Johnson County advisor outlines effects of SB 1 on property tax revenue; council sets conservative 2026 budget guidelines

Johnson County financial adviser Mike Reuter told a special joint meeting of the Johnson County Council and Board of Commissioners on June 25 that recent state legislation will substantially reduce local assessed valuation and shift revenue decisions toward local option income tax (LOIT/LIT) choices, creating multi-year fiscal planning challenges for the county.

Reuter opened his presentation by summarizing how “Senate Bill 1” and the House amendments—particularly language attributed to Representative Thompson and follow-up fixes in what he called the Department of Local Government Finance (DLGF) bill—change homestead supplements, introduce a new homestead credit and widen deductions for rental and agricultural property. “They took a very complicated system and they doubled down on it,” Reuter said, explaining those changes will reduce assessed valuation (AV) and move more revenue decisions to income-tax-based options for counties and municipalities.

Why this matters: Reuter estimated the county could lose roughly $2,000,000 annually from the new homestead credit alone and several million more when combined with circuit-breaker effects. He said the county can adopt up to a 1.2% local option income tax for itself and that municipalities also can adopt rates up to 1.2%, creating divergence in revenue across jurisdictions. Reuter urged the council to consider whether to use LOIT capacity to replace lost property-tax revenue and to weigh the political choices that follow.

Major points from Reuter’s presentation

- Homestead and credits: The…