SENATE BILL NO. 85
INTRODUCED BY HALLIGAN M
BY REQUEST OF THE REVENUE OVERSIGHT COMMITTEE
A BILL FOR AN ACT ENTITLED: "AN ACT REVISING THE PROPERTY TAXATION OF ELECTRICAL GENERATION FACILITIES; CREATING CLASS THIRTEEN PROPERTY TO INCLUDE ELECTRICAL GENERATION FACILITIES; PROVIDING A DEFINITION OF "ELECTRICAL GENERATION FACILITIES"; PROVIDING AN EXCEPTION FOR QUALIFYING SMALL POWER PRODUCTION FACILITIES; TAXING ALL ELECTRICAL GENERATION FACILITIES THAT WERE PREVIOUSLY TAXED UNDER CLASS NINE AS CLASS THIRTEEN PROPERTY; TAXING CLASS THIRTEEN PROPERTY AT 6 PERCENT OF ITS MARKET VALUE; PLACING ALL ELECTRICAL TRANSMISSION AND DISTRIBUTION PROPERTY INTO A SINGLE PROPERTY TAX CLASS; CLARIFYING THE VALUATION OF THAT CLASS OF PROPERTY; IMPOSING A WHOLESALE ENERGY TRANSACTION TAX ON ELECTRIC ENERGY INTRODUCED ONTO STATE TRANSMISSION LINES AT A RATE OF 0.03 CENT PER KILOWATT HOUR OF ELECTRICITY AT THE POINT THAT THE ELECTRICITY IS INTRODUCED ONTO TRANSMISSION LINES IN THE STATE; PROVIDING THAT THE TAX IS PRECOLLECTED BY THE OWNER OF THE TRANSMISSION FACILITY AT WHICH THE INTRODUCTION OCCURS; PROVIDING THAT THE DEPARTMENT OF REVENUE SHALL PROVIDE FOR THE METHOD OF MEASURING ELECTRIC ENERGY BY RULE; PROVIDING FOR THE ADMINISTRATION OF THE TAX; PROVIDING THAT THE PROCEEDS OF THE TAX BE DEPOSITED IN AN ACCOUNT USED TO PARTIALLY REPLACE THE DECREASE IN ELECTRICAL GENERATION PROPERTY TAXES; PROVIDING THAT THE TAX BE APPROVED BY THE ELECTORATE; PROVIDING FOR THE DISTRIBUTION OF THE WHOLESALE ENERGY TRANSACTION TAX REVENUE TO TAXING JURISDICTIONS; REVISING THE CLASSIFICATION OF COUNTIES; REVISING THE DEBT LIMITS OF TAXING JURISDICTIONS; AMENDING SECTIONS 7-1-2111, 7-7-107, 7-7-2101, 7-7-2203, 7-7-4201, 7-7-4202, 7-14-2524, 7-14-2525, 7-16-2327, 7-16-4104, 15-6-135, 15-6-137, 15-6-141, 15-8-111, AND 20-9-406, MCA; AND PROVIDING EFFECTIVE DATES AND AN APPLICABILITY DATE."
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
NEW SECTION. Section 1. Class eleven property -- description -- taxable percentage. (1) Class eleven property includes all electrical transmission and distribution property owned by an electric utility or a rural cooperative association organized under the laws of Montana, including, if congress passes legislation that allows the state to tax property owned by an agency created by congress to transmit or distribute electric energy, allocations of property constructed, owned, or operated by a public agency created by congress to transmit or distribute electric energy produced at privately owned generating facilities.
(2) Class eleven property is taxed at 11% of its market value.
NEW SECTION. Section 2. Class thirteen property -- description -- taxable percentage. (1) Except as provided in subsections (2)(b) and (2)(c), class thirteen property includes all electrical generation facilities, including electrical generation facilities of a centrally assessed electric power company.
(2) (a) For the purposes of this section, "electrical generation facilities" means any combinations of a physically connected generator or generators, associated prime movers, and other associated property, including appurtenant land and improvements and personal property, that are normally operated together to produce electric power. The term includes but is not limited to generating facilities that produce electricity from coal-fired steam turbines, oil or gas turbines, or turbine generators that are driven by falling water.
(b) The term does not include electrical generation facilities used for noncommercial purposes or exclusively for agricultural purposes.
(c) The term also does not include a qualifying small power production facility, as that term is defined in 16 U.S.C. 796(17), that is owned and operated by a person not primarily engaged in the generation or sale of electricity other than electric power from a small power production facility and classified in class four and class eight.
(3) Class thirteen property is taxed at 6% of its market value.
NEW SECTION. Section 3. Wholesale energy transaction tax. (1) A wholesale energy transaction tax is imposed upon each person transmitting electric power in this state. The tax is imposed at a rate of 0.03 cent per kilowatt hour of electricity transmitted into or out of the state at the point that the electricity is introduced onto transmission lines in the state of Montana that are not owned by an entity of the United States government.
(2) The taxpayer is the owner of the electricity transmitted within the state, but the tax must be precollected by the owner of the electrical transmission facility at which the electric power is introduced onto transmission lines, as provided in subsection (1). The facility owner shall itemize the amount of taxes payable by the taxpayer and report to the department that amount plus any other information required by the department. Refunds of tax overpayment must be made to the taxpayer, and deficiency assessments are the responsiblity of the taxpayer and not the facility owner.
(3) The precollected tax is payable on a quarterly basis, and the amount due, less a 3% administrative fee for its administration of the tax, must be remitted by the facility owner to the department within 30 days after the end of each calendar quarter.
(4) Electricity that is transmitted through the state and electricity that is owned by a governmental agency are not subject to the tax imposed by this section. A taxpayer or governmental agency may apply to the department for refunds of taxes paid on electricity transmitted through the state or on government-owned electricity. The department shall, by rule, establish the forms and procedure for administering the refund.
(5) The proceeds of the tax, less any amount required for refunds, must be deposited in an account provided for in [section 11] for property tax replacement funds.
NEW SECTION. Section 4. Tax records. Each person liable for the tax and each facility owner required to make tax prepayments under [sections 3 through 10] shall keep a record that the department requires, showing the number of kilowatt hours introduced onto transmission lines in the state, the number of kilowatt hours of electricity shipped through the state, and any other information that the department may require.
NEW SECTION. Section 5. Department rules. (1) The department may adopt rules to implement the provisions of [sections 3 through 10].
(2) The rules must address the administration of [sections 3 through 10] and reporting requirements for taxpayers and facility owners prepaying the tax.
(3) The department shall provide by rule the method of measuring electric energy at the time that it is introduced onto taxable transmission lines in the state. The department may adopt a system of measuring the electric energy subject to taxation based upon the carrying capacity of the transmission facility upon which the electric energy is introduced, adjusted by factors relating to the number of customers of the facility and how much of the capacity of the transmission facility remains unused under particular conditions.
NEW SECTION. Section 6. Deficiency assessment -- review -- interest -- penalty. (1) If the department determines that the amount of tax due is greater than the amount reported, it shall mail to the taxpayer a notice, pursuant to 15-1-211, of the additional tax proposed to be assessed. The taxpayer may seek review of the determination pursuant to 15-1-211.
(2) (a) Interest on any deficiency assessment bears interest until paid, at the rate of 1% a month or fraction of a month, computed from the original due date of the return.
(b) If payment is not made within 10 days, the tax is delinquent and a penalty of 10% must be added to the amount of the deficiency.
NEW SECTION. Section 7. Credit for overpayment -- interest on overpayment. (1) If the department determines that the amount of tax, penalty, or interest due for any year is less than the amount paid, the amount of the overpayment must be credited against any tax, penalty, or interest then due from the taxpayer and the balance must be refunded to the taxpayer or its successor through reorganization, merger, or consolidation or to its shareholders upon dissolution.
(2) Except as provided in subsection (3), interest must be allowed on overpayments at the same rate as is charged on deficiency assessments provided in 15-53-105 due from the due date of the return or from the date of overpayment, whichever date is later, to the date on which the department approves refunding or crediting of the overpayment.
(3) (a) Interest may not accrue during any period that the processing of a claim for refund is delayed more than 30 days by reason of failure of the taxpayer to furnish information requested by the department for the purpose of verifying the amount of the overpayment.
(b) Interest may not be allowed:
(i) if the overpayment is refunded within 6 months from the date on which the return is due or from the date on which the return is filed, whichever is later; or
(ii) if the amount of interest is less than $1.
(c) A payment not made incident to a bona fide and orderly discharge of an actual tax liability or one reasonably assumed to be imposed by this law may not be considered an overpayment with respect to which interest is allowable.
NEW SECTION. Section 8. Penalty and interest for delinquency. Wholesale energy transaction taxes due under [sections 3 through 10] become delinquent if not paid by the electrical transmission facility owner within 30 days after the end of each calendar quarter. The department shall add to the amount of all wholesale energy transaction taxes a penalty of 10% of the amount of the taxes plus interest at the rate of 1% a month or fraction of a month, computed on the total amount of taxes. Interest is computed from the date on which the taxes were due to the date of payment.
NEW SECTION. Section 9. Estimation of tax upon failure to file statement or pay tax -- notice. (1) If an electrical transmission facility owner fails, neglects, or refuses to file the statement required by [section 3] within the time required or fails to remit the prepaid tax required by [sections 3 through 10] on or before the date on which payment is due, the department shall proceed to inform itself as best it may regarding the total number of kilowatt hours of electricity introduced onto the owner's facility transmission lines as provided in [section 3].
(2) The department shall compute the amount of prepaid taxes due from the facility owner, less a 3% administration charge due the facility owner, and shall mail to the facility owner a letter and tax assessment statement setting forth the amount of delinquent tax, penalty, and interest due. The letter must advise that if payment is not made, a warrant for distraint may be filed.
(3) The facility owner may bill taxpayers for reimbursement of prepayments made by the facility owner under this section.
NEW SECTION. Section 10. Statute of limitations. (1) Except as otherwise provided in this section, a deficiency may not be assessed or collected with respect to the year for which a return is filed unless the notice of additional tax proposed to be assessed is mailed within 5 years from the date on which the return was filed. For the purposes of this section, a return filed before the last day prescribed for filing is considered as filed on the last day. If the taxpayer, before the expiration of the period prescribed for assessment of the tax, consents in writing to an assessment after that time, the tax may be assessed at any time prior to the expiration of the period agreed upon.
(2) A refund or credit may not be allowed or paid with respect to the year for which a return is filed after 5 years from the last day prescribed for filing the return or after 1 year from the date of the overpayment, whichever period expires later, unless before the expiration of the period, the taxpayer files a claim for the refund or credit or the department has determined the existence of the overpayment and has approved a refund or credit. If the taxpayer has agreed in writing under the provisions of subsection (1) to extend the time within which the department may propose an additional assessment, the period within which a claim for a refund or credit may be filed or a credit or refund allowed if a claim is not filed is automatically extended.
(3) If a return is required to be filed and the taxpayer fails to file the return, the tax may be assessed or an action to collect the tax may be brought at any time. If a return is required to be filed and the taxpayer files a fraudulent return, the 5-year period provided for in subsection (1) does not begin until discovery of the fraud by the department.
NEW SECTION. Section 11. Distribution of property tax replacement revenue. (1) There is an account for property tax replacement funds. Tax revenue deposited in the account, as provided in [section 3], must be distributed as provided in this section.
(2) On or before June 1, 2000, the department shall determine a reimbursement ratio associated with reducing the tax rate on electrical generation facilities owned by electric power companies and taxed under 15-6-141, as that section read on December 31, 1998, and provide that information to each county treasurer. The reimbursement ratio must be determined for each taxing jurisdiction that levied mills on the taxable value of electrical generation facilities owned by electric power companies and taxed under 15-6-141 in tax year 1998.
(3) Except as provided in subsection (4), the reimbursement ratio for each taxing jurisdiction to be used as the basis for the reimbursement amount determined in subsection (5) is calculated using the formula RR = (TV x ML)/(ST), where:
(a) RR is the reimbursement ratio;
(b) TV is the tax year 1998 taxable value of electrical generation facilities in the taxing jurisdiction, and ML is the tax year 1998 mill levy in the taxing jurisdiction applied to electrical generation facilities; and
(c) ST is the sum of (TV x ML) for all taxing jurisdictions in the state for tax year 1998.
(4) In calculating the reimbursement ratio under subsection (3), the department shall exclude the taxable value of property that is described in subsection (5).
(5) (a) If the tax year 2000 assessed value of an electrical generation facility in a taxing jurisdiction that was classified as class nine property under 15-6-141 in tax year 1998 is greater than the assessed value of the electrical generation facility in 1998, then the taxable value of the electrical generation facility in tax year 2000 in the taxing jurisdiction must be subtracted from the taxable value figures used to calculate the reimbursement ratio in subsection (3).
(b) For the purposes of this subsection (5), "electrical generation facility" means any combinations of a physically connected generator or generators, associated prime movers, and other associated property that are normally operated together to produce electric power. The term includes but is not limited to generation facilities that produce electricity from coal-fired steam turbines, oil or gas turbines, or turbine generators that are driven by falling water.
(6) For each calendar quarter, the department shall determine the amount of tax, late payment interest, and penalty collected under [sections 3 through 10]. The tax year reimbursement amount for each taxing jurisdiction in the state is the product of multiplying the reimbursement ratio determined for the taxing jurisdiction in subsection (3) by the amount available in the account for property tax replacement revenue for redistribution for the calendar quarter.
(7) Upon receipt of the reimbursement from the department, the county treasurer shall distribute the reimbursement as calculated by the department to each taxing jurisdiction.
(8) For the purposes of this section, "taxing jurisdiction" means a jurisdiction levying mills against electrical generation facilities described in 15-6-141, as that section read on December 31, 1998, and includes but is not limited to a county, city, school district, tax increment financing district, special district, or miscellaneous taxing district and the state of Montana.
(9) Each local government taxing jurisdiction receiving reimbursements shall consider the amount of reimbursement that will be received and lower the mill levy otherwise necessary to fund the budget by the amount that would otherwise have to be raised by the mill levy.
(10) A local government taxing jurisdiction that ceases to exist after [the effective date of this section] will no longer be considered for revenue loss or reimbursement purposes. A local government taxing jurisdiction that is created after January 1, 2000, may not be considered for revenue loss or reimbursement purposes. If a local government taxing jurisdiction that existed prior to January 2000 is split between two or more taxing jurisdictions or is annexed to or is consolidated with another taxing jurisdiction, the department shall determine how much of the revenue loss and reimbursement is attributed to the new jurisdictions.
Section 12. Section 7-1-2111, MCA, is amended to read:
"7-1-2111. Classification of counties. (1) For the purpose of regulating the compensation and salaries of all county officers, not otherwise provided for, and for fixing the penalties of officers' bonds, the counties of this state must be classified according to the taxable valuation of the property in the counties upon which the tax levy is made, except for vehicles subject to taxation under 61-3-504, as follows:
(a) first class--all counties having a taxable valuation of $50 million or more;
(b) second class--all counties having a taxable valuation of $30 million or more and less than $50 million;
(c) third class--all counties having a taxable valuation of $20 million or more and less than $30 million;
(d) fourth class--all counties having a taxable valuation of $15 million or more and less than $20 million;
(e) fifth class--all counties having a taxable valuation of $10 million or more and less than $15 million;
(f) sixth class--all counties having a taxable valuation of $5 million or more and less than $10 million;
(g) seventh class--all counties having a taxable valuation of less than $5 million.
(2) As used in this section, "taxable valuation" means the taxable value of taxable property in the county as of the time of determination plus:
(a) that portion of the taxable value of the county on December 31, 1981, attributable to automobiles and trucks having a rated capacity of three-quarters of a ton or less;
(b) that portion of the taxable value of the county on December 31, 1989, attributable to automobiles and trucks having a manufacturer's rated capacity of more than three-quarters of a ton but less than or equal to 1 ton;
(c) that portion of the taxable value of the county on December 31, 1997, attributable to buses, trucks having a manufacturer's rated capacity of more than 1 ton, and truck tractors;
(d) that portion of the taxable value of the county on December 31, 1997, attributable to trailers, pole trailers, and semitrailers with a declared weight of less than 26,000 pounds;
(e) the value provided by the department of revenue under 15-36-324(13); and
(f) 50% of the taxable value of the county on December 31, 1999, attributable to electrical generation facilities under [section 2]; and
(f)(g) 6% of the taxable value of the county on January 1 of each tax year."
Section 13. Section 7-7-107, MCA, is amended to read:
"7-7-107. Limitation on amount of bonds for city-county consolidated units. (1) Except as provided in 7-7-108, no
a city-county consolidated local government may not issue bonds for any purpose which that, with all outstanding
indebtedness, may exceed 39% of the taxable value of the property therein in the local government subject to taxation, as
ascertained by the last assessment for state and county taxes, plus an additional 50% of the taxable value of electrical
generation facilities under [section 2] within the local government for tax year 1999, multiplied by 39%.
(2) The issuing of bonds for the purpose of funding or refunding outstanding warrants or bonds is not the incurring of a new or additional indebtedness but is merely the changing of the evidence of outstanding indebtedness."
Section 14. Section 7-7-2101, MCA, is amended to read:
"7-7-2101. Limitation on amount of county indebtedness. (1) A county may not become indebted in any manner or
for any purpose in an amount, including existing indebtedness, in the aggregate exceeding 23% of the total of the taxable
value of the property in the county subject to taxation, plus:
(a) the value provided by the department of revenue in 15-36-324(13), as ascertained by the last assessment for state and
county taxes previous to the incurring of the indebtedness, plus,;
(b) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 23%; and
(c) for indebtedness to be incurred during fiscal year 1997, an additional 11% of the taxable value of class eight property
within the county for tax year 1995, for indebtedness to be incurred during fiscal year 1998, an additional 22% of the taxable
value of class eight property within the county for tax year 1995, and for indebtedness to be incurred during fiscal years
1999 through 2008, an additional 33% of the taxable value of class eight property within the county for tax year 1995, in
each case of class eight property, multiplied by 23%.
(2) A county may not incur indebtedness or liability for any single purpose to an amount exceeding $500,000 without the approval of a majority of the electors of the county voting at an election to be provided by law, except as provided in 7-7-2402, 7-21-3413, and 7-21-3414.
(3) This section does not apply to the acquisition of conservation easements as set forth in Title 76, chapter 6."
Section 15. Section 7-7-2203, MCA, is amended to read:
"7-7-2203. Limitation on amount of bonded indebtedness. (1) Except as provided in subsections (2) through (4) and
(3), a county may not issue general obligation bonds for any purpose that, with all outstanding bonds and warrants except
emergency bonds, will exceed 11.25% of the total of the taxable value of the property in the county, plus:
(a) the value provided by the department of revenue under 15-36-324(13), to be ascertained by the last assessment for
state and county taxes prior to the proposed issuance of bonds, plus,;
(b) for general obligation bonds to be issued during fiscal year 1997, an additional 11% of the taxable value of class eight
property within the county for tax year 1995, for general obligation bonds to be issued during fiscal year 1998, an additional
22% of the taxable value of class eight property within the county for tax year 1995, and for general obligation bonds to be
issued during fiscal years 1999 through 2008, an additional 33% of the taxable value of class eight property within the
county for tax year 1995, in each case of class eight property, multiplied by 11.25%; and
(c) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 11.25%.
(2) In addition to the bonds allowed by subsection (1), a county may issue bonds that, with all outstanding bonds and
warrants, will not exceed 27.75% of the total of the taxable value of the property in the county subject to taxation, plus the
value provided by the department of revenue under 15-36-324(13), when necessary to do so, to be ascertained by the last
assessment for state and county taxes, plus, for bonds to be issued during fiscal year 1997, an additional 11% of the taxable
value of class eight property within the county for tax year 1995, and for bonds to be issued during fiscal year 1998, an
additional 22% of the taxable value of class eight property within the county for tax year 1995.
(3)(2) In addition to the bonds allowed by subsections subsection (1) and (2), a county may issue bonds for the
construction or improvement of a jail detention center that will not exceed 12.5% of the taxable value of the property in the
county subject to taxation, plus the adjustments permitted by 7-7-2101 subsection (1).
(4)(3) The limitation in subsection (1) does not apply to refunding bonds issued for the purpose of paying or retiring
county bonds lawfully issued prior to January 1, 1932, or to bonds issued for the repayment of tax protests lost by the
county."
Section 16. Section 7-7-4201, MCA, is amended to read:
"7-7-4201. Limitation on amount of bonded indebtedness. (1) Except as otherwise provided, a city or town may not
issue bonds or incur other indebtedness for any purpose in an amount that with all outstanding and unpaid indebtedness will
exceed 28% of the taxable value of the property in the city or town subject to taxation, to be ascertained by the last
assessment for state and county taxes, plus,:
(a) for bonds to be issued or other indebtedness to be incurred during fiscal year 1997, an additional 11% of the taxable
value of class eight property within the city or town for tax year 1995, for bonds to be issued or other indebtedness to be
incurred during fiscal year 1998, an additional 22% of the taxable value of class eight property within the city or town for
tax year 1995, and for bonds to be issued or other indebtedness to be incurred during fiscal years 1999 through 2008, an
additional 33% of the taxable value of class eight property within the city or town for tax year 1995, in each case of class
eight property, multiplied by 28%; and
(b) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 28%.
(2) The issuing of bonds for the purpose of funding or refunding outstanding warrants or bonds is not the incurring of a new or additional indebtedness but is merely the changing of the evidence of outstanding indebtedness.
(3) The limitation in subsection (1) does not apply to bonds issued for the repayment of tax protests lost by the city or town."
Section 17. Section 7-7-4202, MCA, is amended to read:
"7-7-4202. Special provisions relating to water and sewer systems. (1) Notwithstanding the provisions of 7-7-4201, for the purpose of constructing a sewer system, procuring a water supply, or constructing or acquiring a water system for a city or town that owns and controls the water supply and water system and devotes the revenue from the water supply and water system to the payment of the debt, a city or town may incur an additional indebtedness by borrowing money or issuing bonds.
(2) The additional total indebtedness that may be incurred by borrowing money or issuing bonds for the construction of
a sewer system, for the procurement of a water supply, or for both of the purposes, including all indebtedness that is
contracted and that is unpaid or outstanding, may not in the aggregate exceed 55% over and above of the 28%, debt
limitation referred to in 7-7-4201, of the taxable value of the property in the city or town subject to taxation, to be
ascertained by the last assessment for state and county taxes, plus,:
(a) for indebtedness to be incurred during fiscal year 1997, an additional 11% of the taxable value of class eight property
within the city or town for tax year 1995, for indebtedness to be incurred during fiscal year 1998, an additional 22% of the
taxable value of class eight property within the city or town for tax year 1995, and for indebtedness to be incurred during
fiscal years 1999 through 2008, an additional 33% of the taxable value of class eight property within the city or town for tax
year 1995, in each case of class eight property, multiplied by 55%; and
(b) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 55%."
Section 18. Section 7-14-2524, MCA, is amended to read:
"7-14-2524. Limitation on amount of bonds issued -- excess void. (1) Except as otherwise provided in 7-7-2203,
7-7-2204, and this section, a county may not issue bonds that, with all outstanding bonds and warrants except emergency
bonds, will exceed 11.25% of the total of the taxable value of the property in the county, plus:
(a) the value provided by the department of revenue under 15-36-324(13). The taxable property and the amount of taxes levied on new production, production from horizontally completed wells, and incremental production must be ascertained by the last assessment for state and county taxes prior to the issuance of the bonds.
(b) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 11.25%.
(2) A county may issue bonds that, with all outstanding bonds and warrants, will exceed 11.25% but will not exceed
22.5% of the total of the taxable value of the property, plus an additional 50% of the taxable value of electrical generation
facilities under [section 2] within the county for tax year 1999, multiplied by the amount that exceeds 11.25% but does not
exceed 22.5%, plus the value provided by the department of revenue under 15-36-324(13) when necessary for the purpose
of replacing, rebuilding, or repairing county buildings, bridges, or highways that have been destroyed or damaged by an act
of God or by a disaster, catastrophe, or accident.
(3) The value of the bonds issued and all other outstanding indebtedness of the county may not exceed 22.5% of the
total of the taxable value of the property within the county, plus the value provided by the department of revenue under
15-36-324(13), as ascertained by the last preceding general assessment as adjusted in this section."
Section 19. Section 7-14-2525, MCA, is amended to read:
"7-14-2525. Refunding agreements and refunding bonds authorized. (1) Whenever the total indebtedness of a
county exceeds 22.5% of the total of the taxable value of the property in the county, plus the value provided by the
department of revenue under 15-36-324(13) as adjusted in 7-14-2524, and the board determines that the county is unable to
pay the indebtedness in full, the board may:
(a) negotiate with the bondholders for an agreement under which the bondholders agree to accept less than the full amount of the bonds and the accrued unpaid interest in satisfaction of the bonds;
(b) enter into the agreement;
(c) issue refunding bonds for the amount agreed upon.
(2) These bonds may be issued in more than one series, and each series may be either amortization or serial bonds.
(3) The plan agreed upon between the board and the bondholders must be embodied in full in the resolution providing for the issuance of the bonds."
Section 20. Section 7-16-2327, MCA, is amended to read:
"7-16-2327. Indebtedness for park purposes. (1) Subject to the provisions of subsection (2), a county park board, in addition to powers and duties now given under law, may contract an indebtedness in behalf of a county, upon the credit of the county, in order to carry out its powers and duties.
(2) (a) The total amount of indebtedness authorized to be contracted in any form, including the then-existing indebtedness, may not at any time exceed 13% of the total of the taxable value of the taxable property in the county, as ascertained by the last assessment for state and county taxes previous to the incurring of the indebtedness, plus:
(i) the value provided by the department of revenue under 15-36-324(13), ascertained by the last assessment for state
and county taxes previous to the incurring of the indebtedness; and
(ii) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 13%.
(b) Money may not be borrowed on bonds issued for the purchase of lands and improving the land for any purpose until the proposition has been submitted to the vote of those qualified under the provisions of the state constitution to vote at the election in the affected county and a majority vote is cast in favor of the bonds."
Section 21. Section 7-16-4104, MCA, is amended to read:
"7-16-4104. Authorization for municipal indebtedness for various cultural, social, and recreational purposes. (1) A city or town council or commission may contract an indebtedness on behalf of the city or town, upon the credit of the city or town, by borrowing money or issuing bonds:
(a) for the purpose of purchasing and improving lands for public parks and grounds;
(b) for procuring by purchase, construction, or otherwise swimming pool facilities, athletic fields, skating rinks, playgrounds, museums, a golf course, a site and building for a civic center, a youth center, or any combination of these facilities; and
(c) for furnishing, equipping, repairing, or rehabilitating a swimming pool facility, athletic field, skating rink, playground, museum, golf course, civic center, or youth center.
(2) The total amount of indebtedness authorized to be contracted in any form, including the then-existing indebtedness, may not at any time exceed 16.5% of the taxable value of the taxable property of the city or town, as ascertained by the last assessment for state and county taxes previous to the incurring of the indebtedness, plus an additional 50% of the taxable value of electrical generation facilities under [section 2] within the county for tax year 1999, multiplied by 16.5%. Money may not be borrowed for any purpose on bonds issued for the purchase of lands and improving the land until the proposition has been submitted to the vote of the qualified electors of the city or town and a majority vote is cast in favor of the proposition."
Section 22. Section 15-6-135, MCA, is amended to read:
"15-6-135. Class five property -- description -- taxable percentage. (1) Class five property includes:
(a) all property used and owned by cooperative rural electrical and cooperative rural telephone associations organized under the laws of Montana, except:
(i) electrical transmission and distribution property described in [section 1]; and
(ii) property owned by cooperative organizations described in 15-6-137(1)(b);
(b) air and water pollution control equipment as defined in this section;
(c) new industrial property as defined in this section;
(d) any personal or real property used primarily in the production of gasohol during construction and for the first 3 years of its operation;
(e) all land and improvements and all personal property owned by a research and development firm, provided that the property is actively devoted to research and development;
(f) machinery and equipment used in electrolytic reduction facilities.
(2) (a) "Air and water pollution control equipment" means that portion of identifiable property, facilities, machinery, devices, or equipment designed, constructed, under construction, or operated for removing, disposing, abating, treating, eliminating, destroying, neutralizing, stabilizing, rendering inert, storing, or preventing the creation of air or water pollutants that, except for the use of the item, would be released to the environment. Reduction in pollutants obtained through operational techniques without specific facilities, machinery, devices, or equipment is not eligible for certification under this section.
(b) Requests for certification must be made on forms available from the department of revenue. Certification may not be granted unless the applicant is in substantial compliance with all applicable rules, laws, orders, or permit conditions. Certification remains in effect only as long as substantial compliance continues.
(c) The department of environmental quality shall promulgate rules specifying procedures, including timeframes for certification application, and definitions necessary to identify air and water pollution control equipment for certification and compliance. The department of revenue shall promulgate rules pertaining to the valuation of qualifying air and water pollution control equipment. The department of environmental quality shall identify and track compliance in the use of certified air and water pollution control equipment and report continuous acts or patterns of noncompliance at a facility to the department of revenue. Casual or isolated incidents of noncompliance at a facility do not affect certification.
(d) A person may appeal the certification, classification, and valuation of the property to the state tax appeal board. Appeals on the property certification must name the department of environmental quality as the respondent, and appeals on the classification or valuation of the equipment must name the department of revenue as the respondent.
(3) (a) "New industrial property" means any new industrial plant, including land, buildings, machinery, and fixtures, used by new industries during the first 3 years of their operation. The property may not have been assessed within the state of Montana prior to July 1, 1961.
(b) New industrial property does not include:
(i) property used by retail or wholesale merchants, commercial services of any type, agriculture, trades, or professions unless the business or profession meets the requirements of subsection (4)(b)(v);
(ii) a plant that will create adverse impact on existing state, county, or municipal services; or
(iii) property used or employed in an industrial plant that has been in operation in this state for 3 years or longer.
(4) (a) "New industry" means any person, corporation, firm, partnership, association, or other group that establishes a new plant in Montana for the operation of a new industrial endeavor, as distinguished from a mere expansion, reorganization, or merger of an existing industry.
(b) New industry includes only those industries that:
(i) manufacture, mill, mine, produce, process, or fabricate materials;
(ii) do similar work, employing capital and labor, in which materials unserviceable in their natural state are extracted, processed, or made fit for use or are substantially altered or treated so as to create commercial products or materials;
(iii) engage in the mechanical or chemical transformation of materials or substances into new products in the manner defined as manufacturing in the 1987 Standard Industrial Classification Manual prepared by the United States office of management and budget;
(iv) engage in the transportation, warehousing, or distribution of commercial products or materials if 50% or more of an industry's gross sales or receipts are earned from outside the state; or
(v) earn 50% or more of their annual gross income from out-of-state sales.
(5) Class five property is taxed at 3% of its market value."
Section 23. Section 15-6-137, MCA, is amended to read:
"15-6-137. Class seven property -- description -- taxable percentage. (1) Class seven property includes:
(a) all property used and owned by persons, firms, corporations, or other organizations that are engaged in the business of furnishing telephone communications exclusively to rural areas or to rural areas and cities and towns of 800 persons or less;
(b) all property owned by cooperative rural electrical and cooperative rural telephone associations that serve less than
95% of the electricity consumers or telephone users within the incorporated limits of a city or town, except rural electric
cooperative properties described in 15-6-141(1)(a) electrical transmission and distribution property described in [section 1];
(c) electric transformers and meters; electric light and power substation machinery; natural gas measuring and regulating station equipment, meters, and compressor station machinery owned by noncentrally assessed public utilities; and tools used in the repair and maintenance of this property.
(2) To qualify for this classification, the average circuit miles for each station on the telephone communication system described in subsection (1)(b) must be more than 1 mile.
(3) Class seven property is taxed at 8% of its market value."
Section 24. Section 15-6-141, MCA, is amended to read:
"15-6-141. Class nine property -- description -- taxable percentage. (1) Class nine property includes:
(a) centrally assessed electric power companies' allocations, including, if congress passes legislation that allows the state
to tax property owned by an agency created by congress to transmit or distribute electrical energy, allocations of properties
constructed, owned, or operated by a public agency created by the congress to transmit or distribute electric energy
produced at privately owned generating facilities, not including rural electric cooperatives. However, rural electric
cooperatives' property used for the sole purpose of serving customers representing less than 95% of the electric consumers
located within the incorporated limits of a city or town of more than 3,500 persons in which a centrally assessed electric
power company also owns property is included. For purposes of this subsection (1)(a), "property used for the sole purpose"
does not include a headquarters, office, shop, or other similar facility.;
(b) allocations for centrally assessed natural gas companies having a major distribution system in this state; and
(c) centrally assessed companies' allocations, except:
(i) electric power and natural gas companies' electrical generation facility property included in class thirteen;
(ii) property owned by cooperative rural electric and cooperative rural telephone associations and classified in class five;
(iii) property owned by organizations providing telephone communications to rural areas and classified in class seven;
(iv) electrical transmission and distribution property described in [section 1];
(iv)(v) railroad transportation property included in class twelve; and
(v)(vi) airline transportation property included in class twelve.
(2) Class nine property is taxed at 12% of market value."
Section 25. Section 15-8-111, MCA, is amended to read:
"15-8-111. Assessment -- market value standard -- exceptions. (1) All taxable property must be assessed at 100% of its market value except as otherwise provided.
(2) (a) Market value is the value at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.
(b) If the department uses construction cost as one approximation of market value, the department shall fully consider reduction in value caused by depreciation, whether through physical depreciation, functional obsolescence, or economic obsolescence.
(c) Except as provided in subsection (3), the market value of special mobile equipment and agricultural tools, implements, and machinery is the average wholesale value shown in national appraisal guides and manuals or the value before reconditioning and profit margin. The department shall prepare valuation schedules showing the average wholesale value when a national appraisal guide does not exist.
(3) The department may not adopt a lower or different standard of value from market value in making the official assessment and appraisal of the value of property, except:
(a) the wholesale value for agricultural implements and machinery is the average wholesale value category as shown in Guides 2000, Northwest Region Official Guide, published by the North American equipment dealers association, St. Louis, Missouri. If the guide or the average wholesale value category is unavailable, the department shall use a comparable publication or wholesale value category.
(b) for agricultural implements and machinery not listed in an official guide, the department shall prepare a supplemental manual in which the values reflect the same depreciation as those found in the official guide; and
(c) as otherwise authorized in Titles 15 and 61.
(4) For purposes of taxation, assessed value is the same as appraised value.
(5) The taxable value for all property is the percentage of market or assessed value established for each class of property.
(6) The assessed value of properties in 15-6-131 through 15-6-133 is as follows:
(a) Properties in 15-6-131, under class one, are assessed at 100% of the annual net proceeds after deducting the expenses specified and allowed by 15-23-503 or, if applicable, as provided in 15-23-515, 15-23-516, 15-23-517, or 15-23-518.
(b) Properties in 15-6-132, under class two, are assessed at 100% of the annual gross proceeds.
(c) Properties in 15-6-133, under class three, are assessed at 100% of the productive capacity of the lands when valued for agricultural purposes. All lands that meet the qualifications of 15-7-202 are valued as agricultural lands for tax purposes.
(d) Properties in 15-6-143, under class ten, are assessed at 100% of the forest productivity value of the land when valued as forest land.
(7) Land and the improvements on the land are separately assessed when any of the following conditions occur:
(a) ownership of the improvements is different from ownership of the land;
(b) the taxpayer makes a written request; or
(c) the land is outside an incorporated city or town.
(8) The market value of electrical transmission and distribution properties under class eleven is determined individually for each taxpayer based upon individual taxpayer factors that determine market value, including numbers of electrical customers served, taxpayer revenue, and amount of depreciated taxpayer investment. Component values may not be averaged or aggregated classwide to be used in determining market values for all taxpayers with property in class eleven."
Section 26. Section 20-9-406, MCA, is amended to read:
"20-9-406. Limitations on amount of bond issue. (1) (a) Except as provided in subsection (1)(c) (1)(d), the
maximum amount for which an elementary district or a high school district may become indebted by the issuance of bonds,
including all indebtedness represented by outstanding bonds of previous issues and registered warrants, is 45% of the taxable
value of the property subject to taxation, to be ascertained by the last-completed assessment for state, county, and school
taxes previous to the incurring of the indebtedness, plus,:
(i) for bonds to be issued during fiscal year 1997, an additional 11% of the taxable value of class eight property within
the district for tax year 1995, for bonds to be issued during fiscal year 1998, an additional 22% of the taxable value of class
eight property within the district for tax year 1995, and for bonds to be issued during fiscal years 1999 through 2008, an
additional 33% of the taxable value of class eight property within the district for tax year 1995, in each case of class eight
property, multiplied by 45%; and
(ii) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the district for tax year 1999, multiplied by 45%.
(b) Except as provided in subsection (1)(c) (1)(d), the maximum amount for which a K-12 school district, as formed
pursuant to 20-6-701, may become indebted by the issuance of bonds, including all indebtedness represented by outstanding
bonds of previous issues and registered warrants, is up to 90% of the taxable value of the property subject to taxation, to be
ascertained by the last-completed assessment for state, county, and school taxes previous to the incurring of the
indebtedness, plus,:
(i) for bonds to be issued during fiscal year 1997, an additional 11% of the taxable value of class eight property within
the district for tax year 1995, for bonds to be issued during fiscal year 1998, an additional 22% of the taxable value of class
eight property within the district for tax year 1995, and for bonds to be issued during fiscal years 1999 through 2008, an
additional 33% of the taxable value of class eight property within the district for tax year 1995, in each case of class eight
property, multiplied by 90%; and
(ii) an additional 50% of the taxable value of electrical generation facilities under [section 2] within the district for tax year 1999, multiplied by 90%.
(c) The total indebtedness of the high school district with an attached elementary district must be limited to the sum of 45% of the taxable value of the property for elementary school program purposes and 45% of the taxable value of the property for high school program purposes, adjusted as provided in this section.
(c)(d) (i) The maximum amount for which an elementary district or a high school district with a district mill value per
elementary ANB or per high school ANB that is less than the corresponding statewide mill value per elementary ANB or per
high school ANB may become indebted by the issuance of bonds, including all indebtedness represented by outstanding
bonds of previous issues and registered warrants, is 45% of the corresponding statewide mill value per ANB times 1,000
times the ANB of the district. For a K-12 district, the maximum amount for which the district may become indebted is 45%
of the sum of the statewide mill value per elementary ANB times 1,000 times the elementary ANB of the district and the
statewide mill value per high school ANB times 1,000 times the high school ANB of the district.
(ii) If mutually agreed upon by the affected districts, for the purpose of calculating its maximum bonded indebtedness
under this subsection (1)(c) (1)(d), a district may include the ANB of the district plus the number of students residing within
the district for which the district or county pays tuition for attendance at a school in an adjacent district. The receiving
district may not use out-of-district ANB for the purpose of calculating its maximum indebtedness if the out-of-district ANB
has been included in the ANB of the sending district pursuant to the mutual agreement.
(2) The maximum amounts determined in subsection (1), however, may not pertain to indebtedness imposed by special improvement district obligations or assessments against the school district or to bonds issued for the repayment of tax protests lost by the district. All bonds issued in excess of the amount are void, except as provided in this section.
(3) When the total indebtedness of a school district has reached the limitations prescribed in this section, the school district may pay all reasonable and necessary expenses of the school district on a cash basis in accordance with the financial administration provisions of this chapter.
(4) Whenever bonds are issued for the purpose of refunding bonds, any money to the credit of the debt service fund for the payment of the bonds to be refunded is applied toward the payment of the bonds and the refunding bond issue is decreased accordingly."
NEW SECTION. Section 27. Codification instruction. (1) [Sections 1 and 2] are intended to be codified as an integral part of Title 15, chapter 6, part 1, and the provisions of Title 15, chapter 6, part 1, apply to [sections 1 and 2].
(2) [Sections 3 through 10] are intended to be codified as an integral part of Title 15, and the provisions of Title 15 apply to [sections 3 through 10].
(3) [Section 11] is intended to be codified as an integral part of Title 15, chapter 1, and the provisions of Title 15, chapter 1, apply to [section 11].
NEW SECTION. Section 28. Contingent voidness. (1) If Constitutional Initiative No. 75, enacting Article VIII, section 17, of the Montana constitution, is declared invalid, then [sections 1 and 3] are effective on the date of the determination of invalidity.
(2) If either [LC 541] or [LC 1046] is submitted to and not approved by the electorate, then [this act] is void.
NEW SECTION. Section 29. Effective dates. (1) Except as provided in subsection (2), [this act] is effective on January 1, 2000.
(2) [Sections 1 and 3] are effective upon the occurrence of the contingency provided for in [section 28(1)].
NEW SECTION. Section 30. Applicability. If approved by the electorate, [this act] applies to tax years beginning after December 31, 1999.
- END -
Latest Version of SB 85 (SB0085.01)
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Status of this Bill
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