Introduction

Highlights

Revenues

Local Property Tax Aids and Credits

Appropriations

State Debt and Capital Expenditures

Statistics and tables

About the Fiscal Review

Senate Counsel & Research home page

Local Property Tax Aids and Credits

A property tax rebate was enacted for homeowners and renters equal to 20 percent of property taxes paid in 1997. For renters, the rebate is based on the 18 percent of rent which is deemed to be used to pay property taxes on the rental unit. For agricultural homesteads, the rebate is limited to the property tax paid on the house, garage, and 320 acres of farm land. The rebate is a refundable income tax credit which will be claimed on the taxpayer's 1997 individual income tax return. The cost of the rebate is estimated to be $500 million in the 1997-99 biennium.

A new education homestead credit was enacted equal to 32 percent of the general education tax on a homestead up to a maximum credit of $225. For agricultural homesteads, the credit is limited to the general education tax paid on the house, garage, and one acre of land. The cost of the new credit is estimated to be $153.3 million in the 1997-99 biennium.

The statewide general education levy was reduced by $85 million annually beginning with state FY 1999. Because of the school levy recognition shift and the metering of school aid payments, the cost of this levy reduction is $82.5 million in the 1997-99 biennium.

Property tax class rates were reduced for a number of property types effective for taxes payable in 1998. The law also provides for "target class rates" for single-family nonhomestead, apartment, and commercial/industrial property. The target class rates represent goals for the three property types which are given first priority for reductions as funds become available. The Governor is required to recommend a class rate schedule for all properties at the time that the biennial budget is submitted. If the Governor recommends any change in the class rate schedule, priority must be given to the classes of property having the target class rates until the target class rates have been reached. The following table shows the class rates under prior law, the newly enacted class rates, and the target class rates.

The 1997 session extended the limit on market value increases for homestead and cabin properties through assessment year 2001. The market value subject to property tax will be limited to the greater of a 10 percent increase over the previous year market value or one-fourth of the difference between the current year's estimated market value and the previous year's value. The market value limit does not apply to increases in value which result from improvements.



All State Aids

Seventy percent of the 1997 General Fund budget enacted by the Legislature and Governor was appropriated to local government units for programs they administer and to local property taxpayers as tax relief. Biennial General Fund appropriations totaled more than $24.5 billion, and almost $14.6 billion of that amount went for locally administered programs and property tax relief. Another $906 million in non-General Fund appropriations also went for local aids, with more than 90 percent of that amount for highway programs. This percentage of local aid and property tax relief is higher than usual, primarily because of a one-time $500 million property tax rebate that was enacted by the 1997 session of the Legislature.

As always, the largest such appropriation went to the school districts, and the next highest amount went for human services medical assistance programs. K-12 connected appropriations for the biennium exceeded $6.5 billion for the biennium, and appropriations for medical assistance programs were nearly $3.7 billion.

Appropriations for property tax relief to local governmental units and individual taxpayers exceeded $3 billion.

The budget also provided funds for the district court system; pension aid for local governmental shares of police, fire, and other public employees; criminal justice aids; welfare aids for social services and family support programs; highway and transit aids; support for local health departments; and payments in lieu of taxes to counties with state lands.

A breakdown of the biennial aids can be found on the following table.


Go to next page