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Bill Summary · HB 2394

HB 2394 — Establishing a “tax use value” for certain property classes (Kansas)

Status: Introduced Feb 4, 2025 — Referred to House Committee on Taxation
Primary sponsor: Walt Blackman; cosponsors include David Marshall Sr., Emanuel “Chris” Welch, Nicolle Grasse, Michael Crawford, Harry Benton, Meg Loughran Cappel, and others.

Purpose / Intent

The bill creates a new “tax use value” methodology to limit year‑to‑year taxable valuation growth for several classes of property (residential, mobile homes used for residence, commercial & industrial property, and buildings/improvements on land devoted to agricultural use). The aim is to smooth taxable values over multiple years by allowing the taxable (use) value to be the lower of current fair market value (FMV) or a multi‑year average of FMVs.

Key provisions

  • New Section 1: Applies to
    • Real property used for residential purposes (including multi‑family),
    • Real property for mobile/manufactured home communities (and the lots),
    • Mobile homes used for residential purposes,
    • Real property used for commercial and industrial purposes,
    • Buildings/other improvements located on land devoted to agricultural use.
  • Tax use value definition: for each covered property, the tax use value is the lower of:
    • Fair market value (FMV) for the tax year (per K.S.A. 79‑501); or
    • An average of FMVs that gradually incorporates prior years.
  • Phased averaging schedule (starts tax year 2026):
    • Tax year 2026: tax use value = current year FMV.
    • 2027: average of 2027 FMV and 2026 FMV (2‑year average).
    • 2028: average of current and prior 2 years (3‑year average).
    • ...each subsequent year adds one prior year until reaching a 7‑year average (current + prior 6 years).
  • Exception for significant new construction/renovation: any new structures, improvements, or remodeling/renovation that increase appraised value by 50% or more (excluding ordinary maintenance/repair) are valued at FMV for the tax year in which the change occurs.
  • Administrative duty: county clerk in each county must calculate the tax use value for each property.
  • Amends K.S.A. 79‑1439 to reference tax use value for the identified classes and retains assessment rates (e.g., residential and mobile homes assessed at 11.5%; commercial/industrial at 25%).

Fiscal and operational impact

  • The Kansas Department of Revenue expects reduced property tax revenues (limits taxable value growth) with fiscal effects beginning FY 2028 (tax year 2027 impacts FY 2028).
  • Division of the Budget estimated reductions to state receipts tied to the 20‑mill uniform school levy and building funds as follows (reductions shown as negative amounts):
    • FY 2028: School district finance – ($23,650,000); Educational Building Fund (EBF) – ($1,180,000); State Institutions Building Fund (SIBF) – ($590,000); total ≈ ($25,420,000).
    • FY 2029: School district finance – ($48,940,000); EBF – ($2,450,000); SIBF – ($1,225,000); total ≈ ($52,615,000).
    • FY 2030: School district finance – ($75,960,000); EBF – ($3,800,000); SIBF – ($1,900,000); total ≈ ($81,660,000).
  • Local governments: Kansas Association of Counties and League of Municipalities note indeterminate local fiscal effects; revenues to local taxing jurisdictions would decline in aggregate but impacts could shift between property classes.
  • Administrative impacts: county appraisal offices/county clerks must calculate tax use values annually; potential costs for public education about the change. Department of Revenue reports no direct operational fiscal effect.

Practical implications

  • Owners of properties in the affected classes may see slower increases in taxable value in rising‑market years (due to averaging), but owners undergoing qualifying major improvements would be taxed at full FMV the year of the change.
  • School funding: reduced property tax base tied to the uniform mill may require additional State General Fund appropriations to maintain the Base Aid for Student Excellence (BASE); absent such appropriation, state aid could be prorated (reduced) to keep formula totals whole.

Procedural notes / timeline

  • Bill introduced Feb 4, 2025 and referred to Taxation committee.
  • Tax use value schedule begins with tax year 2026 (first year uses current FMV); multi‑year averaging phases in thereafter until a 7‑year average is reached.

Compiled from official sources — confirm details with the bill’s official record.

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