Revenue Neutral Rate

What is a revenue neutral rate?

The revenue neutral rate is the mill levy rate (tax rate) that would generate the same amount of property tax revenue as the year before using the current year’s assessed valuation.

Overview of Legislation

The Kansas Legislature passed Senate Bill 13 to increase transparency around municipal revenues. This new legislation requires that if a taxing jurisdiction (the County, City, school district or other special districts) wants to exceed the revenue neutral rate, then a special public hearing must be called to allow citizens the chance to speak specifically on the intent to exceed the revenue neutral rate. The Governing Body must take a roll call vote to exceed the revenue neutral rate. The mill rate is what determines a City's yearly revenue and budget. The Governing Body is planning to lower Roeland Park’s mill rate just not to a revenue neutral rate. This will equal a tax savings for all residents and allow the City to continue funding services, programs and capital projects.

Being revenue neutral means a taxing jurisdiction budgets the exact same amount of property tax revenue, in dollars, for the upcoming budget year as they did for the current year.

For example, If a city budgets for the use of $1 million of property tax revenue in 2022, being revenue neutral means a city should budget to use the same $1 million in 2023 as well; unless otherwise approved during a public hearing and roll call vote.

Calculation of Revenue Neutral Rate

Based on current assessed property values and the 2023 budget, Roeland Park will exceed the revenue neutral rate for 2023 taxes. Therefore, the City plans to hold a public hearing on August 22, 2022 at City Hall at 6 pm. The Council is currently planning to lower the mill rate, but is proposing to keep it over the revenue neutral rate to ensure that the City is able to continue to fund services and capital projects. The 2023 Proposed Budget also includes a number of Council objectives and the implementation of a City-wide curbside glass recycling service.

2023 Mill Rate is a currently planned estimate that is subject to final approval at the August 22nd Budget Adoption Meeting.

Process

As a tax paying resident, you will receive a technical and detailed letter in the mail from the County with information on the revenue neutral rate as it regards your property and taxing divisions. It will also have information on the planned public hearing in Roeland Park that will take place at City Hall on August 22, 2022 at 6 p.m. (you may also participate in the public hearing via Zoom at the link in the City's online calendar). 

Implementation and Timelines

Early August 2022: Estimated tax notice sent to all property owners by the county.

August 22, 2022: Roeland Park holds its Public Hearing to vote and discuss exceeding the Revenue Neutral mill rate all while still lowering the mill rate.

The new mill rate will be put into place for the 2023 budget year. The mill rate that is voted into effect will be reflected on 2023 tax statements.

Questions? Please reach out to Assistant City Administrator Erin Winn @ ewinn@roelandpark.org.

Resources

Sample of County tax notice to be sent out to all Johnson County residents

Senate Bill 13 

FAQs

How is revenue neutral defined?

From Senate Bill 13: Revenue neutral is defined as the tax rate for the current tax year that would generate the same property tax revenue as levied the previous tax year using the current tax year’s total assessed valuation. To calculate the rate county staff shall divide the property tax revenue by the total of all taxable assessed valuation in a taxing unit for the current year and then multiply by 1,000 to show mill levy. 

Did the City exceed revenue neutral last year?

Yes.

Why does Roeland Park want to exceed the revenue neutral rate?

A revenue neutral philosophy as defined by the Kansas State Legislature does not take into account inflation and increasing cost of service. The City is proposing to increase property tax revenue to provide the same level of service as the year before.

To provide residents with the same (or better) level of service, it costs more. Roeland Park is proposing to "exceed revenue neutral" and use the increase in revenue to help pay for increasing (due to inflation) costs for vehicle, equipment, building and infrastructure replacements (capital investment), public safety services, administrative services, street maintenance and parks and recreation services.

If the City were to stay revenue neutral every year, services and capital investment would both have to be reduced because the cost of both go up annually. With no growth in revenue there is no offset to ever increasing costs due to inflation.

Is my mill rate going to go down even though Roeland Park is proposing to exceed the Revenue Neutral Rate?

Yes. The Governing Body is expected to approve a 1 mill reduction for 2023. 

 When was the last time Roeland Park’s Mill Rate was lowered? 

The mill rate was lowered 2.5 mills in both 2018 and 2019 for a total reduction of five mills over two years.