A bill advocating a new property tax system for Kansas was introduced in the House taxation committee Thursday that would abolish the current property tax system and replace it with a system backers say is more closely linked to ability to pay.

The legislation, which has not yet been assigned a bill number, is being sponsored by Rep. Steve Brunk, R-Bel Aire, and has more than 20 co-sponsors.

Proposition K would stop all appraisal-driven tax increases and would be implemented by first establishing a baseline for all current properties.  This baseline value would replace the appraised valuations. If Proposition K is adopted during the 2009 legislative session the baseline for properties would be set at properties’ Jan 1, 2010 appraised valuations.  

Once a baseline for the property is established a fixed formula of an annual 2 percent increase would be applied to the baseline value for properties. The 2 percent increase would compensate for inflation, allowing governments to maintain steady income from the taxes.

The tax reform would be a complete overhaul of the current ad valorem tax system which bases property taxes on the appraised value of a person’s assets.

The tax system “Proposition K” was written by Art Hall, PhD., executive director of the Center for Applied Economics at the University of Kansas School of Business, and is being promoted by the Flint Hills Center for Public Policy.

“The problem with property tax fundamentally is that it’s a wealth tax and its not based on income at all so there can be a big disconnect between the amount of the tax and the ability to pay the tax,” Hall told Kansas Liberty. “And that is what we have really seen in the last ten years in Kansas.”

According to Proposition K's executive summary, “Over the last decade, the appraised value of homes in Kansas has grown faster than income in counties representing 98 percent of the population; in fact 84 percent of Kansans live in counties where residential values have grown at least 30 percent faster than their income.”

The report also points out that population and inflation should not have caused the spike in property taxes since the population in Kansas has only increased 7 percent in the last ten years and property taxes have increased by almost 3 times the rate of inflation.

"Total property taxes have increased 83% over the last ten years; tax rates have gone up slightly but most of the damage has been caused by a 66% escalation in appraised values. The changes are even worse for  Residential property, where runaway appraisals drove a 119% tax increase," according to the summary.

Hall said Proposition K would remedy the main problems of our current tax system – including the inability for residents to plan for tax increases- while still maintaining a steady, predictable stream of revenue for local governments.

“The goal was to have a stable funding base for local government and appraisal is not necessary for that goal,” Hall told Kansas Liberty. “So I stepped out of the box and asked the question of do we really need to have all these appraisals and can the system really work without it. And then it was just a matter of coming up with formulas that work."

Hall said the best way for Kansas residents to fully understand the new tax policy would be to try and view it as something completely separate and different from the current tax policy.

“You will have to unlearn what you know in order to really appreciate what we have accomplished,” he said. "And the key word with Proposition K is predictability because it allows for a high level of predictability for the government and for the taxpayer.”

Proposition K would also address construction and economic development, backers said. The other key element of the plan is to adopt a per-square-foot standard for new construction, meaning that any new construction would adopt the annually-adjusted baseline values of similar properties in close proximity. In cities, this would mean adopting baseline values of similar properties located within a 200-foot radius and for counties the system would use properties within a 1,000 foot radius.

Despite the name, Proposition K would be statutory so it would not require a constitutional amendment, according to Dave Trabert, president of the Flint Hills Center for Public Policy.

“This does not affect cities, counties and school districts and maintains complete government autonomy,” Trabert said. “And it does not favor one group over any other while providing great stability.”

Trabert also said the transition to the new system would be considered revenue neutral and would not be difficult to implement.

Trabert has presented Proposition K to legislators, communities, and various Kansas groups, and said the feedback for the idea has been largely positive. 

“It has really gotten a tremendous response from the public,” Trabert told Kansas Liberty. “There has obviously been a lot of good questions and for the most part everyone has been very enthusiastic.”

- Holly Smith

 Resources

•  Participate in Proposition K Poll here: http://www.flinthills.org/content/view/207/1/

•  Read the Executive Summary here: http://www.kansasliberty.com/resources/executive-summary-proposition-k
• Flint Hills Executive Summary in .doc format: http://www.flinthills.org/component/option,com_docman/task,doc_download/Itemid,1/gid,1141/
• Flint Hills Center for Public Policy: http://www.flinthills.org/

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