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HB 2396

Senate Substitute for HB 2396 by Committee on Assessment and Taxation - Authorizing the use of a protest petition to limit funding of a taxing jurisdiction by property tax revenues exceeding a certain amount, providing for a protest petition notice to be sent to taxpayers and modifying the content requirements of the revenue neutral rate hearing notice.

2025-2026 Regular Session

HB 2396 creates a voter-driven cap on property tax funding, requires notices, and establishes the ASTRA fund with state transfers to counties for local services.

Died on Senate General Orders
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Bill Summary · HB 2396

Summary — HB 2396 (Senate Substitute) — Property tax protest petitions, notice changes, and ASTRA fund

Status: Committee report recommending substitute be passed by Senate Committee on Assessment and Taxation. Introduced: February 4, 2025. Primary sponsor: Saiki.

Purpose

HB 2396 establishes a voter-driven protest process to limit property-tax–funded budgets of local taxing jurisdictions, requires taxpayer notice when a jurisdiction’s proposed property-tax funding exceeds a set limit, modifies revenue-neutral rate notice content, and creates state payment and reimbursement mechanisms to accompany the new regime.

Key provisions

  • Property-tax funding limit (when triggered by a successful petition)

    • If a valid protest petition is successful, a taxing jurisdiction’s property-tax revenue for the year is limited to the prior year’s property-tax revenue plus allowable increases for:
    • The annual percent change in the Consumer Price Index for All Urban Consumers — Midwest Region (or 3% whichever is less, per substitute);
    • Revenue from new construction, improvements, remodeling or renovation (excluding ordinary maintenance/repair); and
    • Increased revenues dedicated to pay bonds approved by voters at elections held on or after July 1, 2025.
    • The limit does not apply to the State or to school districts.
    • Any taxing jurisdiction that fails to adopt a budget timely is subject to the limit without needing a petition.
    • The protest provisions do not apply in years when no transfer is made from the State General Fund to the ASTRA Fund.

  • Protest petition mechanics and administration

    • County clerks must notify county treasurers when a taxing jurisdiction proposes property-tax funding above the allowable amount.
    • County treasurers must maintain standard protest petition forms (designed by the Director of Accounts and Reports), post availability on county websites/social media, and keep physical copies available for signature.
    • Qualified voters have 30 days after the governing body certifies the levy to file a petition. A petition validly signed by at least 10% of the votes cast for U.S. President in the most recent general election in the taxing district triggers the funding limit.
    • If a jurisdiction must amend its budget after a successful petition, it must certify its levy to the county clerk by October 1.

  • Taxpayer notice and reimbursement of costs

    • County clerks must mail (or electronically send with consent) a prescribed “protest petition notice” to each taxpayer whose property lies in a taxing jurisdiction exceeding the funding limit. Required content includes: explanation of the petition process, current and prior-year appraised/assessed values, prior-year tax rates/amounts, proposed current-year rates/estimates, and clear ID of taxing jurisdictions subject to petition.
    • For calendar years 2025–2026, the State will reimburse county clerks’ printing/postage costs from a newly created Protest Petition Notification Costs Fund; taxing jurisdictions must reimburse any costs not covered by the State.

  • ASTRA Fund (Acknowledging Stewardship of Tax Revenue and Appropriations)

    • Creates ASTRA Fund and requires a demand transfer of $60.0 million from the State General Fund (on or before July 15; specified in versions as July 15, 2025), increasing 2% annually thereafter.
    • State Treasurer apportions the transfer to counties: 65% by population, 35% by assessed valuation; within counties, distributions to county and cities are proportional to property taxes levied.
    • Payments to qualifying counties/cities are made on or before January 15 following the transfer and must be used for specified local services (roads, law enforcement, elections, public health & safety, etc.). Jurisdictions that exceed the allowed property-tax amount forfeit their share; forfeited amounts revert to the State General Fund.

  • Revenue-neutral rate changes and repeal aspects

    • The bill repeals or modifies existing revenue-neutral rate notice/hearing requirements and the Taxpayer Notification Costs Fund in some versions.
    • Changes required to revenue-neutral notice form: include columns for rates used in calculations, rows showing totals for prior year, revenue-neutral year, and proposed year, and refer to current-year levies as “Proposed Tax” (instead of “Maximum Tax”).

Who is affected

  • Local taxing jurisdictions (counties, cities, other local governments that levy property tax) — budgets, notice obligations, potential loss of additional property-tax revenue if petition succeeds.
  • County clerks and treasurers — new administrative duties for notices and maintaining petition forms.
  • Property taxpayers — will receive new notices and have an opportunity to sign protest petitions (10% threshold).
  • The State — fiscal impact via ASTRA transfers and temporary reimbursement fund.

Fiscal and procedural notes

  • Estimated State fiscal effect (Division of the Budget): demand transfer of $60.0 million in FY2026, $61.2M in FY2027, $62.4M in FY2028 (2% annual increase). Local fiscal effects are indeterminate—some jurisdictions gain ASTRA payments; others may lose the ability to raise property-tax revenue.
  • Procedural deadlines: 30-day petition filing window after levy certification; county treasurer/county clerk posting/notice duties; October 1 certification if budget amended; January 15 ASTRA payments; annual Treasurer reporting of recipients/nonrecipients.

For full text, fiscal note, and committee analyses, see the Legislative Research Department and Division of the Budget materials linked in the bill file.

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

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