2017 Montana Legislature

Additional Bill Links     PDF version

Seal

HOUSE BILL NO. 565

INTRODUCED BY R. COOK

 

AN ACT REVISING THE ENTITLEMENT SHARE PAYMENT LAWS; REVISING ENTITLEMENT SHARE GROWTH RATES FOR FISCAL YEARS 2018 AND 2019; REVISING THE GROWTH RATE FOR THE REIMBURSEMENT FOR CLASS EIGHT TAX RATE REDUCTIONS AND EXEMPTIONS; PROVIDING REASONS FOR WHICH AN ENTITLEMENT SHARE PAYMENT MUST BE WITHHELD; AMENDING SECTIONS 15-1-121, 15-1-123, AND 20-9-630, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

 

     Section 1.  Section 15-1-121, MCA, is amended to read:

     "15-1-121.  Entitlement share payment -- purpose -- appropriation. (1) As described in 15-1-120(3), each local government is entitled to an annual amount that is the replacement for revenue received by local governments for diminishment of property tax base and various earmarked fees and other revenue that, pursuant to Chapter 574, Laws of 2001, amended by section 4, Chapter 13, Special Laws of August 2002, and later enactments, were consolidated to provide aggregation of certain reimbursements, fees, tax collections, and other revenue in the state treasury with each local government's share. The reimbursement under this section is provided by direct payment from the state treasury rather than the ad hoc system that offset certain state payments with local government collections due the state and reimbursements made by percentage splits, with a local government remitting a portion of collections to the state, retaining a portion, and in some cases sending a portion to other local governments.

     (2)  The sources of dedicated revenue that were relinquished by local governments in exchange for an entitlement share of the state general fund were:

     (a)  personal property tax reimbursements pursuant to sections 167(1) through (5) and 169(6), Chapter 584, Laws of 1999;

     (b)  vehicle, boat, and aircraft taxes and fees pursuant to:

     (i)  Title 23, chapter 2, part 5;

     (ii) Title 23, chapter 2, part 6;

     (iii) Title 23, chapter 2, part 8;

     (iv) 61-3-317;

     (v)  61-3-321;

     (vi) Title 61, chapter 3, part 5, except for 61-3-509(3), as that subsection read prior to the amendment of 61-3-509 in 2001;

     (vii) Title 61, chapter 3, part 7;

     (viii) 5% of the fees collected under 61-10-122;

     (ix) 61-10-130;

     (x)  61-10-148; and

     (xi) 67-3-205;

     (c)  gaming revenue pursuant to Title 23, chapter 5, part 6, except for the permit fee in 23-5-612(2)(a);

     (d)  district court fees pursuant to:

     (i)  25-1-201, except those fees in 25-1-201(1)(d), (1)(g), and (1)(j);

     (ii) 25-1-202;

     (iii) 25-9-506; and

     (iv) 27-9-103;

     (e)  certificate of title fees for manufactured homes pursuant to 15-1-116;

     (f)  financial institution taxes collected pursuant to the former provisions of Title 15, chapter 31, part 7;

     (g)  all beer, liquor, and wine taxes pursuant to:

     (i)  16-1-404;

     (ii) 16-1-406; and

     (iii) 16-1-411;

     (h)  late filing fees pursuant to 61-3-220;

     (i)  title and registration fees pursuant to 61-3-203;

     (j)  veterans' cemetery license plate fees pursuant to 61-3-459;

     (k)  county personalized license plate fees pursuant to 61-3-406;

     (l)  special mobile equipment fees pursuant to 61-3-431;

     (m)  single movement permit fees pursuant to 61-4-310;

     (n)  state aeronautics fees pursuant to 67-3-101; and

     (o)  department of natural resources and conservation payments in lieu of taxes pursuant to Title 77, chapter 1, part 5.

     (3)  (a) Except as provided in subsection (3)(b), the Except as provided in subsection (7)(b), the total amount received by each local government in the prior fiscal year as an entitlement share payment under this section is the base component for the subsequent fiscal year distribution, and in each subsequent year the prior year entitlement share payment, including any reimbursement payments received pursuant to subsection (7), is each local government's base component. Subject to subsection (3)(b), the The sum of all local governments' base components is the fiscal year entitlement share pool.

     (b)  For fiscal year 2016, the fiscal year entitlement share pool is reduced by $1,049,904.

     (4)  (a) Subject to subsection (3)(b) Except as provided in subsections (4)(b)(iv) and (7)(b), the base entitlement share pool must be increased annually by an entitlement share growth rate as provided for in this subsection (4). The amount determined through the application of annual growth rates is the entitlement share pool for each fiscal year.

     (b)  By October 1 of each year, the department shall calculate the growth rate of the entitlement share pool for the next fiscal year in the following manner:

     (i)  The department shall calculate the entitlement share growth rate based on the ratio of two factors of state revenue sources for the first, second, and third most recently completed fiscal years as recorded on the statewide budgeting and accounting system. The first factor is the sum of the revenue for the first and second previous completed fiscal years received from the sources referred to in subsections (2)(b), (2)(c), and (2)(g) divided by the sum of the revenue for the second and third previous completed fiscal years received from the same sources multiplied by 0.75. The second factor is the sum of the revenue for the first and second previous completed fiscal years received from individual income tax as provided in Title 15, chapter 30, and corporate income tax as provided in Title 15, chapter 31, divided by the sum of the revenue for the second and third previous completed fiscal years received from the same sources multiplied by 0.25.

     (ii) Except as provided in subsection subsections (4)(b)(iii) and (4)(b)(iv), the entitlement share growth rate is the lesser of:

     (A)  the sum of the first factor plus the second factor; or

     (B)  1.03 for counties, 1.0325 for consolidated local governments, and 1.035 for cities and towns.

     (iii) In no instance can the entitlement growth factor be less than 1. Subject to subsection (4)(b)(iv), the entitlement share growth rate is applied to the most recently completed fiscal year entitlement payment to determine the subsequent fiscal year payment.

     (iv) For fiscal year 2016, the entitlement share growth rate is applied to the most recently completed fiscal year entitlement payment minus $1,049,904 to determine the subsequent fiscal year payment The entitlement share growth rate, as described in this subsection (4), is:

     (A) for fiscal year 2018, 1.005;

     (B) for fiscal year 2019,. 1.0187;

     (C) for fiscal year 2020 and thereafter, determined as provided in subsection (4)(b)(ii). The rate must be applied to the entitlement payment for the previous fiscal year as if the payment had been calculated using entitlement share growth rates for fiscal years 2018 and 2019 as provided in subsection (4)(b)(ii).

     (5)  As used in this section, "local government" means a county, a consolidated local government, an incorporated city, and an incorporated town. A local government does not include a tax increment financing district provided for in subsection (8). The county or consolidated local government is responsible for making an allocation from the county's or consolidated local government's share of the entitlement share pool to each special district within the county or consolidated local government in a manner that reasonably reflects each special district's loss of revenue sources for which reimbursement is provided in this section. The allocation for each special district that existed in 2002 must be based on the relative proportion of the loss of revenue in 2002.

     (6)  (a) The entitlement share pools calculated in this section, the amounts determined under 15-1-123(2) for local governments, the funding provided for in subsection (8) of this section, and the amounts determined under 15-1-123(4) for tax increment financing districts are statutorily appropriated, as provided in 17-7-502, from the general fund to the department for distribution to local governments. Except for the distribution made under 15-1-123(2)(b), the distributions must be made on a quarterly basis.

     (b)  (i) The growth amount is the difference between the entitlement share pool in the current fiscal year and the entitlement share pool in the previous fiscal year. The growth factor in the entitlement share must be calculated separately for:

     (A)  counties;

     (B)  consolidated local governments; and

     (C)  incorporated cities and towns.

     (ii) In each fiscal year, the growth amount for counties must be allocated as follows:

     (A)  50% of the growth amount must be allocated based upon each county's percentage of the prior fiscal year entitlement share pool for all counties; and

     (B)  50% of the growth amount must be allocated based upon the percentage that each county's population bears to the state population not residing within consolidated local governments as determined by the latest interim year population estimates from the Montana department of commerce as supplied by the United States bureau of the census.

     (iii) In each fiscal year, the growth amount for consolidated local governments must be allocated as follows:

     (A)  50% of the growth amount must be allocated based upon each consolidated local government's percentage of the prior fiscal year entitlement share pool for all consolidated local governments; and

     (B)  50% of the growth amount must be allocated based upon the percentage that each consolidated local government's population bears to the state's total population residing within consolidated local governments as determined by the latest interim year population estimates from the Montana department of commerce as supplied by the United States bureau of the census.

     (iv) In each fiscal year, the growth amount for incorporated cities and towns must be allocated as follows:

     (A)  50% of the growth amount must be allocated based upon each incorporated city's or town's percentage of the prior fiscal year entitlement share pool for all incorporated cities and towns; and

     (B)  50% of the growth amount must be allocated based upon the percentage that each city's or town's population bears to the state's total population residing within incorporated cities and towns as determined by the latest interim year population estimates from the Montana department of commerce as supplied by the United States bureau of the census.

     (v)  In each fiscal year, the amount of the entitlement share pool before the growth amount or adjustments made under subsection (7) are applied is to be distributed to each local government in the same manner as the entitlement share pool was distributed in the prior fiscal year.

     (7)  (a) If the legislature enacts a reimbursement provision that is to be distributed pursuant to this section, the department shall determine the reimbursement amount as provided in the enactment and add the appropriate amount to the entitlement share distribution under this section. The total entitlement share distributions in a fiscal year, including distributions made pursuant to this subsection, equal the local fiscal year entitlement share pool. The ratio of each local government's distribution from the entitlement share pool must be recomputed to determine each local government's ratio to be used in the subsequent year's distribution determination under subsections (6)(b)(ii)(A), (6)(b)(iii)(A), and (6)(b)(iv)(A).

     (b) For fiscal year 2018 and thereafter, the growth rate provided for in subsection (4) does not apply to the portion of the entitlement share pool attributable to the reimbursement provided for in 15-1-123(2). The department shall calculate the portion of the entitlement share pool attributable to the reimbursement in 15-1-123(2), including the application of the growth rate in previous fiscal years, for counties, consolidated local governments, and cities and, for fiscal year 2018 and thereafter, apply the growth rate for that portion of the entitlement share pool as provided in 15-1-123(2).

     (c) The growth amount resulting from the application of the growth rate in 15-1-123(2) must be allocated as provided in subsections (6)(b)(ii)(A), (6)(b)(iii)(A), and (6)(b)(iv)(A) of this section.

     (8)  (a) Except for a tax increment financing district entitled to a reimbursement under 15-1-123(4), if a tax increment financing district was not in existence during the fiscal year ending June 30, 2000, then the tax increment financing district is not entitled to any funding. If a tax increment financing district referred to in subsection (8)(b) terminates, then the funding for the district provided for in subsection (8)(b) terminates.

     (b)  Except for the reimbursement made under 15-1-123(4)(b), one-half One-half of the payments provided for in this subsection (8)(b) must be made by November 30 and the other half by May 31 of each year. Subject to subsection (8)(a), the entitlement share for tax increment financing districts is as follows:

 Deer Lodge

 TIF District 1

 $2,833

 Deer Lodge

 TIF District 2

 2,813

 Flathead

 Kalispell - District 2

 4,638

 Flathead

 Kalispell - District 3

 37,231

 Flathead

 Whitefish District

 148,194

 Gallatin

 Bozeman - downtown

 31,158

 Missoula

 Missoula - 1-1C

 225,251

 Missoula

 Missoula - 4-1C

 30,009

 Silver Bow

 Butte - uptown

 255,421

     (9)  The estimated fiscal year entitlement share pool and any subsequent entitlement share pool for local governments do not include revenue received from tax increment financing districts, from countywide transportation block grants, or from countywide retirement block grants.

     (10) When there has been an underpayment of a local government's share of the entitlement share pool, the department shall distribute the difference between the underpayment and the correct amount of the entitlement share. When there has been an overpayment of a local government's entitlement share, the local government shall remit the overpaid amount to the department.

     (11) A local government may appeal the department's estimation of the base component, the entitlement share growth rate, or a local government's allocation of the entitlement share pool, according to the uniform dispute review procedure in 15-1-211.

     (12) (a) A Except as provided in 2-7-517, a payment required pursuant to this section may not be offset by a debt owed to a state agency by a local government in accordance with Title 17, chapter 4, part 1.

 

     (b) A payment required pursuant to this section must be withheld if a local government:

     (i) fails to meet a deadline established in 2-7-503(1), 7-6-611(2), 7-6-4024(3), or 7-6-4036(1); and

     (ii) fails to remit any amounts collected on behalf of the state as required by 15-1-504 or any other amounts owed to the state or another taxing jurisdiction, as otherwise required by law, within 45 days of the end of a month.

     (c) A payment required pursuant to this section may be withheld if, for more than 90 days, a local government fails to:

     (i) file a financial report required by 15-1-504;

     (ii) remit any amounts collected on behalf of the state as required by 15-1-504; or

     (iii) remit any other amounts owed to the state or another taxing jurisdiction."

 

     Section 2.  Section 15-1-123, MCA, is amended to read:

     "15-1-123.  Reimbursement for class eight rate reduction and exemption -- distribution -- appropriations. (1) For the tax rate reductions in 15-6-138(3), the increased exemption amount in 15-6-138(4), the effective tax rate reductions on property under 15-6-145 because of the rate reductions required by the amendments of 15-6-138 in section 2, Chapter 411, Laws of 2011, and section 2, Chapter 396, Laws of 2013, and the effective tax rate reductions on property under 15-6-145 because of the increased exemption amount required by the amendment of 15-6-138 in section 2, Chapter 396, Laws of 2013, the department shall for the fiscal years ending June 30, 2014, and June 30, 2015, estimate for reimburse each local government, as defined in 15-1-121(5), each school district, the county retirement fund under 20-9-501, the countywide school transportation reimbursement under 20-10-146, each tax increment financing district, and the 6-mill university levy for the purposes of 15-10-108 the difference between property tax collections under 15-6-138 as amended by section 2, Chapter 411, Laws of 2011, and section 2, Chapter 396, Laws of 2013, and under 15-6-145 and the property tax revenue that would have been collected under 15-6-138 and 15-6-145 if 15-6-138 had not been amended by section 2, Chapter 411, Laws of 2011, and section 2, Chapter 396, Laws of 2013. The difference is the annual reimbursable amount for each local government, each school district, each tax increment financing district, and the 6-mill levy for the support of the Montana university system under 15-10-108.

     (2)  (a) The department shall distribute the reimbursements calculated in subsection (1) to local governments with the entitlement share payments under 15-1-121(7) for the fiscal year ending June 30, 2015. Local government reimbursements for subsequent years are made pursuant to the entitlement share recomputation as provided in 15-1-121(6). For fiscal year 2018 and thereafter, the growth rate applied to the reimbursement is one-half of the average rate of inflation for the prior 3 years.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property for each local government. By June 15, 2014, the department shall distribute the amount determined under this subsection (2)(b) for local governments as provided in 15-1-121(6)(a).

     (3)  (a) The office of public instruction shall distribute the reimbursements calculated in subsection (1) to school districts with the block grants pursuant to 20-9-630 for the fiscal year ending June 30, 2015. School district reimbursements for subsequent fiscal years are made pursuant to 20-9-630.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property for each school district. By November 30, 2014, the office of public instruction shall distribute the amount determined under this subsection (3)(b) in the same manner as the block grant is distributed by fund under 20-9-630.

     (4)  (a) For the fiscal year ending June 30, 2015, the The amount determined under subsection (1) for each tax increment financing district must be added to the reimbursement amount for the tax increment financing district as provided in 15-1-121(8)(b) if the tax increment financing district is still in existence. If a tax increment financing district that is entitled to a reimbursement under this section is not listed under 15-1-121(8)(b), the reimbursement must be made to that tax increment financing district at the same time as other districts.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property for each tax increment financing district. By June 15, 2014, the department shall distribute the amount determined under this subsection (4)(b) to each tax increment financing district as provided in 15-1-121(8) and to any other tax increment financing district that is entitled to a reimbursement under this section.

     (5)  (a) For the fiscal year ending June 30, 2015, the The amount determined under subsection (1) for the 6-mill university levy must be added to current collections and reimbursements for the support of the Montana university system as provided in 15-10-108.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property for the 6-mill university levy. By June 15, 2014, the department of administration shall transfer the amount determined under this subsection (5)(b) from the general fund to the state special revenue fund for the support of the Montana university system as provided in 15-10-108.

     (c)(b)  Beginning in fiscal year 2013, the The department of administration shall transfer the amounts amount determined under this subsection (5) from the general fund to the state special revenue fund for the support of the Montana university system as provided in 15-10-108.

     (6)  (a) The office of public instruction shall distribute the reimbursements calculated in subsection (1) to the countywide retirement fund under 20-9-501 for the fiscal year ending June 30, 2015. One-half of the amount must be distributed in November and the remainder in May.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property in the county. By November 30, 2014, the office of public instruction shall distribute the amount determined under this subsection (6)(b) to the countywide retirement fund.

     (7)  (a) The office of public instruction shall distribute the reimbursements calculated in subsection (1) to the county transportation fund reimbursement under 20-10-146 for the fiscal year ending June 30, 2015. The reimbursement must be made at the same time as countywide school transportation block grants are distributed under 20-9-632.

     (b)  For the fiscal year ending June 30, 2014, the department shall determine from the amount calculated under subsection (1) the amount that is attributable to personal property taxes that are not a lien on real property in the county. By November 30, 2014, the office of public instruction shall distribute the amount determined under this subsection (7)(b) to the county transportation reimbursement."

 

     Section 3.  Section 20-9-630, MCA, is amended to read:

     "20-9-630.  School district block grants. (1) (a) The office of public instruction shall provide a block grant to each school district based on:

     (i)  the revenue received by each district in fiscal year 2001 from vehicle taxes and fees, corporate income taxes paid by financial institutions, aeronautics fees, state land payments in lieu of taxes, and property tax reimbursements pursuant to sections 167(1) through (5) and 169(6), Chapter 584, Laws of 1999; and

     (ii) any reimbursement to be made to a school district pursuant to subsection (2).

     (b)  Block grants must be calculated using the electronic reporting system that is used by the office of public instruction and school districts. The electronic reporting system must be used to allocate the block grant amount into each district's budget as an anticipated revenue source by fund.

     (2)  If the legislature enacts a reimbursement provision that is to be distributed pursuant to this section, the office of public instruction shall determine the reimbursement amount as provided in the enactment and add the appropriate amount to block grant distributions under this section. Except for the reimbursement made under 15-1-123(3)(b), the The total of reimbursement distributions made pursuant to this subsection in a fiscal year must be added to all other distributions to the school district in the fiscal year to determine the distribution for the subsequent fiscal year.

     (3)  Each year, 70% of each district's block grant must be distributed in November and 30% of each district's block grant must be distributed in May at the same time that guaranteed tax base aid is distributed.

     (4)  (a) The block grant for the district general fund is equal to the amount received in fiscal year 2011 by the district general fund from the block grants provided for in subsection (1) and the amount received by the district general fund under subsection (2), except the amount received under 15-1-123(3)(b).

     (b)  The block grant for the district transportation fund is equal to the amount received in fiscal year 2011 by the district transportation fund from the block grants provided for in subsection (1) and the amount received by the district transportation fund under subsection (2), except the amount received under 15-1-123(3)(b).

     (c)  (i) The combined fund block grant is equal to the amount received in fiscal year 2011 and the amount received under subsection (2), except the amount received under 15-1-123(3)(b).

     (ii) The school district may deposit the combined fund block grant into any budgeted fund of the district."

 

     Section 4.  Effective date. [This act] is effective on passage and approval.

- END -

 


Latest Version of HB 565 (HB0565.ENR)
Processed for the Web on April 22, 2017 (10:34am)

New language in a bill appears underlined, deleted material appears stricken.

Sponsor names are handwritten on introduced bills, hence do not appear on the bill until it is reprinted.

See the status of this bill for the bill's primary sponsor.

 Status of this Bill | 2017 Legislature | Leg. Branch Home
All versions of all bills (PDF format)
Authorized print version of this bill (PDF format)
[
NEW SEARCH ]

Prepared by Montana Legislative Services
(406) 444-3064