The Puzzling Pieces of Property TaX

Recently, I was in a room where tables were covered with pieces of various jigsaw puzzles. One table had 2000 pieces that were in an array of colors and shapes. Looking at that multitude of pieces did not reveal how the finished effort would look.   A guiding picture on a box is an essential part of understanding “what goes where.” When I look at the tax structure our state uses to fund its many programs, it is much like a puzzle that lacks a definitive image unless you can see the structure as a whole. Even as a whole, we may not like the picture the tax revenues in our state portray.

In two months, property taxes will be due for many classes of property. It seems like a good time to try to describe the picture of property tax, which is the single largest tax collected in Kansas, exceeding totals of either sales or income tax. In contrast to sales and income tax, due to legislation I supported, the State of Kansas will no longer levy property tax starting in 2026.   All property taxes will be used by educational institutions and local units of government. The total amount collected in Kansas in FY2024 was $11.2B, an increase of about 1.5% more than in 2023 and about 50% more than was collected in 2014.

The history of property tax can be traced to feudal Europe, where monarchies not only took a portion of what was produced on the land (think income tax), but also required anyone that owned land to pay to the leader a portion of the value of that land (property tax). It is interesting to note that even though colonists were reluctant to pay taxes to the throne, they soon adopted a similar patronage to government, essentially paying for the privilege of ownership. A double standard seems to exist in that we encourage citizens to own property. That property is often homes, land, personal possessions, and businesses. Through taxes we essentially take a portion of that property back to the government every year. This seems especially egregious when you consider that the dollars used to buy property have already had income tax and often sales tax previously  assessed on those dollars before property is purchased.

The actual calculation of the property tax that you pay on a given piece of property (if it doesn’t qualify for an exemption) is a three-step process. The first step is to determine the appraised value of the property. County appraisers determine a fair market value for all property except for agricultural property. Land for agricultural use is valued using a formula that determines its use value. This process keeps valuations on land used for growing crops from increasing due to factors not related to its production capability. Use valuation also prevents rapid swings in ag land values since the value is tempered by using multiple years.

Once the valuation is determined, a multiplier is used to allocate what percentage of the appraised value will be subject to tax.  Residential property has 11.5% of its appraised value subject to tax. Twenty-five percent of commercial property is subject to tax. Agricultural land has 30% of the use valuation that is counted for taxation. That “taxable” amount is then multiplied by the tax rate.

Kansas has a total of 4500 distinct taxing districts. Each one has a unique mill levy. The taxing district your property is in will determine the applicable rate. Tax rates are listed as mill.  A mill equals 0.1%. 1 mill is equal to $1 in property tax per $1,000 of a property's determined taxable value.  A mill levy of 100 translates into $100 per $1,000 which is 10% of the taxable value.

Rates in Kansas range from 9.2% to 21.2% with an average rate of 13.4%. A significant portion of that will be for the Unified School District (USD). Most school districts in north central Kansas levy around 55 mill (5.5%), but USD393 (67 mill) and USD487 (61 mill) are higher. School districts in Kansas range from 29.66 to 79 mill with an average of 53. A further complication is that taxing districts set their budget, not the mill levy. The levy is then calculated using the proposed budget. The important thing to remember is that if your taxes increase, it is due to the increased spending authorized by the taxing entity.

The many variables that determine the final property tax you pay on your property contribute to the puzzling nature of property tax. Underlying this complexity is a more troubling mentality that those who work hard, are judicious in how they spend their money, and save for the future by investing in property should pay the majority of taxes. If we are to continue to be the land of opportunity that has been a guiding principle through our history, we need to reward ownership, not punish it. The two counties I represent have made hard decisions to hold the line on property tax.  Saline and Dickinson County governments are doing a great job. The complete puzzle picture shows that nearly every other unit of local government has increased the amount they collect. That is not a puzzle, that is a completed picture that many find distasteful.