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Audit: Property tax exemptions cost Kansas local governments about $1 billion in 2024
Summary
Legislative auditors estimated counties forewent about $1,000,000,000 in property tax revenue in 2024 due to exemptions and flagged data‑quality problems with exemption coding that prevent breakdowns by exemption type.
Legislative auditors told the Legislative Post Audit Committee that real property tax exemptions resulted in counties foregoing an estimated $1,000,000,000 in tax revenue in 2024 and the state foregoing about $12,000,000.
"In 2024, real property tax exemptions resulted in counties foregoing an estimated $1,000,000,000 in tax revenue, and the state foregoing about $12,000,000 in tax revenue due to real property tax exemptions," senior auditor Sam Dads told the committee. The auditors derived the estimate by applying county‑level average assessment rates and mill levies to exempt property values reported in county records.
The report describes important methodological assumptions. Because exempt properties are not taxed, counties and KDOR often lack a clear, comparable assessment for those parcels; auditors therefore used county averages to estimate what tax revenue would have been. Auditors said using a universal assessment and mill levy instead of county averages would have increased the statewide estimate by roughly $700,000,000.
Committee members pressed auditors on data quality. The audit found exemption codes in CADOR county data were sometimes missing or inconsistent (about 7% of exempt property statewide had a blank exemption code), which prevented auditors from reliably estimating foregone revenue by exemption type.
The auditors recommended KDOR include new industrial revenue bond (IRBX) and economic development (EDX) exemption codes and totals in its published statistical report and generally ensure the statistical report compiles exempt‑value totals accurately.
The committee accepted the audit on consent and asked KDOR to follow up with the committee about data improvements and whether counties can produce grouped reports that separate common exemption categories.
