House Bill No. 611

Introduced By harper

A Bill for an Act entitled: "An Act allowing the exclusion of the taxable value of property under a protest proceeding from the taxable valuation of a county, municipality, or a school district for the purpose of setting property tax levies if the taxable value of the property under protest exceeds 5 percent of the taxing jurisdiction's taxable valuation; providing that payment to the county, municipality, and school district from the protest fund on the property must be used to lower subsequent tax levies; amending sections 7-6-604, 7-6-2321, 7-6-4232, 15-10-202, and 20-9-142, MCA; and providing an effective date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 7-6-604, MCA, is amended to read:

"7-6-604.   Alternative accounting method -- requirements. A local government entity that adopts the alternative accounting method shall:

(1)  prepare its accounting records and financial reports in accordance with generally accepted accounting principles established by the governmental accounting standards board or its generally recognized successor;

(2)  adopt a fiscal year that commences on July 1 of each year;

(3)  (a) compile an annual financial report covering the preceding fiscal year and submit a copy of the annual financial report or an annual audit, pursuant to subsection (3)(b), to the department of commerce within 6 months of the end of that reported fiscal year; or

(b)  if the local government entity submits an audit report in lieu of an annual financial report, ensure that the audit report contains, at a minimum, the entity's general purpose financial statements and combining and individual fund and account group statements as defined under the principles described in subsection (1);

(4)  cause an annual audit in accordance with the provisions of Title 2, chapter 7, part 5; and

(5)  ensure that a budget is made each year that:

(a)  shows the complete expenditure program for the local government entity for the coming fiscal year and the sources by which it will be funded;

(b)  must be completed by July 1 of the current fiscal year taking into consideration the provisions of 7-6-2321(2) or 7-6-4232(4);

(c)  must be approved or amended by the governing body in a regularly scheduled meeting;

(d)  must be the subject of one or more advertised public hearings, pursuant to the provisions of 7-1-2121 or 7-1-4127, prior to approval or amendment; and

(e)  must be submitted to the department of commerce by September 15."

Section 2.  Section 7-6-2321, MCA, is amended to read:

"7-6-2321.   Fixing of tax levy -- exception exceptions. (1) On or before the second Monday in August and after the approval and adoption of the final budget, the board of county commissioners shall fix the tax levy for each fund at a rate which that will raise the amount set out in the budget as the amount necessary to be raised by tax levy for the fund during the current fiscal year. The Except as provided in subsection (2), the taxable valuation of the county for the current fiscal year must be the basis for determining the amount of the tax levy for each fund. Each tax levy must be at a rate not higher than is required on that basis, without including any amount for anticipated tax delinquency, to produce the amount set out in the budget, without including any amount for anticipated tax delinquency, that is the amount to be raised by tax levy.

(2) (a) The PORTION OF THE taxable value of property that is the subject of a protest and that remains under protest on the first Monday in August of the current year may, UPON APPROVAL OF THE GOVERNING BODY, be excluded from the county's taxable valuation if the taxable value of the property remaining under protest exceeds 5% of the county's taxable valuation in computing mill levies to fund the amounts necessary to be raised:

(i) under the provisions of subsection (1); or

(ii) under the provisions of law providing for a levy on the taxable valuation of the county or any district or portion of a district.

(b) (i) If tax money that was collected on property excluded under subsection (2)(a) is not required to be refunded to the taxpayer from the protest fund at the conclusion of a protest proceeding, then the money must be used as provided in subsection (2)(b)(ii) to reduce subsequent property tax levies of the appropriate funds or levies from which it was previously withheld in protest, except for mill levies imposed under 20-9-331, 20-9-333, 20-9-360, 20-25-423, and 20-25-439.

(ii) The governing body of the county shall use the released protested tax revenue to reduce mill levies. The protested tax revenue may not be credited to cash reserves unless the revenue reduces to zero the amount necessary to be raised by tax levy. If there is excess revenue, then the excess may be credited to cash reserves.

(2)(3)  The tax levy must be made in the manner provided by 15-10-201.

(3)(4) (a)  This section does not apply to a county that has adopted the alternative accounting method provided for in Title 7, chapter 6, part 6.

(b) Subsection (2) does not apply to a county that has demanded payment on the protested property from the protested tax fund under the provisions of 15-1-402."

Section 3.  Section 7-6-4232, MCA, is amended to read:

"7-6-4232.   Fixing of tax levy -- exception exceptions. (1) On or before the second Monday in August and after the approval and adoption of the final budget, the council shall fix the tax levy for each fund at a rate, not exceeding limits prescribed by law, that will raise the amount set out in the budget as the amount necessary to be raised by tax levy for that fund during the current fiscal year. The Except as provided in subsections (2) and (4), the taxable valuation of the city for the current fiscal year must be the basis for determining the amount of the tax levy for each fund, and each tax levy must be at a rate not higher than is required on that basis, without including any amount for anticipated tax delinquency, to raise the amount set out in the budget.

(2)  If the council considers that a levy made for a bond sinking or interest fund will not provide a sufficient amount to pay all bond principal and interest becoming due during the current fiscal year or within 6 months after the current fiscal year because of anticipated tax delinquency, the council may fix the levy at a rate it considers necessary to raise the amount for making the payments of principal and interest over and above the anticipated tax delinquency.

(3)  Each levy must be made in the manner provided by 15-10-201.

(4) (a) The PORTION OF THE taxable value of property that is the subject of a protest and that remains under protest on the first Monday in August of the current year may, UPON APPROVAL OF THE COUNCIL, be excluded from the city's taxable valuation if the taxable value of the property remaining under protest exceeds 5% of the city's taxable valuation in computing mill levies to fund the amounts necessary to be raised under the provisions of subsection (1).

(b) (i) If tax money that was collected on property excluded under subsection (4)(a) is not required to be refunded to the taxpayer from the protest fund at the conclusion of a protest proceeding, then the money must be used as provided in subsection (2)(b)(ii) to reduce subsequent property tax levies of the appropriate funds or levies from which it was previously withheld in protest.

(ii) The governing body of the city shall use the released protested tax revenue to reduce mill levies. The protested tax revenue may not be credited to cash reserves unless the revenue reduces to zero the amount necessary to be raised by tax levy. If there is excess revenue, then the excess may be credited to cash reserves.

(4)(5) (a)  This section does not apply to a municipality that has adopted the alternative accounting method provided for in Title 7, chapter 6, part 6.

(b) Subsection (4) does not apply to a city that has demanded payment on the protested property from the protested tax fund under the provisions of 15-1-402."

Section 4.  Section 15-10-202, MCA, is amended to read:

"15-10-202.   Certification of taxable values and millage rates. (1) By the second Monday in July, the department shall certify to each taxing authority the taxable value within the jurisdiction of the taxing authority. The department shall also send to each taxing authority a written statement of its best estimate of the total assessed value of all new construction and improvements not included on the previous property tax record and the value of deletions from the previous property tax record. Exclusive of new construction, improvements, and deletions, and the PORTION OF THE taxable value of property that is the subject of a protest and that remains under protest on the first Monday in August of the current year if the taxable value of the property remaining under protest exceeds 5% of a taxing jurisdiction's taxable valuation, and if requested to do so by the county commissioners, the department shall certify to each taxing authority a millage rate that will provide the same ad valorem revenue for each taxing authority as was levied during the prior year. For the purpose of calculating the certified millage, the department shall use 95% of the taxable value appearing on the property tax record, exclusive of properties appearing for the first time in the property tax record.

(2) The county commissioners shall inform the department in writing by July 15 as to whether the county wishes to exclude protested values from the tax base for the purpose of calculating certified mill levies. The decision of the county commissioners applies to all affected taxing jurisdictions within the county."

Section 5.  Section 20-9-142, MCA, is amended to read:

"20-9-142.   Fixing and levying taxes by board of county commissioners -- exceptions. (1) On the fourth Monday in August, the county superintendent shall place before the board of county commissioners the final adopted budget of the district. It Except as provided in subsection (2), it is the duty of the board of county commissioners to fix and levy on all the taxable value of all the real and personal property within the district all district and county taxation required to finance, within the limitations provided by law, the final budget.

(2) (a) The taxable value of property that is the subject of a protest and that remains under protest on the first Monday in August of the current year may be excluded from the district's taxable valuation if the taxable value of the property remaining under protest exceeds 5% of the district's taxable valuation in computing mill levies to fund the amounts necessary to be raised under the provisions of subsection (1).

(b) (i) If tax money that was collected on property excluded under subsection (2)(a) is not required to be refunded to the taxpayer from the protest fund at the conclusion of a protest proceeding, then the money must be used as provided in subsection (2)(b)(ii) to reduce subsequent property tax levies of the appropriate funds or levies from which it was previously withheld in protest.

(ii) The school board of the district shall use the released protested tax revenue to reduce mill levies of the district. The protested tax revenue may not be credited to cash reserves unless the revenue reduces to zero the amount necessary to be raised by tax levy. If there is excess revenue, then the excess may be credited to cash reserves.

(3) Subsection (2) does not apply to a school that has demanded payment on the protested property from the protested tax fund under the provisions of 15-1-402."

NEW SECTION. Section 6.  Effective date. [This act] is effective July 1, 1997.

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