New legislation to limit increases in taxable assessed valuation addresses two concerns opponents raised last year, with two major improvements.
Some people last year feared that limiting appraised values would distort the property’s market value. This year’s legislation, SCR 1616, doesn’t affect appraisals and instead limits the increase in the taxable assessed value of a property. For example, residential property is assessed at 11.5% of its appraised value, so a home appraised at $250,000 this year has an assessed taxable basis of $28,750. If next year’s appraised value increases by 15% to $287,500 it’s taxable assessed value would normally be $33,063 and if the total mill rate is 150, the homeowner would pay $4,959 in property taxes. A 3% limit on the taxable assessed valuation, however, would result in $4,442 in property taxes (without any mill rate increases), for a savings of $517
Transferability is good for the buyer and seller
Previously, valuations were reset when a property was sold, but under SCR 1616, the taxable assessed value of the property is transferred to the new owner.
Let’s assume the appraised value of the home in the above example increases by 8% each year over the next ten years. The appraised value is $620,691 and the assessed value is $71,379. If the home sells for $600,000 without an assessment limit, its taxable assessed value would be $69,000; with the limit in place since 2027, the buyer’s taxable assessed value is a little over $44,000. It’s like buying a home for $600,000 but only being taxed at about $390,000.
The transferability in SCR 1616 makes it more affordable to buy or sell a property.
Assessed valuation limit will save taxpayers money
There are still some objections to SCR 1616, but most of them are easily explained.
Opponents of an assessed valuation limit claim that it won’t reduce taxes because local elected officials will increase mill rates to make up the difference. We believe that is unlikely because elected officials have consistently (albeit falsely) told taxpayers that they didn’t raise taxes because the mill rate didn’t increase. Mill rates have generally declined slightly each year, but they would have to increase significantly to produce the same tax revenue with an assessment limit.
To capture the full 8% valuation increase and raise taxes by that amount, the mill rate would have to jump from 150 to 241 over 10 years, and that would probably get a lot of people voted out of office.
Between 2004 and 2017, the average mill rate increased by 1.1%; since then, the average mill rate declined by 1.1%.
If local officials can no longer take advantage of large assessed valuation increases, it stands to reason that we might see rates rise by 1% or so. So, rates will likely rise a bit, but not by more than most elected officials think they can get away with before re-election becomes a threat.
Farmers and ranchers benefit from an assessment limit
The Kansas Farm Bureau’s lobbyist testified against the assessment limit, fearing that owners of agricultural land would carry a larger portion of the tax burden. He referenced calculations from the Kansas Livestock Association (KLA) that showed a very small shift in Shawnee County that would have occurred between 2019 and 2024.
Our research shows that farmers and ranchers would greatly benefit from an assessment limit.
Ag land has a special valuation formula based on use value, which produces alternating periods of increases and declines. Chart 1 below shows the annual rates of change, with the blue line reflecting actual changes. The formula produced valuation declines between 2005 and 2010, then annual increases from 2011 to 2020 before running negative again through 2024. Notice the double-digit valuation jumps each year from 2013 through 2017. (The orange line is used to project future changes.)
Chart 2 shows how values would have changed with a 3% assessed valuation limit. The increases are capped at 3%, and the cumulative, compounding impact produces big savings. Even allowing for significantly higher mill rate increases than those actually implemented, we estimate that ag landowners would have saved $1.3 billion through 2024. (See my legislative testimony for details.)
KLA’s calculations focused only on a few years when ag values were declining and didn’t account for how much would have been saved when values spiked. Our testimony also shows savings totaling almost $800 million over the first ten years of an assessment limit.
Assessment limits have been around for decades
Some opponents raised concerns about what might happen with an assessment limit, like discouraging new home building, but it was only speculation. Assessment limits have been in place for decades across 17 states, and none of the opponents presented proof of any actual negative impacts in those states.
Voter support for an assessment limit is strong and rapidly rising. Our public opinion poll at the end of 2024 found 64% in favor and 18% opposed; nine months later, it was 75% support and only 13% opposed. That’s an enormous improvement in net favorability, and we think we know what’s driving it.
The last three years for which data exists show a 26% increase on the average Kansas home. Unfortunately, per capita personal income adjusted for inflation declined by 3%, creating a punishing affordability gap.
The data clearly show why voters overwhelmingly want a constitutional amendment to limit increases in taxable assessed valuations. Still, getting two-thirds of the House and Senate to approve it and let Kansans vote on it is an uphill battle because too many Republicans and Democrats in both chambers don’t want to upset local government officials in an election year.
The real objections to an assessed valuation limit are political, not data-driven.
