Brief(1)
S.B. 226, as amended, would impact the valuation of property and use of property tax revenues in the following ways:
Budget Limitations
S.B. 226 would prohibit the state and its taxing subdivisions from approving an appropriation or budget funded by property taxes which provides for increased funding from the previous year beyond the growth rate of inflation absent the adoption by a simple majority vote of a charter resolution, charter ordinance, or concurrent resolution, except with regard to increases attributable to (1) new improvements to real estate; (2) increased personal property valuation for all subclasses except oil and gas leaseholds and mobile homes; (3) property located within added jurisdictional territory; and (4) property which has changed in use.
After excluding such increases, taxing subdivisions normally would be required to adopt charter resolutions or ordinances to approve appropriations or budgets funded from property tax increases above the rate of inflation, except that the provisions of the bill would not be applicable to all bonded indebtedness property tax levies (including levies for temporary notes and no-fund warrants) or local option budget (LOB) property tax levies.
Valuation Limitations
The bill also would provide "caps" starting in 2001 on the appraised valuation of all property valued pursuant to K.S.A. 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
Local officials said during public hearings that they could support S.B. 226 in its original form, provided the aggregate levy limitation (tax lid) is allowed to sunset on July 1.
The Senate Committee of the Whole removed the application of the bill to school district LOB levies.
The House Committee amended the bill by inserting the word "charter," effectively requiring a supermajority vote in order to adopt a resolution or ordinance before passing an appropriation or budget with increased funding from the previous year. This amendment also makes the resolution or ordinance subject to a protest petition. The House Committee also added the language allowing an increase in funding equal to the inflation rate before such charter resolution and charter ordinance provisions are triggered. A final House Committee amendment clarifies that levies for temporary notes and no-fund warrants would be excluded from the provisions of the bill (along with levies for bonded indebtedness).
The House Committee of the Whole amended the bill to apply to the Legislature as well as taxing subdivisions and to allow the adoption of a charter resolution or charter ordinance or concurrent resolution by a simple majority vote to meet the necessary requirements before passing an appropriation or budget with increased funding from the previous year. The House Committee of the Whole also added the provision limiting under certain circumstances the increase in annual appraised property valuation to the rate of inflation in the CPI-U.
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