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House Bill 103

House Bill 103

Wayne Hoffman
February 6, 2017

Bill description: Local government officials could stop massive property tax increases by preventing the accumulation of “foregone balances.”

Analyst note: Under current state law, local taxing districts can increase their total property tax collections by 3 percent a year, annexations and new construction exempted. As part of property tax limitation, the state government gave local governments “foregone balances” which could be accessed at any time in the future. This allowed local governments to raise property taxes by less than the maximum amount each year and maintain a “foregone balance” that could be assessed, if needed, sometime in the future. The problem is taxing districts have accrued very large foregone balances, creating the potential for massive, unexpected property tax increases. House Bill 103 attempts to address this issue.

Rating: +1

Does it directly or indirectly create or increase any taxes, fees, or other assessments?

Under current law, local taxing districts can recover their forgone balances “by certifying, in addition to any increase otherwise allowed, an amount not to exceed one hundred percent (100%) of the increase originally forgone.” The proposed statute provides policymakers a second option. They can “Disclaim the right to recover all or any portion of the forgone increase by adoption of a resolution declaring the same. Upon adoption of the resolution, the clerk of the taxing district shall file a copy of the resolution with the county clerk and the state tax commission, and the state tax commission shall exclude the amounts indicated in the resolution from the calculation of the district's forgone balance.” The local district is under no obligation to adopt the resolution. The bill provides a new decision point during the adoption of the budget. Passage of a resolution to disclaim taxes that are foregone could help prevent future tax increases. (+1)

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