Kansas Sen. Larry Alley on Tuesday proposed lifting a state-imposed cap on local property tax increases in exchange for exempting the first $20,000 of assessed value on residences from local mill levies.
Alley, a Republican from Winfield, said governing bodies would then take the blame for raising taxes. As it is, he said, people can't complain to an elected official about rising property taxes because county appraisers are appointed positions.
"If we do this," Alley said, "and if we take the cap off and they raise their taxes, then they can go to the city, they can go to the county, and those are all elected officials."
Alley floated the idea during a discussion in a Senate tax committee as an alternative to the tax break introduced by Sen. Rob Olson, R-Olathe.
Under existing law, the first $20,000 of assessed value on residential property already is exempt from the statewide school levy. Olson's idea was to double the exemption to $40,000.
Olson said property taxes — the "most regressive burden" — are going through the roof.
"We don't talk a lot about property tax, what it's doing to our state as a whole," Olson said.
Others raised concerns with Olson's plan, which would drain an estimated $46 million from public schools.
Instead, Alley proposed, the state could provide tax relief without affecting schools or the state budget by extending the existing $20,000 exemption to all local mill levies.
The 2015 Legislature imposed limits on municipalities to prevent property tax increases beyond the rate of inflation. Alley said that cap could be lifted in conjunction with providing residential tax relief.
Alley's approach would force local leaders into voting on a tax rate increase to offset lost revenue. As a side effect, some of the local tax burden would shift to commercial properties.
"It's easier to give away other people's money," said Trey Cocking, deputy director for the League of Kansas Municipalities.
Cocking said Alley's proposal would have a significant impact, essentially cutting multiple mills from city budgets, and translate into a fundamental shift in tax burden from residential to business.
"There's not this giant waste, fraud and abuse pot that we can just go to," Cocking said, "so if that were to be cut, we would have to raise the mill levy to make up for it."
Additionally, Cocking said, the plan would give landlords an incentive to avoid making upgrades to homes.
Senators also entertained legislation brought by Sen. Dennis Pyle, R-Hiawatha, that would exempt Social Security benefits from state income tax collections.
Pyle said retiring Kansans are fleeing the state in part because they can find a better tax climate elsewhere. He provided figures that show 10 percent of payments from the Kansas Public Employees Retirement System are going out of state.
Pyle previously proposed the tax break, which would have a $93.2 million impact on the state budget, as an amendment to windfall tax reform that passed the Senate earlier in the session.
"Taxing Social Security benefits as a revenue source is bad policy," Pyle said.
Sen. Tom Holland, D-Baldwin City, said he would prefer to target relief to seniors by freezing their property taxes.
Holland introduced legislation earlier in the session that protects disabled Kansans and those who are 65 and older from tax increases if their home is valued at less than $350,000 and the household income is under $50,000. That would have a $9.4 million impact on the state budget.
The idea, Holland said, is to shield those who are vulnerable to property tax pressure because they live in an area with high growth or a diminishing commercial tax base.
"It gives property tax certainty, which I think is particularly important to our Kansas seniors," Holland said.