A proposal centered on replacing property taxes with sales tax revenue generated from a retail surcharge was met with skepticism during a Senate committee hearing.

A public hearing for Senate Bill 488, dubbed the “Kansas Property Tax Freedom Act of 2026,” produced muddled information on the actual legislation itself after the bill’s author — Sen. Michael Murphy, R-Sylvia, conceded that his plan “as written doesn’t work.”

Murphy on March 10 pinned blame for the lack of clarity on a software program that “assumed some things that it shouldn’t have assumed” when crunching numbers related to revenue estimates.

A fiscal note estimated abolishing property taxes would eliminate about $7.9 billion in state and local tax revenue in the first full year of implementation. Meanwhile, the increased sales tax intended to offset the property tax elimination would only raise about $1.5 billion, according to Kansas Department of Revenue estimates.

Murphy, whose district includes Hutchinson, told the committee he planned to press forward in his quest to bring “meaningful” property tax relief to Kansans. He added that he has “scenarios that will work,” while declining to elaborate.

“But that’s not for right now,” he said.

With a packed Statehouse audience serving as a backdrop, Murphy’s explanation came as a surprise to committee chair Sen. Caryn Tyson, R-Parker.

“You can’t drop a bombshell and say that ‘there’s other things that we could do without giving the committee your ideas,” Tyson said, as Murphy departed the lectern.

Under Murphy’s plan, the bill would cut property taxes by 50% in 2026 and 75% in 2027 by placing caps on mill levies. By 2028, property taxes would be fully eliminated and replaced with surcharge fees on retail purchases as established by the “Fair Share Purchase Surcharge.” The plan would ultimately need to be approved by voters via a constitutional amendment. 

A flat surcharge fee of $1.60 would be applied to purchases of $20 or more. For transactions less than $20, a surcharge of 7.6% of the purchase price is assessed. An exemption carveout would apply to SNAP-eligible grocery items, prescription medications, medical devices, motor fuel, mortgage payments, utility services and K-12 tuition.

Lawmakers leave door ajar for SB 488

Lawmakers said they are still open to hearing more about Murphy’s plan if he can come up with revenue estimates related to the surcharge fees. Specifically, they need to know if the lost property tax revenue is being adequately replaced.