Every spring, work begins on the budget for the upcoming year. By early summer, City of Olathe budget and finance staff will prepare materials for review and approval by the City Council.

This budget funds city services, capital improvement projects (CIP), maintenance, and more. Once approved in September, the budget will take effect on Jan. 1 the following year.

City budgets are a complicated process which can lead to questions or confusion.

Where does the City of Olathe receive its revenue?

The City of Olathe receives 40% of its General Fund revenue from sales tax. Anything purchased in the City of Olathe is subject to 1.5% sales tax. Approximately 35% of Olathe’s General Fund revenue comes from property taxes. The amount of revenue that is collected from property taxes is set by the Olathe City Council. Smaller revenue sources include things like franchise fees, building permit fees, and investment earnings.

A mill levy rate is the rate at which property is taxed per every thousand dollars of assessed property value. Residential property is assessed at a lower rate of 11.5% of total property value, while commercial property is assessed at 25% of total property value. A mill levy is separated by taxing districts, including City of Olathe, Olathe Public Schools, Johnson County, etc.

The City of Olathe has the second lowest tax rate of any Johnson County City.

For the average cost of an Olathe home, a resident pays $1,174 to Olathe in property taxes each year, or about $98 per month This number reflects about 20% of the average tax bill.

Is Olathe raising taxes?

Simply put, no. The City of Olathe is not raising the tax rate you pay (mill levy).

Will I pay more in property taxes in 2026 if the mill levy isn’t raised?

Your property tax bill may increase simply due to the increased valuation of your property. As Olathe is 20% of your property tax bill, it is estimated that given the increase of the average home’s valuation, Olathe residents may see an increase of $7.42 per month. Again, the City of Olathe is not raising the mill levy/property tax rate. This potential increase would be dependent on how much your individual property increased in value. If your home value stayed flat or decreased, your property tax bill would stay flat or decrease.

What is the City of Olathe doing to remain fiscally responsible?

The proposed budget placed before the Olathe City Council reflects a modest increase of 1.7% from 2025. More than $4 million was cut from the 2025 budget to ensure a strong forecast in the coming years. The City continues to operate with lean staffing across the organization to keep personnel expenses manageable and continues to identify innovative strategies for delivering exceptional services at a low cost to residents.

The City of Olathe has not been immune to economic volatility. Discretionary spending has decreased, resulting in a slowdown in sales tax revenue, and slowing sales tax income and inflation continues to drive the City’s expenses just like it does on your personal budget. Olathe is proud of its exceptional services for its residents, and it takes exceptional people to take care of our resources. As such, 61% of Olathe’s expenses are its employees.

Olathe has been one of the fastest growing cities in Kansas for the past several years, resulting in an increasing number of roads, infrastructure maintenance needs, public safety initiatives, and utility services.  

What does revenue neutral mean?

If a city or county is revenue neutral, it means that organization cannot accept one cent above the previous year’s property tax revenue.

In March 2021, the Kansas Legislature passed K.S.A. 79-2988, which requires Kansas County Clerks to send taxpayers notification of the revenue neutral rate (RNR) compared to the proposed rate for each taxing subdivision. Taxing subdivisions are prohibited from levying an ad valorem property tax that exceeds the RNR without first holding a public hearing and passing a resolution.

Is Olathe exceeding the revenue neutral rate?

At the July 15 Council meeting, the City Council passed a resolution with their intent to exceed the revenue neutral rate. This resolution set the maximum amount of property tax revenue the City will levy for the 2026 budget, which is the equivalent of the City’s current mill rate of 23.317 mills. While the mill rate is proposed to remain flat, the 2026 proposed budget does propose exceeding the revenue neutral rate as it would not be fiscally responsible or sustainable for the City to remain revenue neutral with rising costs and economic uncertainty on future revenues.

Where can I learn more?

All City of Olathe budget-related items can be found on OlatheKS.gov/Budget. The Olathe City Council is scheduled to vote on the 2026 budget on Tuesday, Sept. 16, during its regularly scheduled meeting.