HOUSE BILL NO. 677

INTRODUCED BY M. LINDEEN

A BILL FOR AN ACT ENTITLED: "AN ACT ALLOWING COUNTIES THAT HAVE A TAXABLE VALUATION IN EXCESS OF $100 MILLION TO LEVY ADDITIONAL MILLS TO COMPENSATE FOR LOWER TAXABLE VALUES CAUSED BY LEGISLATIVE ACTION IN RECLASSIFYING ELECTRICAL GENERATION PROPERTY; PROVIDING AN EXEMPTION FROM LIMITS ON PROPERTY TAXATION FOR LEVYING THE ADDITIONAL MILLS; AMENDING SECTION 15-10-412, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A RETROACTIVE APPLICABILITY DATE."

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

NEW SECTION. Section 1. County levies to compensate for taxable value loss through property reclassification. (1) A county that has a taxable valuation in excess of $100 million may levy additional mills against the taxable value of the county to compensate for any loss of revenue because of a decrease in county taxable value caused by changes in the classification of electrical generation property within the county under Title 15, chapter 6, part 1.

(2) Any increased levy under subsection (1) is subject to the hearing provisions of Title 7, chapters 6 and 7.

Section 2. Section 15-10-412, MCA, is amended to read:

"15-10-412. Property tax limit -- exception. Section 15-10-402 is implemented as follows:

(1) The limitation on the amount of taxes levied means that, except as otherwise provided in this section, the total amount of taxes levied by each taxing unit is capped at the dollar amount levied in each taxing unit for the 1996 tax year, except in a taxing unit that levied a tax in tax years 1993 through 1995 but did not levy a tax in 1996, in which case the taxes levied are capped at the dollar amount due in that taxing unit for the 1995 tax year.

(2) The limitation on the amount of taxes levied does not prohibit an increase in the total taxes levied by a taxing unit as a result of:

(a) annexation of real property and improvements into a taxing unit;

(b) construction, expansion, or remodeling of improvements;

(c) transfer of property into a taxing unit;

(d) subdivision of real property;

(e) reclassification of property;

(f) increases in the amount of production or the value of production for property described in 15-6-131 or 15-6-132;

(g) transfer of property from tax-exempt to taxable status; or

(h) revaluations caused by expansion, addition, replacement, or remodeling of improvements.

(3) The limitation on the amount of taxes levied does not prohibit an increase in the total taxes levied by a taxing unit in order to compensate the taxing unit for any loss in the total amount of nonlevy revenue received in 1996 from taxes imposed under Title 15, chapter 23, part 7, and Title 15, chapter 36, part 3.

(4) The limitation on the amount of taxes, as clarified in this section, is intended to leave the property appraisal and valuation methodologies of the department intact. Determinations of county classifications, salaries of local government officers, and all other matters in which total taxable valuation is an integral component are not affected by 15-10-401 and 15-10-402.

(5) (a) Except as provided in subsection (5)(d), if a taxing unit's taxable valuation decreases from the 1996 tax year, it may levy additional mills to compensate for the decreased taxable valuation, but the mills levied may not exceed a number calculated to equal the revenue from property taxes for the 1996 tax year in that taxing unit.

(b) If a levy authorized under Title 20 raised less revenue in 1996 than was raised in either 1994 or 1995, the taxing unit may, after approval by the voters in the taxing unit, raise each year thereafter an additional number of mills but may not levy more revenue than the 3-year average of revenue raised for that purpose during 1994, 1995, and 1996.

(c) If a levy authorized in 50-2-111 that was made in 1996 was for less than the number of mills levied in either 1994 or 1995, the taxing unit may, after approval by the voters in the taxing unit, levy each year thereafter an additional number of mills but may not levy more than the 3-year average number of mills levied for that purpose during 1994, 1995, and 1996.

(d) If a taxing unit's taxable valuation decreases by more than 5% in any year, it may levy additional mills by following either procedure provided for in subsection (7)(a).

(6) The limitation on the amount of taxes levied does not apply to the following levy or special assessment categories, whether or not they are based on commitments made before or after approval of 15-10-401 and 15-10-402:

(a) rural improvement districts;

(b) special improvement districts;

(c) levies pledged for the repayment of bonded indebtedness, including tax increment bonds;

(d) city street maintenance districts;

(e) tax increment financing districts;

(f) satisfaction of judgments against a taxing unit;

(g) street lighting assessments;

(h) revolving funds to support any categories specified in this subsection (6);

(i) levies for economic development authorized pursuant to 90-5-112(4);

(j) levies authorized under 7-6-502 for juvenile detention programs;

(k) levies authorized under 76-15-531 and 76-15-532 for conservation district special administrative assessments;

(l) elementary and high school districts;

(m) voted poor fund levies authorized under 53-2-322; and

(n) county levies to compensate for loss of taxable value through legislative action reclassifying electrical generation property under Title 15, chapter 6, part 1, as provided in [section 1].

(7) (a) The limitation on the amount of taxes levied does not apply in a taxing unit if the voters in the taxing unit approve an increase in tax liability:

(i) following a resolution of the governing body of the taxing unit containing:

(A) a finding that there are insufficient funds to adequately operate the taxing unit as a result of 15-10-401 and 15-10-402;

(B) an explanation of the nature of the financial emergency;

(C) an estimate of the amount of funding shortfall expected by the taxing unit;

(D) a statement that applicable fund balances are or by the end of the fiscal year will be depleted;

(E) a finding that there are no alternative sources of revenue;

(F) a summary of the alternatives that the governing body of the taxing unit has considered; and

(G) a statement of the need for the increased revenue and how it will be used; or

(ii) by a vote pursuant to this subsection (7)(a)(ii). The approval or rejection of a levy that does not follow the procedure in subsection (7)(a)(i) is decided in the following manner:

(A) determine the total number of qualified electors of the taxing unit from the list of electors supplied by the county registrar for the election;

(B) determine the total number of qualified electors who voted at the taxing unit election from the tally sheets for the election; and

(C) calculate the percentage of qualified electors voting at the election by dividing the number determined in subsection (7)(a)(ii)(A) by the number determined in subsection (7)(a)(ii)(B).

(b) When the calculated percentage in subsection (7)(a)(ii)(C) is 40% or more, the levy is considered to have been approved and adopted if a majority of the votes are cast in favor of the proposition, otherwise it is considered to have been rejected.

(c) The election provisions of this section do not apply to school levy elections.

(8) (a) The limitation on the amount of taxes levied does not apply to levies required to address the funding of relief of suffering of inhabitants caused by famine, conflagration, or other public calamity.

(b) The limitation set forth in this chapter on the amount of taxes levied does not apply to levies to support:

(i) a city-county board of health, as provided in Title 50, chapter 2, if the governing bodies of the taxing units served by the board of health determine, after a public hearing, that public health programs require funds to ensure the public health. A levy for the support of a local board of health may not exceed the 5-mill limit established in 50-2-111.

(ii) county, city, or town ambulance services authorized by a vote of the electorate under 7-34-102(2);

(iii) a hospital district, as provided in Title 7, chapter 34, part 21, if authorized by the electorate of the district. A levy for the support of the hospital district may not exceed the 3-mill levy limit authorized in 7-34-2133 unless a voted special levy is authorized under 7-34-2134.

(iv) a rail authority, as provided in Title 7, chapter 14, part 16, authorized by a board of county commissioners. A levy for the support of a rail authority may not exceed the 6-mill limit established in 7-14-1632.

(9) The limitation on the amount of taxes levied by a taxing jurisdiction subject to a statutory maximum mill levy does not prevent a taxing jurisdiction from increasing its number of mills beyond the statutory maximum mill levy to produce revenue equal to its 1996 revenue.

(10) The limitation on the amount of taxes levied does not apply to a levy increase to repay taxes paid under protest in accordance with 15-1-402.

(11) A taxing jurisdiction that included special improvement district revolving fund levies in the limitation on the amount of taxes levied prior to April 22, 1993, may continue to include the amount of the levies within the dollar amount due in each taxing unit for the 1986 tax year even if the necessity for the revolving fund has diminished and the levy authority has been transferred."

NEW SECTION. Section 3. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 15, chapter 10, part 4, and the provisions of Title 15, chapter 10, part 4, apply to [section 1].

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

NEW SECTION. Section 5. Retroactive applicability. [This act] applies retroactively, within the meaning of 1-2-109, to January 1, 1999.

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