Kansas Gov. Laura Kelly Vetoes Property Tax Cap Bill, Pitches Own Solution

Kansas Gov. Laura Kelly vetoed a legislative attempt to create a property tax cap, but offered a plan for reform.

In her veto message, Kelly said a proposal Republicans put forth, which would let residents petition against local government budget increases over 3%, would not deliver property tax relief.

"The truth is that this bill will only restrict the ability of locally elected officials to be nimble enough to adjust to the unique needs of the communities they serve," Kelly, a Democrat, said.

The measure, known as Senate Substitute for House Bill 2745, is one of several attempts in recent years by Kansas lawmakers to institute some form of property tax reform.

Under the proposal, a petition of 5% of registered voters could halt the budget increase of a government body. That body would then have to resort to the prior year's levy.

The Realtor.com® State-by-State Housing Report Card gave Kansas a C.

Sunflower State politics

Lawmakers in the Republican supermajority were divided on the bill. But it passed the House 76 to 45 in February, and the Senate 22 to 18 in March.

Republican state Rep. Brett Fairchild argued it carried too many exceptions, including revenues from new construction, expiring tax abatements, and some economic development programs.

Republican state Rep. Courtney Sappington added that it was a "step in the right direction," but said it was a "band-aid" on property tax reform.

Kelly said the bill wrought fallout even before its passage. She claimed several school districts and local governments had seen bonds terminated by underwriters due to uncertainty, some days from closing.

“The harm this bill causes local communities is real," Kelly said. "The Legislature would be wise to focus their efforts on partnering with local elected officials to develop real property tax relief for Kansans, as opposed to shutting them out of the process and passing faulty legislation."

Instead, Kelly said she supported a three-point plan to change the state's property tax scheme, which she said saddled homeowners with a growing burden as home values and costs rise.

The governor's alternative plan proposes increasing the property tax exemption for the state's $20 million education levy. This would mean the first $150,000 in home value would be exempt from tax, instead of the $75,000 now on the books. That would provide tax relief to 700,000 homeowners.

The plan also includes a $250 one-time vehicle tax credit and a $60 million fund to reward cities and counties that manage budgets well.

It's unclear what path the new proposal has to passage. Republican House Speaker Daniel Hawkins said the alternative proposal "fails to address the root causes driving property taxes higher."

"This is no more than a half-baked, last-second shot to save face after blocking real property tax relief," Hawkins said.

Renters protections bill was also vetoed

The governor passed several other measures related to real estate, including a measure that was aimed at cutting down on squatters, House Bill 2378.

Kelly also issued 15 other vetoes of legislation from the session. Those bills involved law enforcement, voting, and schools.

She also vetoed Senate Bill 391, a proposal that included a raft of renter-focused provisions, including preventing source-of-income discrimination. The bill sought to restrict a landlord's ability to consider income-qualifying methods, credit scores, and eviction history.

The bill would have placed limits on what security deposits landlords could demand. Those kinds of measures were aimed at turning back rising rents, especially in larger metros.

That bill "takes away the discretion of local elected officials to formulate housing policy that’s best for their community," Kelly said.

The Kansas Realtors had indicated support for House Bill 2378 and Senate Bill 391. They didn't take a position on House Bill 2745.