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Minutes for SB13 - Committee on Taxation
Short Title
Establishing notice and public hearing requirements prior to approval by a governing body to exceed its revenue neutral rate for property tax purposes and discontinuing the city and county tax lid, prohibiting valuation increase of real property solely as the result of normal repair, replacement or maintenance of existing structure and establishing a payment plan for the payment of delinquent or nondelinquent property taxes.
Minutes Content for Tue, Jan 26, 2021
Chairperson Smith opened the hearing for SB13.
Adam Siebers, Assistant Revisor provided an overview for SB13 stating the bill relates to property taxation. The bill would establish new notice and public hearing requirements prior to the approval by a governing body of a taxing subdivision to exceed the revenue neutral rate for property tax purposes and discontinue the city and county tax lid effective January 1, 2021 (Attachment 1).
Chairperson Smith noted there is not fiscal impact on the State General Fund but encouraged Committee members to review the fiscal note for SB13.
Proponents:
Senator Caryn Tyson testified in support of SB13 noting the bill is modeled after existing law in Utah and Tennessee that has been in place for over 30 years. She remarked it was a team effort to find a solution regarding automatic property tax increases imposed by city and county officials. The two items that came to the top after gathering information across the state from taxpayers, county commissioners, county clerks, county treasurers, and appraisers were tax increases with no transparency and valuation increases due to normal maintenance on a home. There have been automatic property tax increases up to almost the Consumer Protection Index (CPI). Senator Tyson noted SB13 removes the property tax lid which has resulted in property tax increases since it was enacted. SB13 provides for transparency with all increases including new construction. (Attachment 2)
Senator Tyson responded to Committee questions:
- The city and county can take a revenue neutral rate with no increase and no timeline for implementation. If there is a delay on passing SB13 this year, we will see another increase with some counties averaging a 4.0% to 5.0% property tax increase and that is with a CPI increase from the tax lid.
- There has been consideration given for the implementation of alternative notifications for notice of property tax changes. She remarked possibly at some date the notices could be sent electronically and another option is if both parties agree the notice can be sent as an e-mail.
- Regarding public libraries, there are 4,000 taxing authorities in the State of Kansas and the idea is not to exclude but include everyone in the notice. The 1.5 mill levy the State collects will also be on the notice for people to see if the valuations go up there will be an automatic dollar increase.
Lynn Jenkins testified in support of SB13 on behalf of the Kansas Health and Fitness Association who represents private sector tax paying health clubs in Kansas.(Attachment 3) She remarked the health clubs biggest competition is not other private sector clubs, but non-profit and government owned health clubs who pay no sales tax, no income tax, and no property tax. The non-profit clubs and government owned facilities have a value of over $300,000,000 and growing. Ms Jenkins presented an amendment to SB13 that would give the same property tax treatment to all Kansas health clubs. This amendment does not include any sales or income tax exemptions, which for profit clubs would continue to pay.(Attachment 4)
Dave Trabert, Kansas Policy Institute testified in support of SB13 which requires city and county elected officials to give public notice of property tax increases, hold a meeting for public input, and vote on the entire amount of the increase. Mr. Trabert addressed concerns and objections raised by elected local officials in his testimony. He noted SB13 is modeled after the State of Utah's Truth in Taxation legislation which has reduced their property tax rate. The Utah Property Tax Annual Statistical Report shows Utah's tax rate declined by 7.5% between 2000 and 2018; whereas, during the same time frame the Kansas effective tax rate increased by more than 22%. (Attachment 5)
Eric Stafford, Kansas Chamber testified via Webex in support of SB13 stating the Kansas Chamber commissioned in the spring of 2019 the Tax Foundation to do a comprehensive review of tax policy in the State. The Tax Foundation went across the State with members from the Kansas Chamber to meet with various legislative stakeholders, leadership, organizations, trade associations, private and public sectors to get a view of taxes. He stated when the first draft of the report came in it suggested Utah's Truth in Taxation model as an alternative to the tax lid. For too long, Kansas taxpayers have been subject to non-transparent property tax increases. Local governments have been allowed to collect additional property tax revenue from valuation increases and rarely have taxpayers seen an offset in the mill rate to keep their tax burden flat.(Attachment 6)
Daniel Murrary, Kansas State Director, National Federation of Independent Business testified in support of SB13 noting taxes remain a big problem for small business owners. He stated every four years there is a survey sent to members and out of the seventy-five issues, four of the top ten were tax related dealing with tax rates and tax complexity. In the 2020 survey of small business owners, property tax rates jumped from eighth to fourth in terms of priority. Mr. Murrary remarked SB13 will help alleviate concerns and give the small business owners notification and opportunity to engage and work with their local municipalities to ensure property taxes remain at a reasonable level. (Attachment 7)
Mark Tombs, VP of Governmental Affairs, testified on behalf of the Kansas Association of Realtors in support of SB13. He remarked realtors believe real estate tax is a burden with an excessive share of increasing cost of state and local government and more should be done to make the property tax process more accountable and transparent. Realtors recognize SB13 may be more effective at giving citizens a voice in decisions impacting their property tax burden. Mr. Tombs stated, realtors support for County Treasurers establishing payment plans for property taxes. (Attachment 8)
Jason Watkins, Wichita Regional Chamber of Commerce testified on behalf of the Wichita Chamber in support of SB13 stating it is a positive step to help increase transparency and taxpayer understanding of property taxes as demonstrated in the Utah and Tennessee legislation. (Attachment 9)
Jim Howell, Commissioner, 5th District testified on behalf of the Sedgwick County Board of County Commissioners as a proponent for SB13 noting Sedgwick County is supportive of the transparency and accountability requirements in the bill. He stated Sedgwick County is requesting some amendments to improve the functionality of the bill which are listed in his testimony. (Attachment 10)
Proponent conferees stood for questions from Committee members.
Written only testimony as a proponent for SB13 was submitted by the following:
Elizabeth Patton, State Director, Americans for Prosperity, Kansas (Attachment11)
John Donley, Kansas Farm Bureau (Attachment 12)
Justin Knopf and Taylor Williamson, Kansas Association of Wheat Growers (Attachment 13)
Neutral:
Jay Hall, Kansas Association of Counties testified as neutral to SB13 concerning property tax, appraisals and partial tax payments. He requested an amendment to change the effective date from January 1, 2021 to January 1, 2022 stating many counties have started their 2021 budgeting process and implementing the changes would be difficult. Mr. Hall stated they did not want to go into this in bad faith and are requesting not only to change the effective date but also keep the tax lid in place while implementing the new process. (Attachment 14)
Rick Piepho, Harvey County Clerk testified as neutral to SB13 stating they support transparency but suggested an amendment to change the effective date from 2021 to 2022 due to difficulty of implementing the bill. He remarked if any entity was to raise their budget, it will be necessary to send out a notice and the infrastructure needs to be in place prior to sending out the notice. (Attachment 15)
Trey Cocking, League of Kansas Municipalities testified as neutral to SB13. He stated the League agrees with sunsetting the tax lid which will increase transparency and promotes the principle of local control. Mr. Cocking noted the following amendments for SB13 would create a better bill: 1) Address the July 15 timing which limits the quality of a solid budget estimate to August 1; 2) the provision for distribution of costs be amended so the language is easy to understand; and 3) change the implementation date from 2021 to 2022. (Attachment 16)
Sara Caylor, Mayor of Ottawa testified as neutral to SB13 (Attachment 17)
Neutral conferees stood for questions from Committee members.
Written only testimony as neutral to SB13 was submitted by the following:
Whitney Damron on behalf of City of Topeka (Attachment 18)
Ed Eilert, Chairman Johnson County Board of County Commissioners (Attachment 19)
Janet White, Miami County Clerk (Attachment 20)
Bryan Chapman, Chairman, Harvey County Council of Governments (Attachment 21)
Sean Robertson, Kansas County Appraisers Association (Attachment 22)
Charles McKinney, Clark County Commissioner (Attachment 23)
April Hall, Kansas County Treasurer's Association (Attachment 24)
Michael Koss, Attorney for the City of Overland Park (Attachment 25)
Ron Fehr, City Manager, City of Manhattan (Attachment 26)
Opponents:
Gail Santy, Central Kansas Library testified as an opponent to SB13 noting the bill places unnecessary burden on the Central Kansas Library System and the other six regional library stems will be required to mail notifications which will cost approximately $8,000 each year depending on the rural population county. (Attachment 27)
Written testimony as an opponent to SB13 was submitted by William Black, Chief Administrative Officer, City of Haysville (Attachment 28)
Chairperson Smith closed the hearing for SB13.
Meeting adjourned at 5:30 pm.
