FINAL BILL REPORT

HB 2330

                                  C 234 L 90

BYRepresentatives Haugen, Ferguson, Cooper, Wang, Raiter, Horn, Zellinsky, Jones, Brumsickle, Basich, Kremen, McLean, Todd, Nealey, Ballard, Morris and Kirby

Modifying levy rate provisions for senior and junior taxing districts.

House Committe on Local Government

Rereferred House Committee on Revenue

Senate Committee on Governmental Operations

SYNOPSIS AS ENACTED

BACKGROUND:

Statutes establish a cumulative ceiling on the rate of most regular property taxes that may be imposed by most taxing districts, including the state.  Under these limitations, the state is authorized to impose regular property taxes of up to $3.60 per $1,000 of assessed valuation, at the state equalized value, to fund K-12 education, while most other taxing districts may impose regular property taxes at a combined rate not to exceed $5.55 per $1,000 of assessed valuation.

Relative status levels of various taxing districts that are subject to the $5.55 limitation have been established.  Counties, cities, towns, and road districts are classified as senior taxing districts.  The remaining taxing districts that are subject to the $5.55 limitation are classified as junior taxing districts, such as library districts, fire protection districts, and public hospital districts.  Different status levels within the junior taxing districts have been established.

If a situation arises where regular property taxes in excess of the $5.55 limitation are sought to be imposed in an area, then a process of reducing and eliminating tax levies occurs to keep the cumulative level of such regular property taxes within the $5.55 limitation.  This process of reducing or eliminating tax levies is referred to as prorationing.  Under this process, the junior taxing districts with the lowest status level have their property taxes reduced proportionately, or eliminated.  If the cumulative limitation still is not reached, then the property taxes of taxing districts of the next lowest status level are proportionately reduced or eliminated, and so on until the $5.55 limitation has been reached.

Various laws have been enacted in the last few years attempting to address this prorationing situation.  One of these measures allows voters of some junior taxing districts to approve a ballot proposition permitting the junior taxing district to retain its property taxes that would otherwise have been reduced, up to an amount not exceeding an additional 35 cents above the $5.55 limitation for five consecutive years.  Voters in several areas have approved such ballot measures.  One of these measures terminated last year.  This measure provided for an automatic reduction of the taxes of a geographically small junior taxing district, in return for transfers of money from a geographically large junior taxing district.

SUMMARY:

The potential of reducing or eliminating junior taxing district property tax levies is reduced by altering property tax laws as follows:

1) The extra 35 cents per $1,000 of assessed taxing capacity that voters may approve for certain junior taxing districts for a six-year period is eliminated;

2) The $5.55 per $1,000 of assessed valuation ceiling is increased by 35 cents to become a $5.90 limitation; and

3) The maximum regular property tax levies for both public hospital districts and metropolitan park districts is altered from a single levy of 75 cents per $1,000 of assessed valuation at the highest junior taxing district tax status, by splitting each of these taxes into two separate tax levies:  one of 50 cents per $1,000 of assessed valuation at the highest junior taxing district tax status; and the other at 25 cents per $1,000 of assessed valuation at the third status level, immediately following the status level for the second and third 50 cents per $1,000 of assessed tax levy for fire protection districts.

VOTES ON FINAL PASSAGE:

      House 89   0

      Senate    46     0

EFFECTIVE:June 7, 1990