Senate-backed property tax bundle runs into wall in Kansas House over last-minute amendments

Rep. Jim Gartner, D-Topeka, warned House colleagues an unearned
Rep. Jim Gartner expressed frustration with several provisions tacked onto a "no-brainer" tax bill and sent to the House at the last minute. Representatives on Thursday did not concur with the Senate amendments. (Sherman Smith/Kansas Reflector)

TOPEKA — A Kansas property tax bill amended with bipartisan support in the Senate ran into trouble Thursday in the House, with one lawmaker saying that passing it without further review would be akin to boarding the Titanic.

House Bill 2313 began as a measure that expanded a law exempted Kansans in the military from paying property taxes on two vehicles, and it passed the House without opposition. The bill was modified in the Senate to include provisions to help retirees struggling to afford their homes, renew a public school funding tax levy and provide financial relief for smaller retailers hurt by temporary shutdown orders during the pandemic.

During an informational hearing in the House Taxation Committee, several legislators expressed displeasure that major amendments were given to them in the waning days of the session. While some pushed back against the idea of “kicking the can down the road,” the committee and subsequently the House chose not to concur with the Senate’s proposal.

“I am frustrated and tired that every year during veto session, we get a bill sent over to us from the Senate and they say, take it or leave it,” said Rep Jim Gartner, D-Topeka. “I’m upset because that’s not the way this process works, and we should take time. This is a complicated bill, and the Senate gives it to us on day, what, 86?”

On a voice vote, the House requested that a conference committee be established to sort out differences in the approach to the issue. With the session expected to end this week, it appears unlikely there will be time for the two sides to reach an agreement.

The bill would require a property tax refund from state and county governments to support certain small businesses forced to close, limit capacity or cut hours amid the COVID-19 pandemic. Larger retailers who were able to remain open — like grocery, liquor and hardware stores — would not qualify for the tax break.

To be considered for the tax break, businesses could have had no more than $2.5 million in annual revenue. Eligible businesses also could not have accepted more than $150,000 in other pandemic financial relief funds.

The individual benefit to each business under the program would be capped at $7,500 per year.

In the first year, the property tax refunds would cost the state treasury an estimated $29.7 million and counties a total of $14.6 million. The estimated cost the second year would fall to $16.6 million from the state and $8.2 million for counties.

The tax bundle was further amended to include a provision proposed by Sen. Tom Holland, a Baldwin City Democrat, that would provide qualifying Kansans over the age of 65 and disabled veterans with household incomes of less than $75,000 a property tax freeze. The “golden years” tax measure would refund a portion of property taxes paid equal to the total property tax increase.

The maximum amount of any refund would be $5,000. Holland estimated the cost to the state at $1 million in 2022 and about $14 million by 2024.

Another section of the bill mandated city, county and state governments waive property taxes after Jan. 1, 2022, for any business forced to close during a government-declared disaster.

Representatives of the Kansas Association of Counties and the League of Municipalities cautioned the House tax panel of the chilling effects this new section could have for future disaster response.

“This is a huge bill in front of you guys with a huge fiscal note for the state and for counties, huge policy implications with it,” said Trey Cocking, deputy director of the Kansas League of Municipalities. “I would just ask you guys to tread carefully and don’t do something that’s going to impair us in the future.”

Rep. Ken Corbet said kicking the can down the road would lead to further suffering of businesses financially harmed by the pandemic. (Sherman Smith/Kansas Reflector)

An extension of the full 20-mill property tax levy that generates $750 million annually for K-12 public schools was also added to the bill to appeal to skeptical legislators.

The Senate approved the bill by a vote of 33 to 6.

Rep. Ken Corbet, a Topeka Republican, acknowledged some provisions added by the Senate were not up to snuff, but said following a pandemic that saw many businesses and individuals suffer financially, it was imperative to act.

“I get kind of perturbed about whining about who’s going to pay for what, when the poor person had a business, had to prepay their sales tax; take their property tax from them. They had no income,” Corbet said. “They’re trying just to stay alive in this state. I think sometimes we forget why we’re here.”

However, Rep. Stephanie Clayton, D-Overland Park, was not as eager to accept the Senate’s provisions without further vetting. She said the House should not let their colleagues across the rotunda dictate their tax stances just because a few positive measures were stuffed into the bundle of tax legislation.

She said many of her constituents told her they have done well with the federal relief aid they received.

“I understand the motives of the Senate, but I think that, again, more study about cross-references of the types of federal benefits that a lot of these businesses are getting,” Clayton said. “I just don’t know if they really are hurting as much as we think they are and if this is really just an excuse to bust our budget.”

Rep. Jim Kelly, R-Independence, concurred with Gartner and Clayton on concerns over some amendments to the bill. He urged caution.

“I think it may be boarding the Titanic, and there are some things in this bill that are the iceberg that will take it down,” Kelly said. “I too think there’s a few things in here that need a lot more study and vetting before we jump on the Titanic.”