We have a number of updates on issues related to property taxes. In addition to many legislative proposals, there is also a troubling movement happening in some counties that we want to make you aware of. We also want to update you on our involvement in a coalition to fight a potential ballot issue next year. We are working daily to stay on top of all of these developments to provide leadership when possible and to keep you informed.
No fewer than10 legislative proposals are being actively considered on the property tax issue. While the die is cast on many of these bills, we do continue to work to at least moderate some of the proposals. We have tried to place them in order of threat level and likelihood of passing. They include:
- House Bill 309 Passed the House, pending in Senate Committee
This bill gives county budget commissions (CBCs) the authority to reduce levy disbursements after the fifth year of a levy cycle if funds are deemed unnecessary. We were successful in the house in limiting this language to after the fifth year of a levy cycle. The bill defines “unnecessary collections” as those beyond the reasonably anticipated financial needs of the taxing authority for the specific purpose of the tax after accounting for current fund balances, projected expenditures, and other available funding sources. We expect this to pass, and frankly, the bill is much better than what was originally introduced. - House Bill 335 Passed the House, pending in Senate Committee
This bill relates only to inside millage. The bill essentially allows county budget commissions to reduce or eliminate inside millage under specific circumstances. We expect this to pass rather quickly. - House Bill 124 Passed the House, pending in Senate Committee
Requires the Department of Taxation to consider only a representative sample of arm’s length property sales submitted by county auditors when conducting sales assessment ratio studies as part of its function to adjust, or “equalize,” proposed property values. The bill is designed to limit valuation increases. We have not taken a position on this one. We expect it to pass. - House Bill 466 Pending in House Committees
This one is really problematic. It would require that levies approved by unelected boards (park boards) would need to be approved by the elected authority which created the board (county commissioners) in order to be placed before voters. This was just introduced in early October and has not yet been scheduled for a hearing. While that is positive, the impact of this means that we are watching it very closely. - House Bill 355 Pending in House Committee
This would require a 60% vote to approve all property tax levies. Thankfully, I don’t currently see a lot of momentum on this one. - House Bill 499 Pending in House Committee
This is another proposal allowing CBC’s to reduce levy funds. It applies primarily to schools, and it does not appear to be the vehicle for these changes. - House Bill 504 Pending in House Committee
This recently introduced bill authorizes counties to temporarily exempt a portion of a property’s increased value from taxation following a reappraisal. I don’t have a sense of where this one is going yet. - House Bill 422 Pending in House Committee
This would require a 60% vote to approve a property tax levy in excess of one mil and a 66% vote to approve levies over 2 mils. Again, we don’t see a lot of momentum here at this point. - House Bill 421 Pending in House Committee
This would allow voters to reduce inside millage by placing an issue on the ballot. While something will happen on inside millage, we doubt that it will be this. - Senate Bill 93 Pending in Senate Committee
This bill would replace local school taxes with a statewide property tax of 20 mills and a 1.75% increase in the state sales tax. This proposal, at least, is looking at the big picture and would represent systemic change. For those reasons alone, it has little chance of being seriously considered. - The state budget bill did include permissive authority for county commissioners to slightly expand the homestead exemption and the owner-occupied tax credits in order to “reduce” property taxes for certain lower income homeowners.
We want you to be aware that we are receiving reports from some park districts that they are being called by county commissioners and informed that they will be having their tax distributions reduced in accordance with these provisions. In at least one case, commissioners have reported that they have essentially been ordered by their state legislators to avail themselves of this permissive authority or risk not receiving funds in the upcoming state capitol improvement budget bill.
We are not sure there is much that we can do about this right now, but did want you to know it is happening around the state.
Finally, we have signed a Memorandum of Understanding to formalize our participation in the Coalition to Protect Essential Public Services, a growing group of local government groups which is preparing to fight the potential ballot issue next fall to eliminate all property taxes. I am currently a leader of the effort to retain a consultant who will direct our public information efforts on behalf of the coalition. We will continue to keep you posted on the work of this group and opportunities for you to become involved.
These are extraordinarily busy times on many fronts. As always, please reach out if you have questions or concerns.