Kansas senators hear sharp debate over House Bill 2396 property-tax package; committee advances constitutional substitute

The Senate Assessment and Taxation Committee on May 1 heard wide-ranging testimony on House Bill 2,396, a proposal that would repeal the state’s revenue-neutral notification process for local property-tax increases and create a new state fund intended to offset some local tax burden.

Supporters including county officials and the Kansas Association of Counties said the bill is intended to restrain local spending while giving local governments predictable relief from rising costs. Opponents, including policy groups and some legislators, said removing the revenue-neutral requirement would reduce transparency and likely lead to higher taxes for many Kansas property owners.

Why it matters: The revenue-neutral process requires local taxing authorities to notify taxpayers and hold a separate vote before increasing property-tax collections beyond a calculated baseline. HB 2396 would replace that mechanism with a combination of mill-levy limits tied to inflation, a citizen protest petition process keyed to signatures equal to 10% of the presidential vote in the jurisdiction, and an Ad Astra fund (state funding) to be distributed to eligible local governments.

Supporters’ case

Jay Hall, deputy director and general counsel for the Kansas Association of Counties, said HB 2396 “represents a partnership between local governments and the state.” Hall told the committee that local governments face rising input costs — gravel, chemicals and other materials — that make revenue-neutral budgeting difficult to sustain.

Jim Howe, a Sedgwick County commissioner speaking for his county commission, urged technical fixes but supported the bill’s basic approach to limit growth and to put a mechanism in place that would let voters rein in spending that grows beyond a CPI measure. Howe described the appraisal scatter he sees in Sedgwick County and said the bill “apportions the tax burden based on people’s property value” while incentivizing conservative budgeting.

Proponents also pointed to the proposed Ad Astra fund as a state-level “carrot” to help jurisdictions accept mill-levy limits. Several conferees described examples of likely awards: one small county official said the distribution would be about $30,000 for a very small county and that larger counties would receive proportionately more; another county representative estimated a local share “around $5 to $7,000,000” for a larger county under the proposal’s formulas.

Opponents’ case

Dave Trabert, CEO of the Kansas Policy Institute, urged rejection of the bill and defended the revenue-neutral process as a working restraint on tax growth. “Revenue neutral is working,” Trabert told the committee, and he pointed to data showing thousands of taxing units did not exceed the revenue-neutral benchmark in the most recent cycle. He warned that repealing the process would allow many jurisdictions that held below the revenue-neutral threshold to raise taxes.

Representative Samantha Potter Partial (District 6) described local election results where voters used the revenue-neutral mechanism to change governing majorities, and she said removing the statutory notice and requirement would reduce accountability and transparency for taxpayers.

Areas of contention and technical fixes

Several witnesses pressed for clarifications and technical changes rather than outright rejection. Common issues raised included:

- The statutory threshold and signature requirement for a protest petition: The bill ties the petition threshold to 10% of the presidential vote in the jurisdiction; some local officials and mayors argued that standard is too low and proposed raising it (one witness suggested 20%). - Exemptions for school districts: Witnesses including Leah Flider said school districts would not be subject to the Ad Astra fund mechanics; several county and municipal speakers warned that exempting schools — which account for roughly half of many local property-tax bills — dramatically reduces the bill’s scope. - Bond-rating and debt-service concerns: Municipal leaders and bond counsel said the bill needs clearer language to avoid unintended impacts on debt-service levies and bond ratings; several testified that debt-service and statutorily mandated levies should be treated as exceptions. - Precision on new-construction and valuation growth language: County testimony urged simplifying or replacing proposed construction-growth language with clear formulas tied to assessed value.

Protest petition and signature timing

Committee members and witnesses discussed the 10% signature requirement and the choice of using the presidential-election turnout as the denominator rather than the secretary-of-state’s turnout for lower-profile races. One conferee said the House Tax Committee considered ranges from 3% to 20% and landed, politically, on 10% as a compromise but acknowledged it is difficult for citizens to gather large numbers of signatures without an organized, public petition drive.

Votes at a glance (committee actions taken during the hearing day)

- HCR 5011 (Senate substitute for HCR 5011 / Senate Concurrent Resolution 1603 language): The committee approved a Senate substitute that replaces House Concurrent Resolution 5011’s text with the Senate Concurrent Resolution 1603 language as the committee’s position. The motion passed; a second motion later recommended the Senate substitute favorably out of committee. Senator Owens asked to be recorded as voting no on the final committee recommendation.

- Senate Bill 259: The committee approved an amendment to add privilege tax rates (taxes in lieu of income tax for financial institutions) to the bill’s income-tax rate decrease framework, and the committee passed the bill as amended.

- Senate Bill 283 / Low-Income Housing Tax Credit (LIHTC): Committee members discussed a proposed amendment that would limit continuing state low-income housing tax credits going forward (70% of the federal credit for 4% developments and compress the credit period from 10 to 5 years). The sponsor withdrew that motion to allow time for fiscal estimates and more review; no change was adopted during the hearing.

What was not decided

The committee did not adopt final statutory language for HB 2396 during the hearing. Multiple conferees asked for technical clarifications, and several senators said they planned to work the bill in mark-up the next day. Members uniformly noted that school funding, bond-rating language and petition thresholds were unresolved and would need amendments if the bill moves forward.

Policy context and next steps

Several senators said they view the question of major property-tax reform as conferenceable with the House; others said it should remain a legislative-policy solution rather than a constitutional amendment. Committee leadership announced plans to continue working tax legislation in committee the following day.

The hearing included wide participation from county officials, municipal leaders, advocacy groups and legislators. Testimony illustrated the competing priorities between preserving local fiscal flexibility and providing statewide constraints and taxpayer notice.

Ending note: The committee passed a procedural substitute for a constitutional amendment and advanced an income-tax bill with a privilege-tax amendment, but it left unresolved major technical and policy questions on House Bill 2,396 that supporters and opponents said will determine whether the measure meaningfully limits property-tax growth or simply replaces one set of complexities with another.