Rising property taxes are squeezing Kansas families and businesses, creating financial stress and threatening economic stability. While a local spending limit would provide the most effective approach to rein in tax growth, it is politically impractical today. In its absence, pairing a more effective property tax increase limit with a new valuation cap offers a sound approach.
Kansas lawmakers must address this issue urgently and focus on crafting reforms that balance immediate relief with long-term sustainability while avoiding the pitfalls seen here and in other states.
The Property Tax Problem in Kansas
The table below shows that Kansas property taxes grew at a staggering rate between 1997 and 2023. Residential property taxes increased by 342%, far outpacing Kansas population growth of 12.8% and CPI for Midwest Cities inflation of 80%.
Over the same period, the share of property taxes paid by residential properties rose from 39% to 55%, while the share paid by commercial and industrial properties dropped from 29% to 24%. These shifts have burdened many homeowners, particularly young families and first-time buyers, who are struggling to keep up with rising costs.
As property valuations climb—sometimes by double digits annually—many taxpayers are being priced out of their homes. Meanwhile, local government spending grows unchecked, driving higher tax bills regardless of appraisal changes. These trends underscore the need for targeted reforms that protect taxpayers and promote fairness.
The Role of Valuation Caps: A Step, But Just Part of the Solution
A property valuation cap, which limits the annual increase in appraised property values, provides immediate relief to homeowners by stabilizing their tax bills. This improved predictability can help families budget more effectively and avoid sudden, unaffordable increases. However, valuation caps come with understandable concerns.
California’s Proposition 13 highlights the risks. By capping annual valuation increases at 2% and tying assessments to 1% of appraised value, Prop 13 has created inequities in the tax system. Long-time property owners enjoy artificially low tax bills, while new buyers—including young families—shoulder a disproportionately high burden. This shift discourages mobility, often locking people into their homes, and distorts the housing market. On the other hand, too many people are being taxed out of their homes, so policymakers must consider these tradeoffs.
While a valuation cap can improve the situation, it cannot address the root cause of tax increases: local government spending. Without broader reforms, valuation caps risk creating long-term distortions and providing only temporary relief.
A More Comprehensive Approach
A tax increase limit, which caps the total property tax revenue local governments can collect, offers a more balanced and effective solution when combined with a valuation limit. This helps protect taxpayers from runaway valuation changes and restricts local officials from unilaterally imposing large tax increases. Tax increase limits address the core issue of rising tax bills, but on their own, they don’t protect families against large valuation increases and the loss of their property.
Texas offers lessons on both the potential and pitfalls of tax increase limits. Despite imposing rollback rates in 2019 that limit annual property tax revenue growth to 3.5% for cities and counties and 2.5% for school districts, Texas left loopholes for new property valuations, natural disasters, and other exemptions. As a result, local governments could increase revenues substantially despite the limits. In 2023, Texas allocated $12.7 billion over two years in state funds to reduce school district maintenance and operations property taxes, which are essentially a statewide property tax, resulting in a $4.5 billion decline in school district property taxes in 2023. But overall property tax collections still rose by $650 million (up 0.8%) that year because other local governments raised their property taxes by $5.1 billion.
Kansas must learn from Texas’s experience by implementing a strict tax increase limit with no exemptions and requiring voter approval for all increases.
The Ideal but Impractical: Local Spending Limits
Local government spending is the ultimate driver of rising property taxes. Between 1997 and 2023, total property tax revenue in Kansas grew by 216%, driven largely by budget increases at the local level. Spending limits that tie changes in local government budgets to a maximum rate of population growth plus inflation are the most effective ways to control tax burdens.
Colorado’s Taxpayer’s Bill of Rights (TABOR) provides a model for such limits, requiring voter approval for revenue increases and aligning government growth with economic realities. While spending limits face significant political resistance in Kansas, they represent the ideal solution for long-term sustainability.
A Better Path Forward
Given the current political landscape, Kansas should pursue a combination of valuation caps and tax increase limits to address the immediate burden on taxpayers. To be effective:
- Tax increase limits should cap revenue growth at 0% without voter approval, ensuring transparency and accountability.
- Valuation caps should apply across all property types to prevent inequities and distortions.
- Policymakers must commit to eventually enacting spending limits at both the state and local levels to address the root cause of rising taxes.
Kansas has the opportunity to avoid the pitfalls seen in California and Texas. By pairing a valuation cap with a robust tax increase limit, Kansas can provide tax relief to homeowners while maintaining a more transparent property tax system. Ensuring these reforms are airtight, with no loopholes or exemptions, is critical to their success.
A Brighter Future for Kansas
Property tax reform is essential to making Kansas a more affordable and attractive place to live and do business. By addressing the immediate burden with valuation and tax increase limits—and committing to long-term solutions like spending controls—lawmakers can protect taxpayers and foster economic growth.
This legislative session offers a chance to take meaningful action. Thoughtful reforms, grounded in sound tax policy, can create a better future for all Kansans. With bold leadership, Kansas can become a national model for responsible, equitable property tax policy.
