Brief ⁽¹⁾

HB 2715, as amended, would make a number of changes relating to the use-valuation of agricultural land for property tax purposes. The bill also would enact "caps" on increases in the appraised valuation of property presently subject to fair market value pursuant to KSA 79-503a.

Agricultural Land and Use Value Provisions

The use of soil classifications would be prohibited in the determination of agricultural income for pasture or rangeland. Moreover, such land would be required to be valued based solely upon net rental income normally received by landlords.

County appraisers would be granted specific authority to apply adverse influence factors and deviate from valuation schedules adopted by the Director of Property Valuation (PVD), provided such adjustments had been reviewed and approved by the Assistant Director of Property Valuation for Use Value Appraisal of Agricultural Lands, a new position within PVD which is created by the bill.

The maximum discretionary authority the PVD Director has to adjust the capitalization rate would be increased from an additional 2.75 percent to an additional 3.75 percent.

All agricultural land subject to the Federal Wetlands Reserve Program would be required to be treated as cultivated dry land for use-value purposes. This provision would apply retroactively to tax year 2000 values.

The aforementioned new Assistant PVD Director would administer, manage, oversee, and direct agricultural land appraisal. The Secretary of Revenue would be required to "immediately reclassify an existing position" to create the new position. The Assistant Director, who would be appointed by and serve at the pleasure of the Secretary, would be subject to Senate confirmation and would be in the unclassified service. Minimum statutory prerequisites for the Assistant Director would include being a member in good standing of the Appraisal Institute; being a member in good standing of the American Society of Farm Managers and Rural Appraisers; meeting the requirements of and maintaining an "MAI" designation; and having extensive experience in use-value appraisal.

Appraised Valuation Caps

The bill also would provide "caps" starting in 2001 on the appraised valuation of all property valued pursuant to KSA 79-503a (fair market value statute), in that under normal circumstances the valuation could not be increased from one year to the next in excess of the rate of inflation (CPI-U). An exception to this limit would be provided for new or newly improved real property, which, in its initial year of valuation, would be valued in comparison with similar real property.

Background

The original bill contained provisions dealing with the valuation of pasture or rangeland and the authority of county appraisers to apply adverse influence factors. House Committee amendments included the provisions relating to the capitalization rate; the new Assistant PVD Director position; and the valuation of land in the Federal Wetlands Reserve Program.

House Committee of the Whole amendments included the appraised valuation cap provisions; requiring the Assistant Director to be a member in good standing of the American Society of Farm Managers and Rural Appraisers; and clarifying that the Assistant Director would have the power of approval over adverse influence factors county appraisers are seeking to apply.

Information provided by the Department of Revenue indicates that at least two of the provisions would have an identifiable impact on local effort for purposes of the school finance formula (less money would be raised from the 20 mill property tax levy).

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html