All real and personal property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The annual growth of all regular property tax levy revenue is limited as follows:
The value of the following add-ons is added in addition to the limit factor:
The state collects two regular property tax levies. The revenue growth limit applies to both state levies and all regular local property tax levies. Excess levies are not subject to this limit and require voter approval.
For purposes of the revenue growth limit, inflation means the percentage change in the implicit price deflator (IPD) for personal consumption expenditures for the United States as published for the most recent 12-month period by the Federal Department of Commerce by September 25 of the year before the taxes are payable. Taxing districts may adopt a resolution of substantial need to levy up to 101 percent if the IPD is less than 1 percent.
For purposes of the revenue growth limit for local property taxes, the limit factor of 101 percent is replaced with a limit factor of 100 percent plus population change and inflation, with a cap of 103 percent.
Inflation is defined as the annual percentage increase in the consumer price index for all urban consumers in the western region for all items as provided for the most recent 12-month period by the United States Department of Labor by July 25 of the year before the taxes are payable.
The term "population change" means the percent increase in the population of a taxing district between the two most recent years provided in the official population estimates published by the Office of Financial Management in April of the year before the taxes are payable. If population decreases, the population change is zero.
The ability for taxing districts with regular levies and a substantial need to adopt a resolution to use the growth factor of 101 percent instead of the IPD if the IPD is less than 1 percent is repealed.
By September 1 of each year, the Department of Revenue must provide county assessors the limit factors. By October 1 of each year, county assessors must determine how the limit factor applies to each taxing district and notify each taxing district.
The changes are applicable for taxes levied for collection in 2024 and thereafter.
(In support) This bill is about removing the restrictions on local government spending and allowing them to sufficiently finance things like emergency responders and roads. Local governments are limited in their ability to get the resources they need to fund necessary things. This is one of the recommendations that came out of the Tax Structure Work Group. Some cities are highly dependent on property tax revenues. Costs of city services outpace the growth in revenues, so cities are continually at budget shortfalls and have to choose between services provided. The 1 percent cap does not reflect the needs of local revenues and is arbitrary. The change this bill allows will more accurately reflect the budget needs of local governments. Counties support this bill, because they understand best how to structure our budgets. Inflation and growth in service needs keeps counties perpetually underfunded. Maintenance of operation levels that are approved by citizens is critical, and we should not have to repeatedly go back to voters to request additional funding.
(Opposed) Property taxes are already out of control, and this bill would make that worse. This would create severe financial hardship for many citizens. Voters have spoken before on the desire for a 1 percent cap. Governments do not have a revenue problem they have a spending problem and mismanagement. This bill violates the uniformity requirements within the constitution. The population metric is problematic because jurisdictions cross many boundary lines.