House File 25 HOUSE FILE BY J.K. VAN FOSSEN, RAYHONS, LUKAN, ELGIN, GREINER, DENNIS, UPMEYER, J.R. VAN FOSSEN, AND S. OLSON Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to a limitation on property taxes for cities and 2 counties. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1152YH 80 5 sc/sh/8 PAG LIN 1 1 Section 1. NEW SECTION. 444.25 PROPERTY TAX LIMITATIONS 1 2 FOR 2004=2005 AND 2005=2006 FISCAL YEARS. 1 3 1. COUNTY LIMITATION. The maximum amount of property tax 1 4 dollars that may be certified by a county for taxes payable in 1 5 the fiscal year beginning July 1, 2004, shall not exceed the 1 6 amount of property tax dollars certified by the county for 1 7 taxes payable in the fiscal year beginning July 1, 2003, and 1 8 the maximum amount of property tax dollars that may be 1 9 certified by a county for taxes payable in the fiscal year 1 10 beginning July 1, 2005, shall not exceed the amount of 1 11 property tax dollars certified by the county for taxes payable 1 12 in the fiscal year beginning July 1, 2004, for each of the 1 13 levies for the following: 1 14 a. General county services under section 331.422, 1 15 subsection 1. 1 16 b. Rural county services under section 331.422, subsection 1 17 2. 1 18 c. Other taxes under section 331.422, subsection 4. 1 19 The limitation provided in this subsection does not apply 1 20 to the levies on the increase in taxable valuation due to new 1 21 construction, additions or improvements to existing 1 22 structures, remodeling of existing structures for which a 1 23 building permit is required, annexation, and phasing out of 1 24 tax exemptions, and on the increase in valuation of taxable 1 25 property as a result of a comprehensive revaluation by a 1 26 private appraiser under a contract entered into prior to 1 27 January 1, 2003, or as a result of a comprehensive revaluation 1 28 directed or authorized by the conference board prior to 1 29 January 1, 2003, with documentation of the contract, 1 30 authorization, or directive on the revaluation provided to the 1 31 director of revenue and finance, if the levies are equal to or 1 32 less than the levies for the previous year; levies on that 1 33 portion of the taxable property located in an urban renewal 1 34 project the tax revenues from which are no longer divided as 1 35 provided in section 403.19, subsection 2; or as otherwise 2 1 provided in this section. 2 2 2. CITY LIMITATION. The maximum amount of property tax 2 3 dollars that may be certified by a city for taxes payable in 2 4 the fiscal year beginning July 1, 2004, shall not exceed the 2 5 amount in property tax dollars certified by the city for taxes 2 6 payable in the fiscal year beginning July 1, 2003, and the 2 7 maximum amount of property tax dollars that may be certified 2 8 by a city for taxes payable in the fiscal year beginning July 2 9 1, 2005, shall not exceed the amount of property tax dollars 2 10 certified by the city for taxes payable in the fiscal year 2 11 beginning July 1, 2004, for each of the levies for the 2 12 following: 2 13 a. City government purposes under section 384.1. 2 14 b. Capital improvements reserve fund under section 384.7. 2 15 c. Emergency fund purposes under section 384.8. 2 16 d. Other city government purposes under section 384.12. 2 17 The limitation provided in this subsection does not apply 2 18 to the levies on the increase in taxable valuation due to new 2 19 construction, additions or improvements to existing 2 20 structures, remodeling of existing structures for which a 2 21 building permit is required, annexation, and phasing out of 2 22 tax exemptions, and on the increase in valuation of taxable 2 23 property as a result of a comprehensive revaluation by a 2 24 private appraiser under a contract entered into prior to 2 25 January 1, 2003, or as a result of a comprehensive revaluation 2 26 directed or authorized by the conference board prior to 2 27 January 1, 2003, with documentation of the contract, 2 28 authorization, or directive on the revaluation provided to the 2 29 director of revenue and finance, if the levies are equal to or 2 30 less than the levies for the previous year; levies on that 2 31 portion of the taxable property located in an urban renewal 2 32 project the tax revenues from which are no longer divided as 2 33 provided in section 403.19, subsection 2; or as otherwise 2 34 provided in this section. 2 35 3. EXCEPTIONS. The limitations provided in subsections 1 3 1 and 2 do not apply to the levies made for the following: 3 2 a. Debt service to be deposited into the debt service fund 3 3 pursuant to section 331.430 or 384.4. 3 4 b. Taxes approved by a vote of the people which are 3 5 payable during the fiscal year beginning July 1, 2004, or July 3 6 1, 2005. 3 7 c. Hospitals pursuant to chapters 37, 347, and 347A. 3 8 d. Unusual need for additional moneys to finance existing 3 9 programs which would provide substantial benefit to city or 3 10 county residents or compelling need to finance new programs 3 11 which would provide substantial benefit to city or county 3 12 residents. The increase in taxes levied under this exception 3 13 for the fiscal year beginning July 1, 2004, is limited to no 3 14 more than the product of the total tax dollars levied in the 3 15 fiscal year beginning July 1, 2003, and the percent change in 3 16 the price index for government purchases by type for state and 3 17 local governments computed for calendar year 2003. The 3 18 increase in taxes levied under this exception for the fiscal 3 19 year beginning July 1, 2005, is limited to no more than the 3 20 product of the total tax dollars levied in the fiscal year 3 21 beginning July 1, 2004, and the percent change in the price 3 22 index for government purchases by type for state and local 3 23 governments computed for calendar year 2004. The price index 3 24 used shall be the state and local government chain=type price 3 25 index used in the quantity and price indexes for gross 3 26 domestic product as published by the United States department 3 27 of commerce. For purposes of this paragraph, tax dollars 3 28 levied in the fiscal years beginning July 1, 2003, and July 1, 3 29 2004, shall not include funds levied for the purposes set out 3 30 in paragraphs "a", "b", and "c". 3 31 Application of this exception shall require an original 3 32 publication of the budget and a public hearing and a second 3 33 publication and a second hearing both in the manner and form 3 34 prescribed by the director of the department of management, 3 35 notwithstanding the provisions of sections 331.434, 362.3, and 4 1 384.16. The publications and hearings prescribed in this 4 2 paragraph shall be held and the budget certified no later than 4 3 March 15. The taxes levied for counties and cities whose 4 4 budgets are certified after March 15, 2004, are limited as 4 5 provided in section 331.434, subsection 7, and section 384.16, 4 6 subsection 6. 4 7 4. APPEAL PROCEDURES. In lieu of the procedures in 4 8 sections 24.48 and 331.426, which procedures, pursuant to 4 9 section 444.25B, do not apply for taxes payable in the fiscal 4 10 years beginning July 1, 2004, and July 1, 2005, if a city or 4 11 county needs to raise property tax dollars from a tax levy in 4 12 excess of the limitations imposed by subsection 1 or 2, the 4 13 following procedures apply: 4 14 a. Not later than March 1, and after the publication and 4 15 public hearing on the budget in the manner and form prescribed 4 16 by the director of the department of management, 4 17 notwithstanding sections 331.434, 362.3, and 384.16, the city 4 18 or county shall petition the state appeal board for approval 4 19 of a property tax increase in excess of the increase provided 4 20 for in subsection 3, paragraph "d", on forms furnished by the 4 21 director of the department of management. Applications 4 22 received after March 1 shall be automatically ineligible for 4 23 consideration by the board. 4 24 b. Additional costs incurred by the city or county due to 4 25 any of the following circumstances shall be the basis for 4 26 justifying the excess in property tax dollars under this 4 27 subsection: 4 28 (1) Natural disaster or other life=threatening 4 29 emergencies. 4 30 (2) Unusual need for additional moneys to finance existing 4 31 programs that would provide substantial benefit to city or 4 32 county residents or compelling need to finance new programs 4 33 that would provide substantial benefit to city or county 4 34 residents. 4 35 (3) Need for additional moneys for health care, treatment, 5 1 and facilities, including mental health and mental retardation 5 2 care and treatment pursuant to section 331.424, subsection 1, 5 3 paragraphs "a" and "b". 5 4 (4) Judgments, settlements, and related costs arising out 5 5 of civil claims against the city or county and its officers, 5 6 employees, and agents, as defined in chapter 670. 5 7 c. The state appeal board shall approve, disapprove, or 5 8 reduce the amount of excess property tax dollars requested. 5 9 The board shall take into account the intent of this section 5 10 to provide property tax relief. The decision of the board 5 11 shall be rendered at a regular or special meeting of the board 5 12 within twenty days of the board's receipt of an appeal. 5 13 d. Within seven days of receipt of the decision of the 5 14 state appeal board, the county or city shall adopt and certify 5 15 its budget under section 331.434 or 384.16, which budgets may 5 16 be protested as provided in section 331.436 or 384.19. The 5 17 budget shall not contain an amount of property tax dollars in 5 18 excess of the amount approved by the state appeal board. 5 19 5. COUNTY AUDITOR ADJUSTMENT. In addition to the 5 20 requirement of the county auditor in section 444.3 to 5 21 establish a rate of tax which does not exceed the rate 5 22 authorized by law, the county auditor shall also adjust the 5 23 rate if the amount of property tax dollars to be raised is in 5 24 excess of the amount specified in subsection 1 or 2, as may be 5 25 adjusted pursuant to subsection 4. 5 26 Sec. 2. NEW SECTION. 444.25A PROPERTY TAX LEVY 5 27 LIMITATIONS NOT AFFECTED. 5 28 Section 444.25 shall not be construed as removing or 5 29 otherwise affecting the property tax limitations otherwise 5 30 provided by law for any tax levy of the political subdivision, 5 31 except that, upon an appeal from the political subdivision, 5 32 the state appeal board may approve a tax levy consistent with 5 33 the provisions of section 24.48 or 331.426. 5 34 Sec. 3. NEW SECTION. 444.25B SECTIONS VOID. 5 35 Sections 24.48 and 331.426 are void for the fiscal years 6 1 beginning July 1, 2004, and July 1, 2005. 6 2 EXPLANATION 6 3 This bill limits, for FY 2004=2005 and FY 2005=2006, the 6 4 maximum dollar amounts of property tax levies to be imposed by 6 5 cities and counties to the dollar amounts of the property 6 6 taxes levied by the cities and counties in FY 2003=2004 and FY 6 7 2004=2005, with certain exceptions. In addition, current 6 8 property tax rate limits still apply. The following are 6 9 exceptions to the limitations: levies on the increase in 6 10 taxable valuation due to new construction or improvements, 6 11 annexation, or phasing out of tax exemptions, or due to a 6 12 comprehensive revaluation authorized before calendar year 6 13 2003, if equal to or less than the previous year's levies; 6 14 levies for discontinued tax increment financing areas; other 6 15 levies for debt service; taxes approved by a vote of the 6 16 people which are payable during FY 2004=2005 or FY 2005=2006; 6 17 certain levies for hospitals; and, only after publication and 6 18 public hearings, tax levies for moneys to permit, in cases of 6 19 unusual need, additional financing of existing programs 6 20 providing a substantial benefit or to permit, in cases of 6 21 compelling need, financing of new programs providing a 6 22 substantial benefit. If a petition is filed by March 1 and 6 23 approved by the state appeal board, the limitations may be 6 24 exceeded for expenditures relating to any of the following: 6 25 natural disaster or other life=threatening emergencies; 6 26 unusual need for additional financing of existing programs 6 27 providing a substantial benefit, or compelling need for 6 28 financing of new programs providing a substantial benefit; 6 29 need for additional financing for certain health care, 6 30 treatment, and facilities; and civil tort claims. 6 31 LSB 1152YH 80 6 32 sc/sh/8