Session of 2024
SENATE BILL No. 332
By Senator Olson
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AN ACT concerning taxation; relating to the local ad valorem tax
reduction fund; authorizing a distribution of moneys from such fund in
fiscal year 2025 and all fiscal years thereafter; providing for the
distribution of all moneys received from such fund to residential
property taxpayers in the form of a state rebate; providing for reports to
the legislature and performance audits; amending K.S.A. 65-163j, 65-
3306, 65-3327, 75-2556, 79-1479, 79-2960 and 79-2961 and K.S.A.
2023 Supp. 79-2959 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 65-163j is hereby amended to read as follows: 65-
163j. (a) The dedicated source of revenue for repayment of a loan to a
municipality may include service charges, connection fees, special
assessments, property taxes, grants or any other source of revenue lawfully
available to the municipality for such purpose. In order to ensure
repayment by municipalities of the amounts of loans provided under this
act, the secretary, after consultation with the governing body of any
municipality which receives a loan, may adopt charges to be levied against
individuals and entities served by the project. Any such charges shall
remain in effect until the total amount of the loan, and any interest thereon,
has been repaid. The charges shall, insofar as is practicable, be equitably
assessed and may be in the form of a surcharge to the existing charges of
the municipality. The governing body of any municipality which receives a
loan under this act shall collect any charges established by the secretary
and shall pay the moneys collected therefrom to the secretary in
accordance with procedures established by the secretary.
(b) Upon the failure of a municipality to meet the repayment terms
and conditions of the agreement, the secretary may order the treasurer of
the county in which the municipality is located to pay to the secretary such
portion of the municipality's share of the local ad valorem tax reduction
fund as may be necessary to meet the terms of the agreement,
notwithstanding the provisions of K.S.A. 79-2960 and 79-2961, and
amendments thereto. Upon the issuance of such an order, the municipality
shall not be required to make the tax levy reductions otherwise required by
K.S.A. 79-2960 and 79-2961, and amendments thereto.
(c) Municipalities which that are provided with loans under this act
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shall maintain project accounts in accordance with generally accepted
government accounting standards.
(d)(c) Any loans received by a municipality under the provisions of
this act shall be construed to be bonds for the purposes of K.S.A. 10-1116
and 79-5028, and amendments thereto, and the amount of such loans shall
not be included within any limitation on the bonded indebtedness of the
municipality.
Sec. 2. K.S.A. 65-3306 is hereby amended to read as follows: 65-
3306. The secretary's annual request for appropriations to the water
pollution control account shall be based on an estimate of the fiscal needs
for the ensuing budget year, less any amounts received by the secretary
from any public or private grants or contributions and moneys in such
account shall be used solely for the purposes provided for by this act.
Moneys allocated to a municipality shall be encumbered as an expenditure
of this account upon the formal letting of a contract for the improvement
notwithstanding the date on which actual payment is made of the state
financial assistance. Any municipality may contribute moneys to the state
water pollution control account. If there are no uncommitted or
unencumbered moneys in the water pollution control account, any
municipality applying for any water pollution control project as defined in
K.S.A. 65-3302, and amendments thereto, shall as a condition of such
application certify in writing to the secretary that a contribution in the
amount of twenty-five percent ( 25%) of the eligible cost of such project
will be made to the water pollution control account by such municipality
prior to formal letting of a construction contract. Upon receipt by the
secretary, each such contribution shall be retained in a subaccount of the
water pollution control account for use solely in the project for which the
municipality has made application.
Notwithstanding the provisions of K.S.A. 79-2960 and 79-2961, any
municipality applying for such a water pollution control project may make
such contribution from all or such part of its share of the local ad valorem
tax reduction fund as may be necessary for such purpose, and to the extent
such fund is pledged and used for such purpose the municipality shall not
be required to make the tax levy reductions otherwise required by K.S.A.
79-2960 and 79-2961. Taxes levied by any municipality by reason of its
failure to make such reduction in its levies shall not be subject to or be
considered in computing the aggregate limitation upon the levy of taxes by
such municipality under the provisions of K.S.A. 79-5003.
Sec. 3. K.S.A. 65-3327 is hereby amended to read as follows: 65-
3327. (a) The dedicated source of revenue for repayment of the loans may
include service charges, connection fees, special assessments, property
taxes, grants or any other source of revenue lawfully available to the
municipality for such purpose. In order to ensure repayment by
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municipalities of the amounts of loans provided under K.S.A. 65-3321
through 65-3329, and amendments thereto, the secretary, after consultation
with the governing body of any municipality which receives a loan, may
adopt charges to be levied against users of the project. Any such charges
shall remain in effect until the total amount of the loan, and any interest
thereon, has been repaid. The charges shall, insofar as is practicable, be
equitably assessed and may be in the form of a surcharge to the existing
charges of the municipality. The governing body of any municipality
which that receives a loan under K.S.A. 65-3321 through 65-3329, and
amendments thereto, shall collect any charges established by the secretary
and shall pay the moneys collected therefrom to the secretary in
accordance with procedures established by the secretary.
(b) Upon the failure of a municipality to meet the repayment terms
and conditions of the agreement, the secretary may order the treasurer of
the county in which the municipality is located to pay to the secretary such
portion of the municipality's share of the local ad valorem tax reduction
fund as may be necessary to meet the terms of the agreement,
notwithstanding the provisions of K.S.A. 79-2960 and 79-2961 and
amendments thereto. Upon the issuance of such an order, the municipality
shall not be required to make the tax levy reductions otherwise required by
K.S.A. 79-2960 and 79-2961 and amendments thereto.
(c) Municipalities which that are provided with loans under K.S.A.
65-3321 through 65-3329, and amendments thereto, shall maintain project
accounts in accordance with generally accepted government accounting
standards.
(d)(c) Municipalities which that receive a grant and an allowance
under the federal act with respect to project costs for which a loan was
provided under K.S.A. 65-3321 through 65-3329, and amendments
thereto, shall promptly repay such loan to the extent of the allowance
received under the federal act.
(e)(d) Any loans received by a municipality under the provisions of
K.S.A. 65-3321 through 65-3329, and amendments thereto, shall be
construed to be bonds for the purposes of K.S.A. 10-1116 and 79-5028,
and amendments thereto, and the amount of such loans shall not be
included within any limitation on the bonded indebtedness of the
municipality.
Sec. 4. K.S.A. 75-2556 is hereby amended to read as follows: 75-
2556. (a) The state librarian shall determine the amount of the grant-in-aid
each eligible local public library is to receive based on the latest
population census figures as certified by the division of the budget.
(b) Except as provided by subsection (d), no local public library shall
be eligible for any state grants-in-aid if the total amount of the following
paragraphs is less than the total amount produced from such sources for
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the same library for the previous year, based on the information contained
in the official annual budgets of municipalities that are filed with the
division of accounts and reports in accordance with K.S.A. 79-2930, and
amendments thereto:
(1) The amount produced by the local ad valorem tax levies for the
current year expenses for such library;
(2) the amount of moneys received from the local ad valorem tax
reduction fund for current year expenses for such library;
(3) the amount of moneys received from taxes levied upon motor
vehicles under the provisions of K.S.A. 79-5101 et seq., and amendments
thereto, for current year expenses for such library; and
(4)(3) the amount of moneys received in the current year from
collections of unpaid local ad valorem tax levies for prior year expenses
for such library.
(c) Local public library districts in which the assessed valuation
decreases shall remain eligible for state grants-in-aid so long as the ad
valorem tax mill rate for the support of such library has not been reduced
below the mill rate imposed for such purpose for the previous year.
(d) If a local public library fails to qualify for eligibility for any state
grants-in-aid under subsection (b), the state librarian shall have the power
to continue the eligibility of a local public library for any state grants-in-
aid if the state librarian, after evaluation of all the circumstances,
determines that the legislative intent for maintenance of local tax levy
support for the on-going operations of the library is being met by the
library district.
(e) The distribution so determined shall be apportioned and paid on
February 15 of each year.
Sec. 5. K.S.A. 79-1479 is hereby amended to read as follows: 79-
1479. (a) (1) On or before January 15, 1992, and quarterly thereafter, the
county or district appraiser shall submit to the director of property
valuation a progress report indicating actions taken during the preceding
quarter calendar year to implement the appraisal of property in the county
or district. Whenever the director of property valuation shall determine
that any county has failed, neglected or refused to properly provide for the
appraisal of property or the updating of the appraisals on an annual basis in
substantial compliance with the provisions of law and the guidelines and
timetables prescribed by the director, the director shall file with the state
board of tax appeals a complaint stating the facts upon which the director
has made the determination of noncompliance as provided by K.S.A. 79-
1413a, and amendments thereto. If, as a result of such proceeding, the state
board of tax appeals finds that the county is not in substantial compliance
with the provisions of law and the guidelines and timetables of the director
of property valuation providing for the appraisal of all property in the
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county or the updating of the appraisals on an annual basis, it shall order
the immediate assumption of the duties of the office of county appraiser by
the director of the division of property valuation until such time as the
director of property valuation determines that the county is in substantial
compliance with the provisions of law. In addition, the board shall order
the state treasurer to withhold all or a portion of the county's entitlement to
moneys from either or both of the local ad valorem tax reduction fund and
the city and county and city revenue sharing fund for the year following
the year in which the order is issued. Upon service of any such order on
the board of county commissioners, the appraiser shall immediately
deliver to the director of property valuation, or the director's designee, all
books, records and papers pertaining to the appraiser's office.
(2) Any county for which the director of the division of property
valuation is ordered by the state board of tax appeals to assume the
responsibility and duties of the office of county appraiser shall reimburse
the state for the actual costs incurred by the director of the division of
property valuation in the assumption and carrying out of such
responsibility and duties, including any contracting costs in the event it is
necessary for the director of property valuation to contract with private
appraisal firms to carry out such responsibilities and duties.
(b) (1) On or before June 1 of each year, the director of property
valuation shall review the appraisal of property in each county or district
to determine if property within the county or district is being appraised or
valued in accordance with the requirements of law. If the director
determines the property in any county or district is not being appraised in
accordance with the requirements of law, the director of property valuation
shall notify the county or district appraiser and the board of county
commissioners of any county or counties affected that the county has 30
days within which to submit to the director a plan for bringing the
appraisal of property within the county into compliance.
(2) If a plan is submitted and approved by the director the county or
district shall proceed to implement the plan as submitted. The director
shall continue to monitor the program to insure that the plan is
implemented as submitted. If no plan is submitted or if the director does
not approve the plan, the director shall petition the state board of tax
appeals for a review of the plan or, if no plan is submitted, for authority for
the division of property valuation to assume control of the appraisal
program of the county and to proceed to bring the same into compliance
with the requirements of law.
(3) If the state board of tax appeals approves the plan, the county or
district appraiser shall proceed to implement the plan as submitted. If no
plan has been submitted or the plan submitted is not approved, the board
shall fix a time within which the county may submit a plan or an amended
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plan for approval. If no plan is submitted and approved within the time
prescribed by the board, the board shall order the division of property
valuation to assume control of the appraisal program of the county and
shall certify its order to the state treasurer who shall withhold distributions
of the county's share of moneys from the county and city revenue sharing
fund and the local ad valorem tax reduction fund and credit the same to the
general fund of the state for the year following the year in which the
board's order is made. The director of property valuation shall certify the
amount of the cost incurred by the division in bringing the program in
compliance to the state board of tax appeals. The board shall order the
county commissioners to reimburse the state for such costs.
(c) The state board of tax appeals shall within 60 days after the
publication of the Kansas assessment/sales ratio study review such
publication to determine county compliance with K.S.A. 79-1439, and
amendments thereto. If in the determination of the board one or more
counties are not in substantial compliance and the director of property
valuation has not acted under subsection (b), the board shall order the
director of property valuation to take such corrective action as is necessary
or to show cause for noncompliance.
Sec. 6. K.S.A. 2023 Supp. 79-2959 is hereby amended to read as
follows: 79-2959. (a) There is hereby created the local ad valorem tax
reduction fund. All moneys transferred or credited to such fund under the
provisions of this act or any other law shall be apportioned and distributed
in the manner provided herein.
(b) On January 15 and on July October 15 of each year, the director
of accounts and reports shall make transfers in equal amounts that in the
aggregate a transfer in an amount equal to 3.63% of the total retail sales
and compensating taxes credited to the state general fund pursuant to
articles 36 and 37 of chapter 79 of the Kansas Statutes Annotated, and
amendments thereto, during the preceding calendar year from the state
general fund to the local ad valorem tax reduction fund, except that: (1) No
moneys shall be transferred from the state general fund to the local ad
valorem tax reduction fund during state fiscal years 2023, and 2024 and
2025; and (2) the amount of the transfer on each such date shall be
$27,000,000 $50,000,000 during fiscal year 2026 2025 and all fiscal years
thereafter. All such transfers are subject to reduction under K.S.A. 75-
6704, and amendments thereto. All transfers made in accordance with the
provisions of this section shall be considered to be revenue transfers from
the state general fund.
(c) The state treasurer shall apportion and pay the amounts transferred
under subsection (b) to the several county treasurers on January 15 and on
July October 15 in each year as follows: (1) 65% of the amount to be
distributed shall be apportioned on the basis of the population figures of
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the counties certified to the secretary of state pursuant to K.S.A. 11-201,
and amendments thereto, on July 1 of the preceding year; and (2) 35% of
such amount shall be apportioned on the basis of the equalized assessed
tangible valuations on the tax rolls of the counties on November 1 of the
preceding year as certified by the director of property valuation.
Sec. 7. K.S.A. 79-2960 is hereby amended to read as follows: 79-
2960. Each year, the county treasurer shall estimate the amount of money
each political subdivision in such county (including the county as one such
political subdivision) will receive from the local ad valorem tax reduction
fund. The state treasurer shall advise each county treasurer, prior to June
July 1 of each year, of the amount of the local ad valorem tax reduction
fund of the state that the state treasurer estimates (, using the most recent
available information), will be paid to such county on January 15 and July
October 15 of the following current calendar year. The county treasurer
shall before June 15 of each year, notify the treasurer of each political
subdivision of the estimated amount in dollars of the distributions to be
made from the local ad valorem tax reduction fund. Such estimate shall be
made in accordance with K.S.A. 79-2961. Each tangible property tax
levying political subdivision shall set out a local ad valorem tax reduction
fund item of income for one or more tangible property tax funds of general
application (excepting bond and interest funds), in its budget for the
current year tax levies, the amount which the county treasurer has
estimated as the share of such local ad valorem tax reduction funds to be
so credited. The director of accounts and reports shall make suitable
provision in the budget forms to be used by such subdivisions for listing
local ad valorem tax reduction fund income items.
Sec. 8. K.S.A. 79-2961 is hereby amended to read as follows: 79-
2961. (a) The county clerk shall certify to the county treasurer when
budgets are made pursuant to K.S.A. 79-2960 and amendments thereto and
tax levies are filed with the county clerk. Prior to crediting the proper
amounts under subsection (c) and except as provided in subsection (d), the
county treasurer shall divide the amount paid by the state treasurer to the
county treasurer among the county and all other taxing subdivisions of the
county except school districts and any incorporated city within which any
portion of the Fort Riley military reservation is located and which would
otherwise be a participant in the Riley county allocation, which comply
with the requirements of this act, in the proportion that the product of the
last preceding total tangible tax rate of each subdivision, times its
equalized tangible assessed valuation for the preceding year, is to the sum
of such products of all the tangible tax-levying political subdivisions,
except school districts and any incorporated city within which any portion
of the Fort Riley military reservation is located and which would otherwise
be a participant in the Riley county allocation, exclusive of the levy by the
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county for any deficiency for state purposes.
(b) No political subdivision shall be entitled to participate in the
distribution of any money appropriated to carry out K.S.A. 79-2960 and
amendments thereto and this section unless and until such political
subdivision has adopted and certified a budget for the ensuing year which
shows as a separate item the amount of the distribution to one or more tax
levy funds of general application within such subdivision except bond and
interest funds and has certified a tax levy for each such fund that will
produce a sum of money less than the amount which a maximum levy
would produce for each such fund, in an amount equal to or in excess of
the amount of such distribution. The budget of each political subdivision
also shall show that the aggregate levies made by such tangible property
tax-levying political subdivisions will produce a sum less than the amount
which the aggregate levy would produce in an amount equal to or in
excess of the aggregate amount of the budget items of such distribution
shown in the aggregate levy.
(c) In crediting the amount that has been divided pursuant to
subsection (a) or subsection (d), the county treasurer shall proceed as
follows: Upon receipt of the payment from the state treasurer each year,
credit the appropriate fund or funds of each political subdivision
complying with the provisions of this act with its proportionate share of
such payment and the county treasurer shall notify such political
subdivision of the amounts so credited. This section and K.S.A. 79-2960
and amendments thereto shall not apply to school districts.
(d) The amount paid by the state treasurer to the county treasurer of
each county under subsection (d) of K.S.A. 79-2959 and amendments
thereto, shall be divided only among the one or more community colleges
or municipal universities, or both, which received amounts under this
section from the payment made from the local ad valorem tax reduction
fund on January 15, 1983. The amount received by each such community
college or municipal university under this subsection shall bear the same
proportion to the total amount paid to such county under subsection (d) of
K.S.A. 79-2959 and amendments thereto, as the amount received by such
community college or municipal university under this section from the
payment made to such county from the local ad valorem tax reduction
fund on January 15, 1983, bears to the total amount received by all such
community colleges and municipal universities under this section from
such payment Not later than 60 days from the date the amount pursuant to
K.S.A. 79-2959, and amendments thereto, is received by the county
treasurer, the county treasurer shall distribute such amount to residential
property taxpayers in the form of rebates. The rebates to such taxpayers
shall be made in the form of rebate checks or as credits against the current
year's property taxes. If the rebates are made by credits against the current
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year's property taxes, the amount of rebate credit shall be stated on the
property tax statement of each residential property for the current year
and designated on such statement as "state rebate for residential property
taxpayers."
(b) The amount of rebate for each residential property shall be
determined by:
(1) Dividing the amount received by the county by the total assessed
valuation of all residential property in such county as of November 1 of
the current tax year; and
(2) multiplying the quotient determined under paragraph (1) by the
assessed valuation of such residential property for the current tax year as
of November 1.
(c) As used in this section, "residential property" means property
classified for property tax purposes within subclass (1) of class 1 and
subclass (1) of class 2 of section 1 of article 11 of the constitution of the
state of Kansas.
(d) On or before December 31 of each year, each county treasurer
shall transmit to the director of property valuation, on forms prepared and
supplied by the director of property valuation, a statement showing:
(1) The amount received from the state treasurer;
(2) the date such amount was received;
(3) the total assessed valuation of all residential property in such
county as of November 1 of the current tax year;
(4) the method by which rebates were made to residential property
taxpayers; and
(5) the date of such rebates.
(e) On or before January 31 of each year, the director of property
valuation shall make an annual report to the legislature of such reported
information from each county by filing a copy of the report with the chief
clerk of the house of representatives and with the secretary of the senate.
The director shall also post a copy of the annual report on the website of
the division of property valuation.
(f) The legislative post audit committee shall annually direct the
legislative division of post audit to conduct a performance audit of at least
five counties to examine compliance with the provisions of this section.
Such performance audits shall be conducted during calendar years 2025
through 2029, and each performance audit report shall be submitted to the
legislature on or before January 15 of each succeeding year.
Sec. 9. K.S.A. 65-163j, 65-3306, 65-3327, 75-2556, 79-1479, 79-
2960 and 79-2961 and K.S.A. 2023 Supp. 79-2959 are hereby repealed.
Sec. 10. This act shall take effect and be in force from and after its
publication in the statute book.
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