will limit the authority that cities and counties have to spend extra property tax revenue when property values rise. Legislators included a version of it in each of two measures raising sales and cigarette taxes to balance the state budget, and the texts conflicted on when the property tax limits took effect – either July 1 or Jan. 1, 2018.

Top Republicans in the GOP-dominated Legislature agreed that they had meant to delay the new property tax limits, and so the fix was relatively easy, putting the effective date at Jan. 1, 2018. The Senate approved the bill, 24-8, and the House passed it, 85-23, sending it to Gov. Sam Brownback.

But the need for a correction forced legislators to extend their annual session to 114 days when it already was the longest in state history. They dealt with the fix on a day set aside for a short adjournment ceremony.

House Taxation Committee Chairman Marvin Kleeb, R-Overland Park, said that without a correction, it probably would have taken a lawsuit to clarify the Legislature’s intent for when the property tax law took effect.

But Randall Allen, executive director of the Kansas Association of Counties, said local officials still think parts of the new law are unclear enough that its provisions will have to be reviewed again next year. Also, he said, local officials will raise the issue of whether the state should impose limits at all.

“I don’t know if we’re in a position at this point to say how tight this lid is,” he said. “We have a lot of questions ourselves.”

The property tax law helped attract GOP votes for the increases in sales and cigarette taxes necessary to avert a budget deficit in the fiscal year beginning July 1. Critics of the lid said the state shouldn’t tell local governments how to balance their budgets.

Starting in 2018, cities and counties will not be allowed to spend an increase in property tax revenue above the rate of inflation as measured by the consumer price index without voters’ approval. There will be some exceptions, including spending to cover bond payments, finance new infrastructure, improve roads or pay legal judgments.

If cities and counties can’t spend the extra revenue, they’ll have to drop their property tax levies. Supporters said the law simply gives more control over local affairs to taxpayers themselves.

“They’re probably glad that there’s somebody looking out for them,” said House Speaker Ray Merrick, R-Stilwell.

Merrick noted that homeowners can see their taxes increase if their property values rise, even if cities and counties don’t increase their levies.

“I get a lot of complaints about that,” Merrick said.

This story was originally published June 26, 2015 at 6:52 PM with the headline "Legislature quickly fixes conflict on property tax limits."