From the Executive Director: Week of February 8

8 Feb 2021, by Seth Grigg Share :

Over the last few weeks, we’ve seen three bills introduced related to property taxes and local government budgets: Senate Bills 1021 and 1048 and House Bill 73. We’re likely to see new bills introduced over the next two weeks. I want to express my appreciation for your attentiveness in reviewing the proposals, letting IAC know of the impacts on your county, and your diligence in reaching out to your legislators to discuss how the bills affect your county. As a result of those efforts, there is a recalibration occurring at the legislature. 

Senate Bill 1048 was originally estimated to be heard in committee this week. In talking with Chairman Rice, the earliest the bill will be heard is next week. A new alternative has emerged, and legislators would like to give time for the idea to take shape. While nothing formal has been drafted, the concept is as follows:

  • Local taxing districts would continue to be subject to the 3% cap on annual property tax budget increases.
  • In addition to the 3% cap, local governments would still be able to budget new construction.
  • New construction property taxes would be calculated using a new formula. Rather than applying the prior year levy rate to the new construction roll, a revised levy rate would be calculated more in line with the levy rate associated with a 3% budget increase for the upcoming year. This would result in a lower levy rate for determining new construction when compared to the prior year levy rate.
  • There would be a limit on how much new construction could be added to the local government’s property tax budget. Under the proposal, a taxing district would only be allowed to budget up to 75% of the new construction amount.
  • Annual increases due to previously forgone property taxes would be capped at 1%.

On the surface, the framework provides much more flexibility for local governments as counties would retain the ability to exceed the current 3% cap (or the proposed 4% cap in Senate Bill 1048). IAC is developing a spreadsheet to analyze the overall fiscal impact with counties and will share the analysis once completed. Pay attention to your inbox as more information will be forthcoming.