Kansas Democratic senator pitches reform bill anchored by robust property tax relief

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Gov. Laura Kelly likes focus on property taxes, still negotiating with GOP leadership

TOPEKA — Outgoing state Sen. Tom Holland recommended Wednesday ahead of a special session of the Kansas Legislature a state tax reform bill highlighted by residential, commercial and agricultural property tax relief rather than offering a package emphasizing state income tax rate cuts.

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Holland, a Baldwin City Democrat who decided not to seek reelection after 22 years in the Legislature, said during a news conference at the Capitol that he would urge lawmakers to increase state exemptions in all property tax classes and trim the state property tax mill levy for public schools. With inclusion of property tax relief for veterans, Holland’s approach would deliver nearly $200 million annually in property tax reductions.

“I am here to announce a tax proposal for next week’s special session that provides all Kansans with meaningful, significant tax relief that is fiscally sustainable,” Holland said. “Make no mistake, the number one hated tax in any state government or local government scheme is property tax.”

He referred to his strategy as the “Statehouse Kumbaya Tax Plan,” because contents were drawn from legislation receiving bipartisan support in the House and Senate. Overall, he said, his bill would offer an average $361 million annual reduction in state tax revenue through 2028. It would leave an estimated $600 million in the state treasury after four years, but that would be a significant reduction from the current surplus of $1.9 billion.

Under Holland’s bill, the state would adopt an income tax exemption on Social Security benefits that would cost the state $152 million in the first year by level off to about $125 million annually going forward. He didn’t propose a broad reduction in income tax rates, arguing it was impossible to make progress on property taxes if the Republican-led Legislature and Gov. Laura Kelly devoted too much capital to lowering income taxes.

GOP legislative leaders and Kelly have tangled for the past two years on what would be an appropriate reduction in state income taxes, given the constitutional imperative to balance the state budget. GOP lawmakers say Kansas had sufficient cash reserves to make big income tax changes, especially for benefit of wealthy Kansans. Kelly has sought modest reductions that lower the risk of a budget quagmire over the next five years.

“I, like most legislators, have heard from many of my constituents regarding their tax burden,” Holland said. “Kansas property owners will be extremely pleased to hear that this plan provides approximately $1 billion, with a ‘b,’ in property tax relief over five years.”

Holland’s plan would nearly triple the state’s residential property tax exemption to $125,000 and shrink the state property tax mill levy for public schools from 20 mills to 18 mills. He said his bill would obligate state government to make up for reductions in property tax revenue for K-12 schools so that burden wouldn’t shift to local property taxpayers.

He said the interest among Kansas politicians in rolling back state income tax rates was problematic because legislation sent to the governor would torpedo the state budget. Rank-and-file legislators understand Kelly vetoed three tax bills in the 2024 legislative session because they weren’t sustainable, he said.

Grace Hoge, a spokeswoman for Kelly, said she appreciated Holland’s inclusion of significant property tax relief in his proposal.

“Kansans have been asking for property tax relief for months,” Hoge said. “There continues to be productive conversations with legislative leaders on responsible tax relief for all Kansans that does not threaten the state’s long-term fiscal stability.”

Members of the House and Senate expect to convene Monday for committee meetings dedicated to sorting through options for a new tax bill. Senate President Ty Masterson, R-Andover, and House Speaker Dan Hawkins, R-Wichita, said Republican legislators would develop a fresh bill that made a priority of modifying income taxes.

In addition, both chambers plan to work during the special session on a bill outlining economic development incentives that might attract the Kansas City Chiefs or Kansas City Royals to new stadiums built in Kansas.

While there has been considerable legislative interest in making a deal on tax reform, the idea of issuing bonds for construction of professional sports stadiums in Wyandotte or Johnson counties hadn’t been vetted by legislators and could run into dedicated opposition.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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