Kansas REALTOR® Advocacy: Final Review of the 2016 Legislative Session
The Kansas Legislature wrapped up the 2016 Legislative Session around 3:30 AM on Monday, May 2nd. At just 74 days, this session was the shortest Kansas legislative session in over 42 years. This was again a very difficult session as the Kansas Legislature was forced to reduce spending and transfer funds to close $351 million in projected budget deficits over the next few fiscal years.
Despite these challenges, Kansas REALTORS® were very successful in strengthening the right of voters to vote when cities and counties increase property taxes by more than inflation, protecting REALTORS® and other small business owners from burdensome tax increases, increasing the fairness of the property tax appeals and valuation system for property owners and protecting the housing market from price control mandates.
When 8,500 Kansas REALTORS® stand together, we deliver a clear and effective message to the Kansas Capitol that the real estate industry is critical to the Kansas economy and that property ownership continues to be an essential component of the American Dream. Thank you for your assistance and for continuing to be a valuable member of the REALTOR® Party by supporting the REALTORS® PAC (RPAC) with your generous investments and lending your voice to our advocacy efforts at the Kansas Capitol.
#1. Strengthening the Right of Kansas Property Owners to Vote When Cities and Counties Increase Property Taxes Over the Previous Year by More Than Inflation
WHAT’S HAPPENING?:
- Over the last 18 years, the property tax burden on Kansans has increased three times faster than the rate of inflation. In 2015, the Kansas Legislature gave voters the right to vote when cities and counties increase property taxes by more than the rate of inflation over the previous year.
- Unfortunately, the property tax vote requirement was not scheduled to go into effect until January 1, 2018, which would have given cities and counties a free pass to increase property taxes for two more years without a public vote. In addition, the law was riddled with too many exemptions that did not relate to growth and development.
PROGRESS ON THE ISSUE:
- Following intensive negotiations with cities and counties, we reached an agreement with cities and counties to move up the implementation date of the property tax vote requirement by one year to January 1, 2017. This means that cities and counties can only increase property taxes for one more year without being required to seek public approval for property tax increases that exceed the rate of inflation.
- In addition, the law eliminates several existing loopholes to the law and adds several new exemptions to the law that will allow cities and counties to respond to disasters and emergencies and provide infrastructure and public safety-related services to new development and growth.
WHAT THIS MEANS FOR KANSAS REALTORS®?:
- Kansas has some of the highest property tax rates in the entire nation on both commercial and residential property. Over time, the property tax vote requirement should help hold down future increases in the property tax burden.
#2. Protecting Realtors® and Other Small Business Owners From Burdensome State Income Tax Increases by Protecting the Pass-Through Exemption
WHAT’S HAPPENING?:
- While state income and sales tax revenues grew significantly over the previous year, state tax revenues have not kept pace with increases in the state budget and spending. As a result, the Kansas Legislature was forced to either increase revenues or reduce spending by $351 million over two fiscal years (2016 and 2017) in order to come up with a balanced budget for the state.
- Many members of the media and the Kansas Legislature have pushed to increase state income taxes on small business owners and self-employed professionals like REALTORS® by repealing the pass-through exemption, which gives small business owners a state income tax break on self-employed and small business income.
PROGRESS ON THE ISSUE:
- Working behind the scenes, Kansas REALTORS® helped to defeat an attempt to repeal the pass-through exemption and impose state income taxes on all wage and non-wage income received by small business owners and self-employed professionals like REALTORS®. This would have increased the state income tax burden on these small businesses and professionals, in some cases by thousands of dollars.
- Several options that were discussed behind closed doors would have retroactively increased state income taxes on small business owners and REALTORS® for any income earned after January 1, 2016. For those REALTORS® and small business owners who file and pay quarterly estimates, this would have forced you to increase your quarterly payments for the rest of the year by an artificial amount to cover the cost of the retroactive tax increase.
WHAT THIS MEANS FOR KANSAS REALTORS®?:
- Just as the housing market has emerged from the multi-year recession and REALTORS® are starting to experience renewed financial health and prosperity, now is not the time to impose retroactive and burdensome income tax increases on small business owners and professionals such as REALTORS®. Our advocacy efforts on this issue have the potential to save you hundreds, if not thousands of dollars, on your state income taxes over the next few years.
#3. Protecting Consumer Choice In The Housing Market By Banning Cities And Counties From Adopting Or Enforcing Price Control Mandates
WHAT’S HAPPENING?:
- Activists are pushing local governments to adopt “inclusionary zoning” requirements, which would put price control mandates on the rent or sale of housing. These price controls act as a tax on new housing units and can lead to a significant decrease in the number of housing units built and an increase in the cost of market-rate housing.
PROGRESS ON THE ISSUE:
- Kansas REALTORS® successfully pushed the Kansas Legislature to protect consumer choice in the real estate market and promote affordable housing for Kansas families by passing legislation to ban cities and counties from adopting or enforcing price control mandates on privately-owned property. Cities and counties should not be interfering in private real estate transactions negotiated between landlords and tenants and buyers and sellers.
WHAT THIS MEANS FOR KANSAS REALTORS®?:
- Rent and sales prices will continue to be negotiated in the fair market and local governments will not be allowed to interfere with private real estate rental and sales transactions. REALTORS® strongly support a fair and free real estate market where consumers can choose the housing options that best meet their individual needs.
