Commission hears legislative alerts: potential federal change to municipal bond tax status and state property-tax bills

County legislative staff and commissioners discussed two separate policy developments that could affect local government financing: a National Association of Counties briefing on a possible federal change to the tax treatment of municipal bonds and a late-breaking package of state bills affecting property-tax procedures and ASTRA distributions.

Lindsay (staff member) and others summarized a NACO briefing that a federal administration option under consideration would tax interest on municipal bonds, eliminating the tax-exempt treatment for new issues. Staff said NACO estimated the change could raise large federal revenues and that, in local practice, removing tax-exempt status would almost certainly increase borrowing costs for local governments and be passed to taxpayers over long bond terms. Lindsay warned that such a change would increase interest costs on new issues and could increase local borrowing costs over 20-year periods.

Separately, Tanya (legislative staff) read aloud a legislative alert received minutes earlier about House Bill 2,125 and Senate Bill 82. Tanya summarized provisions in HB 2,125 including reauthorization language for a 20-mill property tax for schools (meant to avoid a special session on school funding), changes to the revenue-neutral letter process for 2025–2026, and an earlier mailing deadline for property tax notices (moving required mailing from Dec. 15 to Dec. 1). Tanya said the Kansas Association of Counties supports HB 2,125.

Tanya said Senate Bill 82 included changes to ASTRA distributions that make full ASTRA eligibility contingent on remaining revenue neutral; it reduces a county’s ASTRA share if it exceeds the revenue-neutral rate by 2% or 4% and eliminates ASTRA distributions if thresholds are exceeded. Tanya said SB 82 would require an 80% majority to exceed ASTRA thresholds and that KAC does not support sweeping changes in SB 82.

Commissioner Meitzner suggested letting NACO lead advocacy on the municipal bond issue; staff said they would reach out to Thorn Run Partners and the county’s lobby contacts, including Mr. Davenport, to discuss next steps. No formal action or vote on advocacy was taken at the agenda meeting; staff sought direction and said they would follow up with commissioners.