Revenue Neutral Rate (RNR)

Revenue Neutral
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.

i.e. If a city uses $1 million of property tax revenue in 2023, being revenue neutral means they plan to only use $1 million in 2024 as well.

Estimated Tax Notice
In early August, all property owners will receive an "estimated tax notice" from Johnson County. Please note: this is not a bill and does not include information on special assessments that may be charged.

Is the mill levy rate reported on the Estimated Tax Notice final?
No. The mill levy rate reported on the Estimated Tax Notice was Shawnee's proposed rate.

Final mill levy rates will be assigned by Johnson County after final valuations are applied and will be reflected on tax bills received in December.

Why am I being sent this form?
Changes in Kansas law (K.S.A. 79-2988) changed the public engagement and notification requirements for adopting budgets; all counties are now required to mail every property owner a single estimated tax notice with information related to their specific property's taxes and the revenue neutral rate (RNR) compared to the proposed rate for each taxing subdivisions.

What will be on the Taxpayer Notification Form?
As a Shawnee property owner, your property is included in a number of "taxing jurisdictions", aka taxing subdivisions. The State of Kansas, Johnson County, the City of Shawnee, and USD 232 are all examples of taxing jurisdictions.

The taxpayer notification form tells you two main things:

Which of your taxing jurisdictions plan to exceed the revenue neutral rate
Notifications of public hearings for each taxing jurisdiction that plans to exceed the property tax revenue neutral rate

Ex. If the county, the city, and the school district jurisdictions all decide to exceed the revenue neutral rate, your estimated tax notice will inform you of that intent and tell you when you can participate in each of the public hearings.

Sample Notice of Estimated Ad Valorem Taxes

Below is information for Shawnee residents on what the tax notification form may mean for you, as the taxpayer. Check out the "How to Calculate your City Property Tax" page for additional information.

Revenue neutral is when 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.

i.e. If a city uses $1 million of property tax revenue in 2023, being revenue neutral means they plan to only use $1 million in 2024 as well.

If a taxing jurisdiction plans to use more property tax revenue in the next budget year compared to the current year, even $1 more, they would exceed revenue neutral and need to hold a public hearing.

The revenue neutral rate is the mill levy rate that would generate the exact the same amount of property tax revenue as the year before, using the current tax year's total assessed valuation.

A jurisdiction doesn't only increase revenue to provide new services; they often need to increase property tax revenue to provide the same level of service as the year before.

While the revenue
neutral law is an important step for municipal budget transparency, it does not take inflation into account. As property values are rising, so are the cost of goods and services.

To provide residents with the same (or better) level of service, it costs more. Cities often "exceed revenue neutral" and use a modest increase in revenue to help pay for things like the increased cost of chemicals for the city pool, asphalt for streets, mowing services, and other community priorities.

If the City were to stay revenue neutral every year, they would have to provide this year's services, with this year's prices, on last year's budget.

No.

The average property in Shawnee increased in value by 11% this year, but your taxes would not increase by that same amount. The City lowers the mill levy to help re-balance the "appraised value to collected property revenue" scale.

If the City does need to increase the property revenues for the upcoming year, it would be by a modest amount compared to the increase in appraised property values.

Property owners are going to receive a letter in the mail explaining each jurisdiction's intent (or non intent) to exceed revenue neutral (use more property revenues than the year before).

Since the law is in place to promote transparency, we want to help property owners understand the notification they receive.

The mill levy rate is the only influence the City has on your tax bill; to help offset the increase in property values, the City lowers the mill levy rate. This way, there is not a 1:1 increase in your tax bill when the County increases the City's property values.

Sample Notice of Estimated Ad Valorem Taxes

(A) The revenue neutral rate of each taxing subdivision relevant to the taxpayer’s property;

(B) the proposed property tax revenue needed to fund the proposed budget of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate;

(C) the proposed tax rate based upon the proposed budget and the current year’s total assessed valuation of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate;

(D) the tax rate and property tax of each taxing subdivision on the taxpayer’s property from the previous year’s tax statement;

(E) the appraised value and assessed value of the taxpayer’s property for the current year;

(F) the estimates of the tax for the current tax year on the taxpayer’s property based on the revenue neutral rate of each taxing subdivision and any proposed tax rates that exceed the revenue neutral rates;

(G) the difference between the estimates of tax based on the proposed tax rate and the revenue neutral rate on the taxpayer’s property described in subparagraph (F) for any taxing subdivision that has a proposed tax rate that exceeds its revenue neutral rate; and

(H) the date, time and location of the public hearing of the taxing subdivision, if the taxing subdivision notified the county clerk of its proposed intent to exceed its revenue neutral rate.

The City of Shawnee provides all City-related budget information and timeline on the Finance webpage
For more information on County-related budgets, visit jocogov.org/department/budget-and-financial-planning/current-budget
Additional information regarding the recent change in Kansas law can be found at jocogov.org/department/appraiser/publications/truth-taxation-explanation
Shawnee residents can find their appraised value and assessed value at jocogov.org/department/appraiser/property-data
Johnson County's Estimated Tax Notice page, https://www.jocogov.org/department/treasury-taxation-and-vehicles/estimated-tax-notice

Ad valorem property taxes are taxes based on the assessed value of a property. The most common ad valorem property tax examples include:

Real estate: land and the home and/or other buildings on the land
Personal property: trailers, motor homes, golf carts, motorbikes, business machinery and more
Assessed Utilities: pipelines, natural gas, electrical lines and railroad

Property tax statements will be issued after mill rates are finalized and taxes are calculated, on or before November 1.