Kansas Audit: $54 Billion Tax-Exempt, $1.2 Billion Unexplained
Summary
A first-ever estimate from Kansas's nonpartisan legislative audit office finds $54 billion of the state's real property -- 15% of its entire tax base -- sits outside the property tax rolls, costing state and local governments roughly $1 billion a year, almost all of it local revenue. The audit could not say why most of that property is exempt: Kansas's own tracking data is too broken. About 4,800 properties worth $1.2 billion carry no exemption code at all, a random sample turned up a code that has been wrong for more than 30 years, and the state's own official annual report on exemptions has undercounted them by $3.6 billion since a 2017 coding change nobody finished implementing.
A rough number, by the audit's own admission
Representative Kristey Williams requested the audit in 2025; the Legislative Post Audit Committee authorized it that May. Auditors pulled property records for all 105 Kansas counties from the Kansas Department of Revenue (KDOR) and compared taxable to exempt real property values for 2024. Because exempt properties sit off the tax rolls with no assigned assessment rate, the office had to estimate what each would owe if it were taxed -- and says so plainly: the result 'should be interpreted as a rough, general estimate of forgone tax revenue,' not a precise figure. Even on that rough basis, the $1 billion in estimated 2024 forgone revenue is a real number against a real backdrop: it equals roughly 18% on top of the $5.6 billion Kansas state and local governments actually collected in real property taxes that same year. Nearly all of the $1 billion is money local governments -- not the state -- never collected; the state's own share, about $12 million, would otherwise fund building upkeep at state colleges and juvenile institutions.
View data as table
| Total appraised value, 2024 | $366 billion | |
|---|---|---|
| Taxable | $312 billion | 85% |
| Exempt | $54 billion | 15% |
The state can't say why a chunk of it is exempt
Kansas law recognizes seven broad categories of real property tax exemption -- government, education, public service and nonprofit, energy and utility, economic development, agriculture, and a catch-all 'other' -- and lawmakers should be able to see what each one costs. The audit found it couldn't sort the $54 billion in exempt property into those categories, because county-level exemption codes are too unreliable. About 4,800 properties -- 7% of the state's 72,000-property exempt population, appraised at $1.2 billion -- carry a blank code in KDOR's data; auditors could not determine why they're tax-exempt. A random sample of 100 exempt properties found 10 with a code that looked wrong or inconsistent -- not projectable statewide, the audit cautions, but seen 'frequently enough' to signal a broader problem. One example: a Fort Hays State University property was coded as exempt agricultural land, a category capped at an 8-year exemption, when a county appraiser assigned that code in 1993. It has been wrong for more than 30 years, and KDOR does not review county coding for consistency.
View data as table
| No exemption code on file | $1.2 billion | 4,800 properties, ~7% of exempt population |
|---|---|---|
| Omitted from KDOR's official 2024 report | $3.6 billion | IRB + economic development exemptions, error dates to 2017 |
The state's own official report is wrong too
The coding problem isn't confined to county files. KDOR's own Statistical Report of Property Assessment and Taxation -- the state's official annual public accounting of exemptions -- has excluded about $3.6 billion in property exempted through industrial revenue bonds and economic development programs since 2017, when KDOR created new codes for those exemptions but never added them into the report's published totals. KDOR called it an oversight and told auditors it plans to publish corrected 2024-2025 totals 'at the end of January or early February 2026.' A second recommendation -- that lawmakers retire outdated statutes, including one exempting the Docking State Office Building by citing a companion law repealed in 1988, and another covering the privatized Kansas Bioscience Authority -- drew no formal response from KDOR. For the deeper problem, the inconsistent county coding itself, the audit issued no recommendation: fixing it 'would require rethinking the broader system,' outside its scope. No agency owns that fix, and no date is attached to one.
Where the exempt property sits
One slice of the exemption base is easy to see in full, because the audit collected it directly rather than relying on county codes: Kansas's 7 public universities and their foundations -- Emporia State, Fort Hays State, Kansas State, Pittsburg State, the University of Kansas, Wichita State, and Washburn -- together own about $4.5 billion in real property spread across 66 of the state's 105 counties, and reported that $4.4 billion of it, 98%, is tax-exempt. Most of that exempt property serves education and research (49%) or residential use, largely student and staff housing (28%). The audit wasn't asked to estimate the forgone revenue this specific slice represents, but the total shows how much of the state's exemption base sits with a small number of large, identifiable institutions -- next to the much larger share the audit couldn't categorize at all.
View data as table
| Total owned, 2024 | $4.5 billion | 80,000 acres across 66 counties |
|---|---|---|
| Tax exempt | $4.4 billion | 98%, ~27,000 acres |
| Taxable | $101 million | 2%, ~53,000 acres |
- $54 billion of Kansas real property -- 15% of the $366 billion statewide total -- is tax-exempt, costing state and local governments an estimated $1 billion a year, nearly all of it local revenue.
- $1.2 billion of that exempt property carries no exemption code explaining why it's tax-exempt at all -- about 4,800 of the state's 72,000 exempt properties -- and a separate sample found codes wrong or inconsistent 'frequently enough' to signal a broader problem, including one uncorrected for more than 30 years.
- KDOR's own official annual report on exemptions has undercounted them by about $3.6 billion since 2017, when new exemption codes were created but never added to the report's published totals; KDOR says a fix is coming in its 2025 report.
- For the underlying coding-consistency problem itself, the audit issued no recommendation and no agency has been assigned to fix it -- the office called it a systemic issue outside its scope, leaving Kansas without a category-by-category accounting of its own $54 billion exemption base.
This piece keeps the audit's two 'billions of dollars' problems distinct because the audit itself treats them as separate, non-additive findings: the $1.2 billion in blank-coded exempt property (p.15) is property whose reason for exemption is unknown, while the $3.6 billion KDOR undercount (p.17) is a separate reporting error affecting industrial-revenue-bond and economic-development exemptions specifically, in the department's published statistical report rather than the underlying county data the $1.2 billion figure comes from. Neither figure should be added to the $1 billion forgone-revenue estimate, which is a different calculation built from taxable-equivalent assessment rates and mill levies, not from the exemption codes at all.
The audit's scope excludes some real property tax relief entirely: Kansas's separate $75,000 residential homestead exemption from the statewide school mill levy, which KDOR valued at $164 million in 2024, isn't counted anywhere in this piece's figures because checking it would have required reviewing every residential property in the state -- outside the audit's own timeline. All dollar figures describe real property only; Kansas personal property and public utility property, taxed and exempted separately, are not part of any number here.
Sources(1) ▾
- Kansas Legislative Division of Post Audit, Reviewing Tax-Exempt Real Property and Property Donated to Universities (Report R-26-001) (2026-01-01) — A performance audit presented to the Legislative Post Audit Committee, published January 2026 (Report Number R-26-001; the cover page states only the month, not an exact day -- 'date' above is set to the 1st of that month as a placeholder for sorting). Representative Kristey Williams requested the audit; the Committee authorized it at its May 12, 2025 meeting. Two objectives: (1) estimate 2024 forgone property tax revenue statewide due to real property tax exemptions, and (2) inventory how much real property the state's 7 public universities and their foundations own and how much of it is tax exempt. Read directly from the publisher's PDF via pdftotext -layout after direct download (no login required); chart figures (bar charts with numeric labels) were additionally verified by rendering the PDF pages to images and reading the labels visually, because pdftotext's text-extraction of the chart layer scrambled at least one figure's total ('$1 billion' extracted as '$7 billion' in the linear text stream even though the number is unambiguous in the rendered page) -- facts sourced to chart figures below are annotated as visually confirmed. kslpa.gov · original document
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The Kansas Legislative Division of Post Audit -- the nonpartisan legislative-branch office lawmakers use to check whether state programs work as intended -- has produced the state's first-ever estimate of what real property tax exemptions cost Kansas governments. Report R-26-001⧉, published January 2026, puts $54 billion of Kansas real property -- 15% of the state's entire $366 billion real property tax base -- outside the tax rolls, at a cost of roughly $1 billion a year in forgone state and local revenue. A real property tax exemption means the owner pays nothing on that share of value, and the roads, schools, and fire departments that would otherwise have taxed it collect less. Auditors then asked the more useful question -- exempt for what reason, and is each category worth its cost -- and the state's own records couldn't answer. County appraisers are required to log why every exempt property qualifies; the codes are so often blank, inconsistent, or wrong that $1.2 billion in exempt property has no recorded reason at all, and no one at the state currently checks.