County to host September public hearing about potentially exceeding Revenue Neutral Rate

ROBERT PIERCE • Leader & Times

Typically in July, the Seward County Commission meets with department heads for two days to hear budget requests, and a budget is set for the upcoming fiscal year in August.

Commissioners met with department heads this July to hear their needs, but after the Kansas Legislature introduced the Revenue Neutral Rate (RNR) as a replacement for the former tax lid in 2021, the county now has had an additional question to answer before passing a fiscal year budget.

Local taxpayers will get to help answer that question at a hearing during the commission’s regular meeting Sept. 6, and the question concerns whether the budget should include an increase to the mill levy to exceed the RNR.

The RNR is the tax rate in mills that would generate the same property tax revenue in dollars as levied the previous year using the current tax year’s assessed valuation. Administrator April Warden further explained the rate at the commission’s July 18 meeting.

“This is something that was implemented last year, and we went through it for the first time in 2021,” she said. “It’s very confusing for the constituents. It’s very confusing for those of us who have only been through it one time.”

Warden said with many unhappy with the tax lid, the legislature opted to replace it with the RNR, which was implemented through Senate Bill 13 and House Bill 2104, which established new notice and public hearing requirements if a proposed budget was to exceed the rate.

“The tax lid was about actual dollars,” she said. “The revenue neutral rate is about the mill levy not total dollars.”

For fiscal year 2022, which ended June 30, the mill levy was 47.604, and 2021’s final assessed valuation was $247,029,956, making one mill worth $247,029. Under the proposed fiscal year 2023 budget, the mill levy would drop to 43.433, and as of June 8, the estimated valuation was $263,553,248.

“We will not have final certification of valuation until the November abstract,” Warden said. “However, your budgets have to be certified and sent to the state prior to that, so we have to use what we know for now.”

Warden too said current outstanding appeals  before the Board of Tax Appeals could affect the valuation as well, but as of June 8, one mill was equal to $263,553. Because of valuation not being certified until November and the outstanding appeals, she proposed exceeding the RNR.

“Please know that does not mean when it comes time to have your budget hearings, you will exceed it, but if you don’t provide the notice of intent to exceed and something happens where we do have to exceed it, you’re not allowed to do that, and you’re set at what the valuation is, what it changes to and how you’re going to set your budget,” she said.

Warden said it is not the intention of the commission to raise the mill levy, and with the proposed rate already down 4.171 mills from the previous fiscal year, exceeding the RNR could still be below the 2022 number.

“I’m asking you to hold the hearing to exceed the revenue neutral rate in the event we find out your valuation does change in your N ovember abstract,” she said.

Warden emphasized wanting to exceed the RNR is primarily due to the late finalization of valuation.

“If valuation changes, that’s why we’re going to go ahead and do the notice of intent to exceed,” she said.

Under the RNR law, indication of the rate and intent to exceed it must come with a proposed mill levy. Warden said after talking with county financial counselors, that rate would be set at 45.619.

Also under the law, a public hearing has to take place between Aug. 20 and Sept. 20 to allow for comment on the possible exceeding of the RNR. 

With a vote of 4-1, with Commissioner Steve Helm voting against, commissioners approved having that hearing at the board’s first September meeting. That meeting will start at 5:30 p.m. Sept. 6 in the commission chambers in the Administration Building. The vote likewise set the new proposed mill levy at 45.619.