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Introduction
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Local Property Tax Aids and Credits
The property tax rebate enacted by the 1997 Legislature was authorized again for property taxes payable in 1998. The rebate for homeowners and renters is once again equal to 20 percent of property taxes paid. A new provision was added that limits the amount of the rebate to $1,500 per taxpayer. For renters, the rebate is based on the 19 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 1998 individual income tax return. The cost of the rebate is estimated to be $469.3 million in the 1997-1999 biennium and $25.2 million in the 1999-2001 biennium.
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The education homestead credit enacted in 1997 was increased from 32 percent of the general education tax on a homestead to 68 percent for taxes payable in 1999, and 69 percent for taxes payable in 2000 and thereafter. The maximum credit is increased from $225 to $320 for taxes payable in 1999 and to $335 for taxes payable in 2000 and thereafter. The percentage of the credit may be adjusted by the Commissioner of Revenue to account for increases in the general education levy. The additional cost of the credit is estimated to be $271.7 million in the 1999-2001 biennium.
The statewide general education levy was reduced by $57 million annually beginning with state FY 2000. Referendum equalization aid was increased by $7 million annually, and alternative facilities aid was increased by $3 million annually. Desegregation aid was increased by $7 million in FY 2000, and by $13 million in FY 2001. After accounting for the metering of school aid payments, the cost of these education aid increases is $146 million in the 1999-2001 biennium.
Family Preservation Aid (FPA) was increased by $30 million annually beginning with aid payable in FY 2001. Of the $30 million FPA increase, $10 million was a transfer from county Homestead and Agricultural Credit Aid (HACA). The net cost of the FPA increase is $20 million in the 1999-2001 biennium.
HACA was increased to reflect the reduction in the Fiscal Disparities areawide contribution pool resulting from the reduction in commercial-industrial class rates from 4.0 percent to 3.5 percent. The increase in Fiscal Disparities HACA is estimated to be $13.2 million in the 1999-2001 biennium.
The percentage of rent which is deemed to be used to pay property taxes was increased from 18 percent to 19 percent. This change is estimated to increase the cost of the property tax refund by $16.2 million in the 1999-2001 biennium.
Property tax class rates were reduced for a number of property types effective for taxes payable in 1999. The following table shows the class rates under prior law, and the newly enacted class rates.
PROPERTY TAX CLASS RATES
| Prior Law Payable 1999 | Current Law Payable 1999 | |
Residential homestead:
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1.0 1.85 |
1.0 1.7 |
Residential non-homestead:
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Apartments:
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Agricultural land & buildings:
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0.9 1.4 1.4 |
0.35 0.8 1.25 1.25 |
Seasonal recreational residential
(cabins):
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1.4 2.5 |
1.25 2.2 |
Commercial seasonal recreational:
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1.0 2.1 |
1.0 1.8 |
Disabled homestead:
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0.45 |
0.45 |
Commercial/Industrial:
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2.7 4.0 |
2.45 3.5 |
Public utility:
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4.0 4.0 4.0 |
3.5 3.5 3.5 |