Kansas committee hears bill to end state property tax levies and replace them with general‑fund transfers

The Committee on Taxation held a hearing on Senate Bill 35, a measure that would discontinue statewide property tax levies now used to support the Kansas Educational Building Fund and the State Institutions Building Fund and replace them with annual transfers from the state general fund beginning July 1, 2026.

The bill would eliminate two levies that currently total 1.5 mills on taxable tangible property after tax year 2025 and provide specific backfill transfers from the general fund: a one‑time transfer of $56,000,000 to the Kansas Educational Building Fund on July 1, 2026 and an annual transfer on July 1, 2027 and each year thereafter that equals the prior year’s transfer increased by the 10‑year average percentage change in statewide taxable valuation. For the State Institutions Building Fund, the bill would replace the 0.5‑mill levy with a $25,000,000 transfer on July 1, 2026 and an annual increase beginning July 1, 2027 equal to the prior year plus 2 percent of $25,000,000. Section 5 of the bill makes technical accounting adjustments to reflect the change in levies.

Why it matters: Supporters argued the change would provide broad property tax relief to taxpayers statewide while maintaining funding for building needs, but the Board of Regents told the committee it needs a stable funding stream to address a large backlog of deferred maintenance.

In committee, Adam from the Revisor’s office outlined the bill’s provisions and the timing of the transfers. He confirmed the discontinuation of the levies applies after tax year 2025, meaning the levies would still appear on this year’s property tax statements but would not be assessed thereafter if the bill is enacted.

Proponent testimony: John Donnelly, testifying for the Kansas Farm Bureau, said the organization supports broad‑based tax relief and called the bill a “proper approach.” Aaron Popelka of the Kansas Livestock Association also voiced support, saying his group favors cutting the statewide mill levy and that the bill would apply to all classes of real property including agriculture. Both proponents noted differences between this bill and other proposals that would permanently cap or gradually adjust levies.

Neutral testimony: Blake Flanders of the Board of Regents testified neutral. He said the regents rely on the current funding stream for maintenance of more than 1,000 campus buildings and described a deferred maintenance liability of about $1.2 billion. Flanders told the committee that building maintenance needs increase with inflation and that steady funding is important to avoid accelerated deterioration.

Committee discussion touched on the growth/escalator formulas in the bill. Committee members asked why the two transfers use different growth factors — the education fund transfer is tied to a 10‑year average change in taxable valuation while the institutions transfer uses a flat 2 percent increase — and Adam said that difference resulted from a prior amendment and he did not have further detail.

No formal committee action or vote on SB 35 occurred during the hearing. The committee then closed the hearing and moved on to other bills on the agenda.

Ending note: The bill remains at the hearing stage; supporters emphasized property tax relief and the Board of Regents emphasized the need for stable, predictable funding for facility maintenance.