Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam Proffitt, Director Laura Kelly, Governor


February 16, 2023


The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2200 by House Committee on Taxation
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2200 is
respectfully submitted to your committee.
HB 2200 would exempt certain amounts of a homestead property’s assessed valuation for
certain retired and disabled veterans beginning in tax year 2024. The amount of the exemption
would be determined according to the disability rating for a service-connected disability from the
U.S. Department of Veterans Affairs as follows:
Amount of the Exemption
Disability Rating of Assessed Valuation
30.0 percent to less than 40.0 percent $3,000
40.0 percent to less than 50.0 percent $3,500
50.0 percent to less than 60.0 percent $4,000
60.0 percent to less than 70.0 percent $4,500
Above 70.0 percent Full exemption
In addition to the amount of exempt assessed valuation for a disabled veteran with a
disability rating of at least 30.0 percent but less than 70.0 percent, the bill does not prohibit the
disabled veteran to also claim the homestead property tax refund. If a disabled veteran has a
service-connected disability rate of at least 70.0 percent or is permanently confined to a wheelchair,
then all property taxes on the homestead would be exempted and the disabled veteran would not
be eligible for the homestead property tax refund program. The bill would allow a disabled veteran
The Honorable Adam Smith, Chairperson
Page 2—HB 2200

who is 65 years of age to receive homestead property exemption of its assessed value that is equal
to the percentage of their disabled veteran’s disability rating but would no longer be eligible for
the homestead property tax refund program. A surviving spouse of a qualified disabled veteran
would be able to continue to be eligible for this new homestead property tax exemption unless the
surviving spouse remarries.
Passage of HB 2200 would decrease property tax revenues by exempting certain amounts
of a homestead property’s assessed valuation for certain retired and disabled veterans. The state
funds directly affected by this bill are the two building funds, the Educational Building Fund (EBF)
and the State Institutions Building Fund (SIBF). The Department of Revenue estimates this bill
would decrease revenues to these two funds by $465,000 in FY 2025, with $310,000 from the EBF
and $155,000 from the SIBF. Less property tax revenue would also affect state expenditures for
aid to school districts. To the extent that less property tax revenue would be available from the
state’s uniform mill levy to fund expenditures for school districts, the state would be required to
provide an additional $6,280,000 in state aid from the State General Fund through the school
finance formula in FY 2025. Local governments that levy a property tax would also receive less
revenue; however, the amount of reduced property tax revenues was not estimated. The fiscal
effect to state revenues during subsequent years would be as follows:
FY 2026 FY 2027
School District Finance ($6,700,000) ($7,150,000)
EBF (340,000) (360,000)
SIBF (170,000) (180,000)
($7,210,000) ($7,690,000)
To formulate these estimates, the Department of Revenue reviewed data on disabled
veterans from the Kansas Commission on Veterans Affairs. The Department estimates that of the
43,653 veterans in Kansas receiving disability compensation and 3,957 surviving spouses, 24,878
would qualify for this new exemption. The Department was unable to determine the number of
disabled veterans who are permanently confined to a wheelchair.
To formulate the fiscal note, the Department reviewed data from the Housing Assistance
Council, National Center for Veterans Analysis, and Statistics Military Officers Association of
America. The Department assumes that the average value of veteran-owned home is $160,100,
average statewide levy is 129.65, five-year average annual property tax increase is 6.7 percent,
35.0 percent of the eligible disabled veterans are 65 years old and older, and 74.5 percent of
veterans in Kansas receiving disability own their home.
The bill would have no fiscal effect on the operations of the Department of Revenue or the
Board of Tax Appeals. Any fiscal effect associated with HB 2200 is not reflected in The FY 2024
Governor’s Budget Report.
The League of Kansas Municipalities and the Kansas Association of Counties indicate that
the bill has the potential to reduce the amount of local property tax revenues that are used in part
The Honorable Adam Smith, Chairperson
Page 3—HB 2200

to finance local governments. However, they do not have a basis on which to estimate the amount
of property taxes that would be exempted to make a precise estimate of the fiscal effect on local
governments.


Sincerely,

Adam Proffitt
Director of the Budget

cc: Lynn Robinson, Department of Revenue
Craig Neuenswander, Department of Education
Wendi Stark, League of Kansas Municipalities
Jay Hall, Kansas Association of Counties
Jody Allen, Board of Tax Appeals