"Buying a Home in Kansas: What Does the Revenue Neutral Rate Notice Tell You About Next Year's Property Tax?"

The envelope from the county clerk arrives at many Kansas homes in early August, and if you have just bought one, it is worth finding the copy for your address. Inside is a table with one row for every government that taxes your address: the county, the city, the school district, the library, maybe a fire district. Each row has two tax rates side by side, a yes or a no, and a date, a time and a room number for a public meeting. The county is clear that this is not a bill.

In Kansas, the revenue neutral rate notice shows you which local governments plan to collect more property tax than last year, before the tax is set. It lists the rate each one is proposing and its public hearing date between August 20 and September 20. That is a preview of the tax rates behind the bill your servicer will pay from your escrow account in December.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including Kansas. The property tax inside a Kansas mortgage payment is set by local governments and only collected by your lender, and Kansas gives you an unusually clear look at it before the number is final.

What is the revenue neutral rate in Kansas?

It is the tax rate that would bring in the same amount of property tax as last year, on this year's values. Johnson County describes it as the mill levy that would generate the same property tax revenue as the previous year, based on the current year's certified assessed valuation. A mill is one dollar of tax for every $1,000 of assessed value, and a Kansas home is assessed at 11.5 percent of its appraised value.

If home values in a city rise, the same mill levy would collect more money than last year without anybody voting on it. The revenue neutral rate is the lower levy that would keep the collection flat. A city, county or school district that wants to go above it has to say so in public first.

The rule is in Kansas's truth-in-taxation statute, K.S.A. 79-2988. Under it, the county clerk calculates each taxing government's revenue neutral rate on or before June 15 and includes it in the valuation figures that government uses to build its budget.

The Kansas calendar from June to December

The steps run on fixed dates, and they line up closely with a summer closing.

1. June 15. The county clerk calculates the revenue neutral rate for each taxing government.
2. July 20. A governing body that intends to exceed its revenue neutral rate tells the county clerk by this date, with its proposed rate and the date, time and place of its hearing.
3. At least 10 days before the hearing. The governing body publishes its intent on its own website, if it has one, and in a county newspaper. The statute says the notice includes its proposed tax rate, its revenue neutral rate and the hearing details.
4. Also at least 10 days before the hearing. The county clerk notifies each taxpayer with property in that government's area, by mail to the last known address. The same statute sets that duty.
5. August 20 to September 20. The hearing has to fall inside this window. The governing body hears from taxpayers and votes on whether to exceed the rate.
6. November and December. The tax is calculated and the statements go out. Reno County says taxes are calculated November 1 and statements are issued later in November, and K.S.A. 79-2001 has the treasurer mail them before December 1.

How do I read the revenue neutral rate notice?

The notice goes out to property owners in the county, and Reno County's own explanation is a good guide to what it is. You are not being asked to pay anything. It is also not a new valuation notice, so it does not reopen an appeal of your home's value.

Each row is one taxing government. Each row shows the revenue neutral rate next to the rate that government is proposing. KSHB's walk-through of Johnson County's notice describes a yes or no on each row for whether that government intends to exceed it. Johnson County lists the hearing details for every yes. Some counties also print an estimate of the tax on your property under the proposed rates.

I would read the rows in this order:

• I start with the yes rows. Those are the governments planning to collect more than last year. A no row is a government staying at or under its revenue neutral rate.
• Then I compare the two rates on each yes row. The gap between the revenue neutral rate and the proposed rate is the size of the increase that government is asking for.
• I write down the hearing date for each yes row. Every one of them lands between August 20 and September 20.
• I treat any estimate on the notice as an estimate. Johnson County's newsroom says the figures are estimates, special assessments are not included, and the actual tax can come in higher or lower.

Some Kansas neighborhoods also pay special assessments, which are yearly installments for streets, sewer or water lines built for that neighborhood. Those installments are billed on the same tax statement as the general property tax, and they are not on this notice. If your home has them, the special assessments on a Kansas tax statement are a separate line you will want to add back in.

Who sets your Kansas property tax: the county appraiser and the local governments

Your Kansas property tax comes from two numbers multiplied together, and two different offices set them.

The county appraiser sets the value. That notice goes out by March 1, and checking the county's value on a home you just bought walks through how to look it up and how a payment under protest still lets you question it after closing.

The governing bodies set the rate, and the revenue neutral rate notice is your look at that side. Reno County puts the split simply: property values decide each owner's share of the tax, and budgets decide the total amount collected.

So a flat mill levy can still raise your bill. If the appraiser raised your value and a city kept its levy the same, that city collects more from you. That is why a government holding its levy flat can still show up as a yes on the notice. The Topeka area guide walks through a real example, where the city held its levy flat and still voted to exceed its revenue neutral rate.

The notice and the escrow on your Kansas loan

A Kansas tax year is billed late in the year. Under K.S.A. 79-2004, the bill can be paid in full by December 20, or half by December 20 and the rest by May 10 of the next year. If your loan has an escrow account, your servicer pays it out of the money collected in your monthly payment.

On a summer closing, the lender sets up that escrow account from the tax information it has at the time, which is usually last year's bill. The rates on this year's bill have not been voted on yet. Kansas is unusual because it shows you, in writing and on a schedule, which of those rates are about to move and by how much each government is asking.

If the new bill comes in higher than the amount the escrow was built on, the servicer finds the difference at its annual review. You can usually pay that shortage at once or have it spread across the next year's payments, and the monthly escrow resets to match the new bill. How an escrow account collects for taxes and insurance covers that review step by step, and why your property taxes can change after you buy explains why the listing's tax figure is rarely the number you end up paying.

Reading the notice does not change the escrow by itself. It gives you time, because you can see in August the direction the December bill is likely to go, which means a change in your payment the following year is something you already expected.

Steps to take before and after a Kansas closing

Before you write the offer. If you are shopping between late July and September, the information is already public. Many counties post it online: Riley County keeps a revenue neutral rate page, Johnson County posts its estimated tax notice, and Douglas County publishes a list of revenue neutral rate hearings. You can look up which governments that serve the address you are considering have said yes. When we build your payment, I would rather use that information than a listing's tax line.

If you close in the summer. The clerk's notice may have gone to the seller, if they were still the owner of record when the county prepared its mailing. You can ask the county clerk's office, or check the county's website, for the notice on your parcel.

Between August 20 and September 20. The hearings are public. If you want to hear why your city or school district is proposing more, you can attend. The governing body hears from taxpayers before it votes, and these are the meetings where the tax rates on your bill are decided.

In late November and December. Your tax statement arrives, and you can compare it with the August notice and with the escrow amount on your loan. If your servicer pays the bill, you can ask for the date it paid and the amount, which also matters for the January 31 payment under protest window if you plan to question the value.

Mistakes that are easy to avoid

Paying the notice. It is information, and counties such as Reno and Johnson say plainly that it should not be paid. The bill you pay comes in November or December, or your servicer pays it for you.

Reading a yes as the final rate. The proposed rate is what that government has published as its plan. The vote at the hearing decides it.

Leaving out special assessments. The estimate on the notice does not include special assessments, so a home that pays those yearly neighborhood installments will have a larger bill than the notice suggests.

A made-up example of the notice and your escrow

Numbers below are made up to show the mechanism. The values and mill levies are invented, and nothing here is a Kansas average or a quote.

A client closes on a home in Kansas in July. The lender sets up escrow from last year's bill. In August she looks up the notice for her parcel on the county's website, and it shows the city as a yes, proposing 3 mills above its revenue neutral rate. The other rows stay where they were, and the appraised value did not change.

Appraised value                             $300,000
Assessed value at 11.5 percent               $34,500

Last year's total levy (invented)           120 mills
Last year's tax                               $4,140

This year's total levy, city's
proposed 3 mills added (invented)           123 mills
This year's tax                               $4,244
                                             -------
Difference for the year                         $104
Added to the monthly escrow, about               $9

In this made-up example, the August notice told her about a $104 increase four months before the bill was printed. The servicer's annual escrow review later reset her monthly escrow about $9 higher. The $104 the account came up short could be paid at once or spread across the next year's payments, and both were numbers she had already seen.

Planning a Kansas purchase around the calendar

If you are buying in Kansas, the tax line in your payment is worth building from the address's own information rather than a national rule of thumb. The Kansas mortgage page covers what is particular about a Kansas closing, and the Kansas City, Kansas guide explains how the revenue neutral rate shows up in Johnson County and Wyandotte County budget news.

Run your numbers and you will see rates for your scenario, your debt ratio and closing costs priced for Kansas. No credit pull, no account, nobody calls you. If you would rather talk it through, you are welcome to call me, and we can look at the notice for the address you are considering and how it runs into your payment.

Nothing here is a loan approval, a denial, a commitment to lend, or tax or legal advice. Each governing body sets its own rate, and the county clerk and treasurer administer the notice and the bill.

Common questions

What is the revenue neutral rate on my Kansas property tax notice?

It is the mill levy that would collect the same property tax as the year before, using this year's assessed values. The county clerk calculates it for every city, county, school district and other taxing government on or before June 15, under K.S.A. 79-2988. A government that wants to collect more must publish its intent and hold a public hearing first.

Is the Kansas revenue neutral rate notice a tax bill?

No. Reno County and Johnson County both say the notice is for information and should not be paid. It lists each taxing government, its revenue neutral rate, its proposed rate and the hearing details for any government planning to exceed it. Your tax statement comes later, in November or December, and if you have an escrow account your servicer pays it.

When are revenue neutral rate hearings held in Kansas?

Between August 20 and September 20. A governing body that intends to exceed its revenue neutral rate must tell the county clerk by July 20. It then publishes notice at least 10 days before its hearing, on its website if it has one and in a county newspaper. The vote on whether to exceed the rate is taken at that hearing.

Can my Kansas property tax go up if the mill levy stays the same?

Yes. The tax is the mill levy multiplied by your assessed value, so a higher appraised value with a flat levy produces a higher bill. That is why a government holding its levy steady can still be listed as exceeding its revenue neutral rate. Your home's value is set by the county appraiser, and it has its own notice and appeal routes.

How does the revenue neutral rate notice affect my mortgage escrow in Kansas?

It does not change the escrow by itself, but it shows the likely direction of the next tax bill. A lender usually builds a new escrow account from last year's bill. If the December bill comes in higher, the servicer finds the difference at its annual escrow review and adjusts the monthly escrow. The notice lets you see that coming in August.

I bought my Kansas home this summer. Will the notice come to me?

It may have gone to the seller, if they were still the owner of record when the county prepared its mailing. Many county websites post the notice information, and the county clerk's office can tell you which governments serving your address plan to exceed their revenue neutral rate and when their hearings are.