Taxation committee hears bill to let voters curb property tax increases and create $60 million Astra Fund

The Committee on Taxation heard testimony on House Bill 2,396, which would allow voters in taxing jurisdictions to file a protest petition to cap property tax revenue increases and would create a new state fund to make annual transfers intended to offset property tax growth.

A reviser’s summary presented to the committee said, "House Bill 2,396 would authorize the use of a protest petition to limit funding of a taxing jurisdiction, by property tax revenues above a certain amount ... and it would authorize transfers from the state general fund to be debited up between qualified cities and counties, and it would eliminate the revenue neutral rate requirements and the taxpayer notification cost fund." The summary said the bill would create an "Astra Fund" funded initially by a $60,000,000 transfer from the State General Fund (SGF) and that the transfer would increase by 2 percent after the first year.

Supporters and witnesses framed the bill as an attempt to give taxpayers a stronger check on local tax increases while pairing that check with a state-funded payment to jurisdictions that keep their property tax revenues to a defined threshold. Representative Adam Smith, who explained the bill’s origins to the committee, said the measure grew out of conversations about prior demand-transfer programs and the revenue neutral rate, and was intended to "enhance the idea behind truth in taxation" by giving citizens stronger remedies when a local government adopts a budget that increases property tax revenues above an inflation-and-growth threshold.

Under the version described in the hearing, taxing jurisdictions that exceed the prior year’s property tax revenues plus a CPI adjustment and revenue attributable to new construction or improvements would become subject to the protest petition process. If petition signatories meeting the statutory threshold (10 percent of voters in the last relevant election, as drafted) are gathered, the taxing jurisdiction would be limited to property tax revenues equal to the prior year plus CPI and new-construction growth. The reviser’s summary said the petition process would not apply in any year in which the SGF transfer to the Astra Fund was not made.

The bill sets a $60,000,000 initial transfer into the Astra Fund from SGF and provides that distributions would be made to cities and counties that qualify by staying within the revenue threshold. According to the draft allocation language described to the committee, 65 percent of distributed funds would be apportioned by county population and 35 percent by equalized assessed tangible valuation, and counties and cities within counties would receive shares based on the relative property taxes levied by each jurisdiction. The summary said any amounts not transferred would be returned to SGF.

Committee members questioned mechanics and policy choices. Several asked whether the SGF transfer would be automatic (a "demand transfer") or would still require an appropriation; the reviser said the bill, as drafted, would effect the transfer but also included a provision that, if the transfer is not made, the protest-petition mechanism would not apply. Members also pressed over the 10 percent signature threshold, with some members and municipal witnesses recommending a higher threshold (one municipal representative suggested 20 percent, citing local precedent for petition thresholds). Witnesses and members discussed notice to residents, with the bill requiring county treasurers to post qualified taxing entities online and in their offices but not requiring mailed notices to taxpayers.

School and state levies were discussed during testimony. The reviser’s summary initially described the bill’s effect and referenced removal of the revenue neutral rate and the taxpayer notification cost fund; witnesses from school boards and school administrators told the committee they supported the bill’s intent and said the existing truth-in-taxation materials had caused confusion for patrons. The committee and witnesses debated whether school districts were included or excluded in parts of the bill as drafted; proponents said the bill’s language treats certain statutorily set school levies differently, and witnesses asked for clarity and said they supported provisions that reduce confusion for school patrons.

Municipal and county witnesses generally supported the bill’s goal of pairing taxpayer remedies with state assistance, though several municipal representatives and the League of Kansas Municipalities suggested technical changes. The League asked for a higher petition threshold and for explicit treatment of voter-approved bonds so that voter-approved, bond-backed mills would not be unintentionally curtailed by a petition. County representatives described ongoing work to quantify unfunded state mandates and said the proposed payment program could help rebuild trust between state and local governments after prior demand-transfer programs were not funded.

Fiscal staff told the committee the division of the budget was still gathering information from state agencies for the fiscal note; the reviser and fiscal witness said the transfer amounts in the bill were the principal state revenue impacts. The state treasurer’s office told committee staff the program would be similar to prior demand-transfer programs and that implementation costs would likely be small, using procedures already in place for similar transfers.

No final committee vote on House Bill 2,396 was recorded in the hearing. Committee members said they would continue to consider drafting adjustments—most commonly suggested were raising the petition threshold, clarifying notice and petition mechanics, and specifying treatment of voter-approved bond payments.

How this matters: The bill would change the tools available to residents and local governments to limit property tax revenue growth and would create a new annual state transfer for local governments that meet the bill’s qualifying threshold. Committee members and witnesses emphasized implementation details (thresholds, notice, distribution formula, and whether certain levies are treated differently) as determinative for how the proposal would work in practice.