Property tax bills address land valuations

HB 1005 is one of two companion bills related to property tax that has an impact on school districts. It does three things:

1. It phases out the “150 percent rule” for owner-occupied and commercial property owners over five years. (Currently, sales of property that exceed 150 percent of their assessed value are essentially removed from the property tax base.) The bill limits assessments during the phase-out period to increases of no more than 5 percent per year from the new sales added because of phasing out the rule.
2. It ties the value of ag land to its earning capacity, or productivity.
3. It creates a task force to advise the state regarding implementation of the new system. The implementation of the bill is delayed until July 1, 2009. It will first impact valuations for taxes payable in 2011.

HB 1006 helps to alleviate some of the side effects caused by fixing the 150 percent rule in HB 1005 and switching to productivity value for ag land. Some school districts will be significantly impacted by these valuation changes – with either a lot more or a lot less ag value.

Currently, a school district’s capital outlay, special education and pension funds are not capped. This bill places a temporary cap on those funds for school districts that have a change in valuation of more than 10 percent. The caps work by restricting the amount collected by the school district for each fund to the amount collected last year plus increases for inflation (up to 3 percent) and for new construction within the taxation district.