| Summary |
Property tax revenue limit. Beginning with the 2025 property tax
year, section 2 of the bill establishes a limit on specified property tax
revenue for local governments (limit). This limit does not apply to local
governments that are home rule local governments, school districts, have
not received voter approval to exceed the statutory 5.5% property tax
revenue limitation, or have not received voter approval to collect, retain,
and spend revenue without regard to the limitations in section 20 of
article X of the state constitution. The limit is equal to the local
governmental entity's base year qualified property tax revenue increased
by 5.5% for each year since the base year including the relevant property
tax year. A local government may seek voter approval to waive the limit.
A local governmental entity's base year is:
•
For a local governmental entity that had qualified property
tax revenue for the 2023 property tax year, the local
governmental entity's qualified property tax revenue for the
2023 property tax year, plus any money the local
governmental entity received from the state to compensate
the local governmental entity for reduced property tax
revenue in the 2023 property tax year;
•
For a local governmental entity that did not have qualified
property tax revenue for the 2023 property tax year, the
local governmental entity's qualified property tax revenue
for the first year that the local governmental entity has
property tax revenue; and
•
The local governmental entity's qualified property tax
revenue for the most recent property tax year for which the
local governmental entity's voters approved temporarily
waiving the limit.
If a local government property tax revenue would otherwise exceed the
limit, a local government shall establish a temporary property tax credit
equal to the number of mills necessary to prevent the local government's
property tax revenue from exceeding the limit.
Commercial property valuation reductions. Under current law,
for commercial property, the valuation for assessment (valuation) is 29%
of the actual value of the property. Section 3 reduces the valuation of
commercial property as follows:
•
For property tax year 2024, the valuation is 27.9% of the
amount equal to the actual value of the property minus the
lesser of $30,000 or the amount that causes the valuation
for assessment of the property to be $1,000 (alternate
amount);
•
For property tax year 2025, the valuation is 27% of the
actual value of the property;
•
For property tax year 2026, the valuation is 26% of the
actual value of the property; and
•
For property tax years commencing on or after January 1,
2027, the valuation is 25% of the actual value of the
property.
Residential real property valuation reductions. For the 2024
property tax year, section 4 makes 2 reductions to residential real
property valuation by continuing the 2023 property tax year reductions to
residential real property valuation:
•
For multi-family residential real property, the bill reduces
the valuation from 6.8% of the actual value of the property
to 6.7% of the amount equal to the actual value of the
property minus the lesser of $55,000 or the alternate
amount; and
•
For all other residential real property, the bill reduces the
valuation from an estimated 7.06% of the actual value of
the property to 6.7% of the amount equal to the actual
value of the property minus the lesser of $55,000 or the
alternate amount.
Section 5 makes a conforming amendment to the reduction for all
other residential real property for the 2024 property tax year, as described
in section 4.
For the 2025 property tax year, section 4 modifies residential real
property valuation so that the valuation for all residential real property is:
•
For the purpose of a levy imposed by a school district,
7.15% of the actual value of the property; and
•
For the purpose of a levy imposed by a local governmental
entity that is not a school district, 6.7% of the actual value
of the property.
For the 2026 property tax year and all future property tax years,
property tax year and all future property tax years, section 4 also reduces
the valuation for all residential real property from 7.15% of the actual
value of the property. For all residential real property, the valuation is:
•
For the purpose of a levy imposed by a school district, the
lesser of 7.15% of the actual value of the property or a
percentage of the actual value of the property determined
by the property tax administrator pursuant to section 6; and
•
For the purpose of a levy imposed by a local governmental
entity that is not a school district, 6.95% of the amount
equal to the actual value of the property minus the lesser of
10% of the actual value of the property or $70,000 as
adjusted for inflation in the first year of each subsequent
reassessment cycle.
Adjustable residential real property valuation. Section 6
requires legislative council staff to notify the property tax administrator
of the first year after 2026 in which the local share of total program is
equal to or greater than 60% of the total program determined pursuant to
the Public School Finance Act (act). For every property tax year after
that year, the valuation for assessment for all residential real property, for
the purpose of a levy imposed by a school district, is equal to the lesser
of:
•
7.15% of the actual value of the property; or
•
The percentage of the actual value of the property
necessary for the local share of total program to equal 60%
of the total program determined pursuant to the act, based
on the best available information when the property tax
administrator determines the percentage of actual value.
Reimbursement of local governments. The state reimbursed
local governmental entities for property tax revenue lost as a result of the
reductions in valuation enacted in Senate Bill 22-238 and Senate Bill
23B-001. Section 7 establishes a reimbursement mechanism for certain
local governmental entities other than school districts to account for
property tax revenue lost as a result of the reductions in valuation in the
bill for the 2024 property tax year. The reimbursement mechanism
requires the state to reimburse local governments in an amount equal to
the decrease, if any, in assessed value between the 2022 and 2024
property tax years multiplied by the local governments' mill levy rate
from the 2022 property tax year. Section 7 creates a fund out of which the
state makes the reimbursements and requires the state treasurer to transfer
to the fund an amount equal to one percent of the amount appropriated for
expenditure from the general fund for state fiscal year 2024-25. Section
1 makes a corresponding reduction to the amount of the unrestricted
general fund year-end balance that must be retained as a reserve for state
fiscal year 2024-25.
Property tax deferral program. The existing property tax
deferral program allows any person to defer the payment of the portion
of real property taxes on the person's homestead that exceeds the
tax-growth cap, which is an amount equal to the average of the person's
real property taxes paid for the preceding 2 property tax years for the
same homestead, increased by 4%. Beginning with the 2025 property tax
year, section 8 removes the 4% tax-growth cap. Accordingly, beginning
with the 2025 property tax year, a person may defer the payment of the
portion of real property taxes on the person's homestead that exceeds the
average of the person's real property taxes paid for the preceding 2
property tax years for the same homestead.
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