Transcript House Bill 1001 - Association of Indiana Counties (AIC)

House Enrolled Act 1001
Presented by the
Association of Indiana Counties
May 2008
House Enrolled Act 1001
Overview
•
•
•
•
•
•
•
•
•
•
Property Tax Relief
Property Tax Caps
Sales Tax Increase
State Assumes Levies & Costs
Spending Limits / Budget Review
Capital Project Approval
Changes to TIF
Local Option Income Taxes
Assessing Changes
Numerous Other Provisions
Property Tax Relief
• Additional $620 Million Homestead Credit expected
to reduce 2008 tax bills by statewide average of 31%
from pre-rebate 2007 tax bills. (26% Reduction after
2007 Rebate)
• New Homestead Credit - $140 Million for 2009 and
$80 Million for 2010, funds distributed to counties
within 2 weeks of issuance of tax bills.
• Increases the Renter’s Deduction from $2,500 to
$3,000
• Increases the Earned Income Tax Credit from 6% to
9% and repeals expiration date
Property Tax Caps
Property Tax Caps Phased in to 2010
• Homesteads
2008 = 2%
2009 = 1.5%
2010= 1%
• Agricultural Land, Rentals, Long-term Care
2009 = 2.5%
2010 = 2%
• All Other Real & Personal Property
2009 = 3.5%
2010 = 3%
• Relief for Schools: Provides $120 Million to offset the revenue
loss for schools that have an impact of greater than 2% of their
levy ($50 M for 2009; $70 M for 2010). Also, allows schools
to have a referendum to offset the impact of the Property Tax
Caps.
Property Tax Caps
• Lake & St. Joseph Counties – Payments for pre-July 1, 2008
bonds and leases are outside of circuit breaker calculation.
• Requires debt service to be funded; revenue losses must come
from operating funds. (State Auditor may intercept revenues
to pay debt service)
• After 2008, Debt approved at Referendums will be outside the
Property Tax Caps.
• Individual Distressed Political Subdivisions can petition the
Distressed Unit Appeal Board for Relief.
– “Distressed Unit” = Units that expect to have at least 5% of their
property tax collections reduced as a result of the Property Tax Caps.
Distressed Unit Appeal Board
• Appeal Board may:
– Increase the percentage thresholds at which the caps apply.
– Provide for percentage reductions to credits otherwise provided
to taxpayers.
– Provide that some or all of the taxes payable to bonds, leases, or
other obligations are not included when calculating the credit.
• Appeal Board Consists of Nine Members:
–
–
–
–
4 State Agency Heads
Appointment by Speaker of the House
One non-elected gubernatorial appointment
Three gubernatorial appointments (elected officials),
recommended by AIC, IACT, and the Superintendents
Association.
Property Tax Caps
• LSA Revenue Loss Estimates:
– Overall Loss to Local Governments:
2008 = $3.9 M
2009 = $229 M
2010 = $524 M
– Loss to Counties:
2008 = $615,283
2009 = $28 M
2010 = $74 M
(Report can be found at www.indianacounties.org /
under “Legislative Center”)
Constitutional Amendment
• Senate Joint Resolution 1 also Approved by General
Assembly
• Begins process of amending State Constitution to
include 1%, 2%, 3% Property Tax Caps.
• Also includes exclusion for Lake & St. Joseph
Counties.
• To amend Constitution, Identical Resolution must be
approved by a separately elected General Assembly
AND be approved by Hoosier voters.
Sales Tax Increase /
Levy Pick-up
• $.01 Sales Tax Increase effective April 1, 2008
• Sales Tax Increase and existing PTRC and
Homestead Credit dollars used by state to assume
levies in 2009. (PTRC eliminated in 2009)
• Sales tax, income tax & gaming taxes previously
deposited into Property Tax Replacement &
Reduction Funds redirected into the State General
Fund to pay for levies.
State Assumption of Levies &
Costs
•
State Assumes Full Cost for Remaining School General Fund & Pre-school Special
Education
•
State Assumes Full Cost for Child Welfare Levies
–
–
–
–
•
•
•
•
•
County Family & Children Fund
Medical Assistance to Wards (MAW)
Children’s Residential Psychiatric Treatment Fund (CRPT)
Children with Special Health Care Needs
County Income Tax & Excise Tax Distributions Protected when State Assumes
Levies.
County is obligated to pay for welfare services delivered before January 1, 2009.
Excess money in Family & Children Fund and CRPT Fund shall be deposited in the
county’s Levy Excess Fund.
Excess money in the MAW Fund and Children with Special Health Care Needs
Fund shall be transferred to the state.
Eliminates all State Property Tax Levies (State Fair, DNR Forestry)
State Assumption of Levies &
Costs
• State assumes full cost for incarceration of juveniles
in State Correctional Facilities*
• State assumes full cost for Hospital Care for the
Indigent (HCI)*
– Includes $40 Million for Marion County Health & Hospital
Corporation since Marion County does not have an HCI
Levy.
• State will aid cities by making pre-1977 pension,
survivor and disability benefit payments*
• *Levies will be reduced by the amount of cost
assumed by state
Schools &
State Tuition Reserve Fund
To Address Concerns raised by Schools:
• Creates the State Tuition Reserve Fund and limits use of
revenues to fund Tuition Support distributions.
• Requires Budget Agency to transfer $50 M from the State
General Fund to the Tuition Reserve Fund by 12/31/10 (Will
Provide for an approximate $400 M balance by 2010)
• Permits a School Corporation to file a Shortfall Levy Appeal
for 2009 to cover a General Fund shortfall for 2008.
• Requires School Corporations to adopt budgets on a July 1 –
June 30 basis beginning 2010.
Supplemental Homeowner
& Senior Deductions
• Increases the Standard Deduction for Homesteads from the lesser of
$45,000 or 50% of AV to the lesser of $45,000 or 60% of AV (Effective for
Pay 09 Taxes)
• Creates a new Supplemental Deduction equal to 35% of the next $600,000
of AV remaining after the application of Standard Deduction and 25% of
remaining AV over $600,000 (Effective for Pay 09 Taxes)
• Provides that property tax bills for seniors with individual incomes of less
than $30,000 or joint incomes of less than $40,000 and AV that does not
exceed $160,000 cannot increase from 2007 levels by more than 2% per
year. (Effective for Pay 09 Taxes)
• Directs DLGF to adopt rules to prevent married couples from claiming
more than one Standard Deduction.
Spending Limits /
Budget & Project Review
•
No changes to Spending & Levy Limits under Current Law
•
Repeals Capital Project Review Boards
•
County Council shall perform non-binding review of civil unit budgets.
•
County Council or City/Town Council shall approve budgets of non-elected boards
(excluding school corporations) if their budget increases by more than the Assessed
Value Growth Quotient minus 1 (AVGQ – 1)
– City/Town Council approve budgets of units where AV of taxing unit is located
entirely in the city/town OR if the unit was originally established by the city or
town.
– County Council approve all other budgets of non-elected boards.
•
County Council or City/Town Council shall also approve debt issuances or leases
payable of non-elected boards
– City/Town Council approval if the taxing unit’s AV is entirely contained in the
city or town, or the unit was originally established by the city or town.
– County Council approval of all other non-elected boards in the county.
Levy Appeals
• Repeals Most Excess Levy Appeals and Includes Six
Maximum Levy Exceptions:
– Appeal for lack of adequate funds to carry out functions
(Requires appeal to be due to a natural disaster, an accident,
or unanticipated emergency)
– Appeal for correction of math errors and erroneous AV
– Restructures the New Facility Appeal for Schools.
– Shortfall Levy Appeal
– Levy Appeal for Growth
– Excess Levy for Annexation, Consolidation, or other
Extensions of Governmental Services
• This levy is modified to allow units to phase in permissible levy
increases over four years.
“Controlled Projects” Subject to
Petition & Remonstrance
• Controlled Projects are those that Cost the
lesser of:
– $2 Million; or
– Greater of:
• 1% of gross AV; or
• $1 Million
“Controlled Projects” Subject
to Petition & Remonstrance
• Exceptions from Controlled Project Definition:
– All of the current exceptions in statute
– Projects that are in response to a natural disaster,
emergency, or accident and are approved by the
county council
– Projects that were not controlled projects prior to
July 1, 2008 and
• Have been approved by the DLGF; or
• Have issued bonds or entered into a lease prior to July 1,
2008
Petition & Remonstrance
• Applies to projects that were Controlled Projects (as defined
prior to July 1, 2008 for political subdivisions that make
preliminary determinations prior to July 1, 2008)
• K - 8th Grade School Instruction Building Projects that are
controlled projects and cost less than $10 Million
• 9 - 12 Grade School Instruction Building Projects that are
controlled projects and cost less than $20 Million
• Any other project (county, city, etc.) that cost the lesser of:
– 12 Million; or
– Greater of:
• 1% of Gross Assessed Value; or
• $1 Million
Petition & Remonstrance
• Retains Current Application Process
• Registered Voters & Owners of Real Property may
participate
• Notice of preliminary determination must also
include current debt service tax rate and the estimated
debt service tax rate if the bonds are issued or the
lease is executed
• Projects may not be artificially divided to avoided
being subject to Petition & Remonstrance
Projects Subject to Referendum
• K - 8th Grade School Instruction Building Projects that are
controlled projects and cost more than $10 Million
• 9 - 12 Grade School Instruction Building Projects that are
controlled projects and cost more than $20 Million
• Any other project (county, city, etc.) that costs more than the
lesser of:
– 12 Million; or
– Greater of:
• 1% of Gross Assessed Value; or
• $1 Million
• Projects may not be artificially divided to avoid being subject
to Referenda
Referenda Process
• Prohibits use of public resources to promote a position on
referendum
– Includes activities of professionals involved with the project.
• Referenda trigger and application process is similar to current
petition and remonstrance process
• Signature of 100 people or 5% of registered voters needed to
get question on the ballot. (Must verify only the first 125
signatures)
• If petition requesting referendum is certified, a referendum
will be held on the next general, municipal, or primary
election.
Referenda Process
• If no election will be held within 6 months of the
certification, a special election will be held within 90120 days of the certification if requested by the
issuing political subdivision.
• If a special election is requested in a year in which an
election will be held, a special election will be held
only if the political subdivision requesting it agrees to
pay the costs.
• If a majority of voters vote in opposition the political
subdivision may not seek to finance a similar project
within one year of the referendum.
DLGF Role in Financings
• After June 30, 2008:
– Political Subdivisions will not be required to
petition DLGF for approval of bond issue or lease
– DLGF will have no role in approving construction
projects
School Construction
• Requires Department of Education to establish
guidelines for selection and construction of school
buildings and facilities.
– Requires Schools to submit building plans to DOE for
review and requires DOE to provide written comments
back to schools concerning whether the plans meet the
guidelines
– Requires schools to have a public hearing on the plans and
DOE’s written findings.
– Requires DOE to establish a clearinghouse of prototype
designs for schools to reference and use.
Changes to Redevelopment
Commissions
• Adds school board member to redevelopment commission as
nonvoting advisory member.
• Rather than County Executive making all appointments to
Commission, appointments will be made as follows:
• Seven Member County Redevelopment Commissions:
– County Executive shall appoint 4 Members
– County Council shall appoint 3 Members
• Five Member County Redevelopment Commissions:
– County Executive shall appoint 3 Members
– County Council shall appoint 2 Members
TIF Changes
• Reduces term of allocation areas from 30 years to 25
years
• Eliminates “expedited” process to approve changes to
declaratory resolutions and plans; requires every
amendment, including boundary expansions of less
than 20%, to complete the full process.
• Requires Redevelopment Commission to annually
notify the County Auditor and the County or
Municipal Fiscal Body of the amount of “excess” AV
that may be reallocated from the Redevelopment
Commission to other taxing units.
TIF Changes
• Provides that an allocation area may only be enlarged if there
are insufficient revenues for the “original project” or if the
Indiana Economic Development Corporation (IEDC), prior to
action to enlarge the area, makes findings about job creation or
retention, benefit of project, etc.
• Requires legislative body to approve Redevelopment
Commission’s use of eminent domain.
• Requires legislative body to approve ALL bonds issued by a
redevelopment commission, regardless of the principal
amount.
• Requires Legislative Body to give consent to Redevelopment
Commission’s decision to grant property tax deductions for
investments made in an allocation area.
TIF Changes
• Provides that TIF revenues may only be used to
finance public improvements that are located in or are
physically connected to the allocation area.
• Provides that bonds may be issued to pay for
economic development area activities if no other
revenue sources are available for that purpose.
• Expands information required for
redevelopment/economic development plans to
include properties “affected by” the plans.
• Removes ability to capture TIF after expiration of the
term of the allocation area.
TIF Replacement
• TIF Replacement Formula expanded to include any
action taken by the General Assembly or an
administrative agency that reduces TIF
• Replacement Mechanism no longer automatic
– Governing Body must hold public hearing to determine
type of replacement mechanism to be used.
• TIF Replacement Mechanisms expanded:
– Special Benefits Levy
– Special Assessment
– Reduction of Base Assessed Value
Changes to Debt / TIF
• With respect to Bonds payable from property taxes,
special benefit taxes, or TIF revenues:
– Prohibits issuing refunding bonds after June 30, 2008 that
have a maximum maturity longer than the maximum
maturity of the bonds being refunded.
– Prohibits the use of savings from a refunding for any
purpose other than funding a reserve, reducing levies, or
reducing outstanding debt.
– Provides that local issuing bodies may use surplus bonds
proceeds or investment earnings only to maintain a debt
service reserve, to pay debt service on other bonds, or to
reduce taxes.
Changes to Debt / TIF
• Requires issuers to pay principal & interest on a substantially equal
schedule, except to:
– Maintain substantially equal payments, in the aggregate, in any period
in which the local issuing body pays the interest and principal on
outstanding obligations
– Accelerate repayment of principal
– Provide for level principal payments over the term of the obligations, in
order to reduce total interest costs
– Account for variations in collections of TIF revenues
• Reduces Maximum Term of Bonds
– 25 years for Bonds payable from TIF (excluding coal gasification
plants)
– 20 years for other Bonds
– Maximum term permitted under federal law for bonds purchased or
guaranteed by federal agency
Local Option Income Taxes
(LOIT)
Department of Revenue – LOIT Reporting
• Requires employers (and individuals filing
estimated payments) to separate amounts paid
between state and county liability.
• Requires Department of Revenue to develop
reports and procedures to ensure that LOIT are
accurately and properly distributed to counties.
Local Option Income Taxes
(LOIT)
• Retains the LOIT options approved in 2007, with minor
changes.
• Three Options:
– Option A: Increase LOIT to pay for budget increases (instead of
increasing levies). Amount of LOIT increase determined by the state.
– Option B: Increase LOIT up to 1% to provide dollar for dollar property
tax relief
• Can make a decision each year to reallocate among homesteads, qualified
residential property, and broad based property tax relief.
• Relief can be provided to one or more of these classes of property.
– Option C: Increase LOIT by up to .25% for public safety (Must adopt
at least a .25% rate of Option A or Option B in order to adopt Option C)
Local Option Income Taxes
(LOIT)
• Adopting Body:
– CAGIT County: County Council
– COIT County: COIT Council
– Must hold at least one public meeting each year to discuss whether to
impose or increase the LOIT (Option A)
• Political Subdivisions can agree to pool LOIT for Public
Safety to pursue a single project.
• Provides three new alternative methods for allocating LOIT in
Lake County & Requires Commission on State Tax &
Financing Policy to study LOIT allocation alternatives.
• Permits political subdivisions to continue to receive LOIT
allocations that would otherwise be lost as a result of the
elimination of levies.
LOIT
Adoption Deadlines
Adoption Date
Effective Date
Before October 1, 2008
After September 30 & Before October 16, 2008
After October 15 & Before November 16, 2008
After November 15 & Before January 1, 2009
October 1, 2008
November 1, 2008
December 1, 2008
January 1, 2009
• After 2008, LOIT can only be adopted between April 1 and July 31.
LOIT Withholding
•
Provides that the DLGF may order the withholding of the
entire distributions, or a percentage of the distributions, of
CAGIT, COIT, or CEDIT, if:
1) Local assessing officials have not provided information to DLGF in a
timely manner.
2) The County Assessor has not transmitted required parcel and personal
property data to the DLGF by October 1.
3) The County Auditor has not timely paid to the DLGF a bill for a stateconducted assessment or reassessment.
4) The County Assessor has not timely forwarded sales disclosure form
data to the DLGF.
5) The County Auditor has not forwarded duplicate copies of all
approved exemption applications by August 1 as required in IC 6-1.111-8(a)
(continued…)
LOIT Withholding (cont.)
6)
By the date the distribution is scheduled to be made, the County Auditor
has not sent a certified statement of Assessed Values and other
information that is required to be sent to political subdivisions by August
1.
7) The county does not maintain a certified computer system that meets the
requirements of IC 6-1.1-31.5-3.5
8) The county auditor has not timely transmitted by March 1, to the DLGF,
electronic data files of information contained on the tax duplicate for all
parcels and personal property returns.
9) The county has not timely established a parcel index numbering system.
10) “A county official has not provided other information to the DLGF in a
timely manner as required by the DLGF.”
•
If a county that has not adopted LOIT (Lake County), the DLGF may withhold
other state revenues that would otherwise be distributed to the county or other
taxing units in the county.
Assessing Changes
• Transfers the assessing duties of Trustee Assessors to the
County Assessor effective July 1, 2008
• Transfers all duties of Township Assessors in townships with
fewer than 15,000 parcels to the County Assessor effective
July 1, 2008.
• Requires a referendum to be held in the 2008 General Election
in all Townships that include at least 15,000 parcels to
determine whether the assessing duties of the Township
Assessor should be transferred to the County Assessor.
– Before April 15, 2008 each County Auditor shall certify to the County
Assessor, the County Executive, the fiscal body, and the County
Election Board the name of each township in the county that includes at
least 15,000 parcels.
Assessing Changes
• In Townships Affected, assessing duties transfer to
county assessor on July 1, 2008.
– Township Assessor & Trustee-Assessors whose duties are
assumed shall organize their assessment records and
transfer them to the County Assessor by July 1, 2008 (or
January 1, 2009 for those affected by referendum).
– DLGF has until July 1, 2008 to determine a schedule and
procedure for the transfer of records.
– Affected Township Assessors are entitled to remain in
office until the end of their term, with their sole duty being
to assist the county assessor in the transfer of records and
the operations.
Assessing Changes
• The following are transferred to the County Assessor on July
1, 2008 :
– The employment positions as of June 30, 2008 of:
• The elected township assessor; and
• All employees of the elected township assessor
– Real & Personal Property used solely to carry out assessment duties of
Township Assessors and Township Trustee-Assessors.
– Obligations outstanding on June 30, 2008 relating to assessment of
property of Township Assessors and Township Trustee-Assessors.
– After the date of transfer, all Revenues received by the Township for
the purpose of carrying out property assessment duties shall be
transferred from the affected Township Assessor to the County
Assessor. (Amount to be determined by the County Auditor)
(Note: Dates throughout this section are different for Transfer of Assessing
that is decided by Referendum)
Assessing Changes
•
Before July 1, 2008, the county assessor shall
interview, or give the opportunity to
interview, to each individual who:
–
Is an employee, as of March 19, 2008, of
(1) An elected township assessor; or
(2) A trustee-assessor in the county; and
–
Applies before June 1, 2008.
Assessing Changes
• To be a candidate for the office of County Assessor you must have attained
proper certification:
– To run after June 30, 2008, must have Level II.
– To run after January 1, 2012 must have Level III.
• Township Assessors must attain proper certification to take office.
(Certification not required in order to run for office)
– Must have Level II to take office after June 30, 2008
– Must have Level III to take office after January 1, 2012.
– If Township Assessor does not have Level II or Level III as required above, the
assessment duties transfer to the County Assessor but may transfer back to the
Township Assessor if at a later election a person has attained the required level
of certification.
• Employees of the County or Township Assessor who perform real property
assessing duties must have Level II by June 30, 2008 and Level III by
January 1, 2012.
Assessing Changes
• Effective December 31, 2008, each Appraiser
employed by a contractor to perform assessment
duties for a county must hold a Level II or III
Certification.
• After June 30, 2008, the County Assessor may
establish one or more satellite offices in the county.
• Any assessment, appeal, or other official action made
by the Township Assessor or Trustee-Assessor before
the transfer to the County Assessor is considered to
have been made by the County Assessor.
Assessing Changes
• Provides a process for removal of a County and/or Township Assessor who
fails to perform required duties.
– If notified by DLGF of problems with assessment activities, Council
President SHALL provide this information to the County
Commissioners who MAY adopt an ordinance determining the assessor
has failed to perform their duties and as such forfeits office and is
subject to removal.
• Upon adoption of Ordinance, the Prosecuting Attorney SHALL file an
information with the circuit court of the county.
• Requires DLGF to conduct operational audits of assessors to improve
quality/accuracy of assessments.
• Requires the DLGF and the Commission on State Tax & Financing Policy
to study the possibility of eliminating the existing method of assessing and
valuing property AND the use of alternative methods of valuing property
for the purpose of property taxation.
Assessing Changes
• Provides that a political subdivision may not make a payment to a vendor
for assessment related software unless the DLGF has certified the software.
• Repeals Township Assessor’s Authority to employ professional appraisers
& provides that County Assessors may employ professional appraisers for
assessments in all townships in the county.
• Provides that DLGF must be a party to all assessing and computer
contracts.
• Directs the Commission on State Tax & Financing Policy to study whether
it is reasonable to require counties to use a single state designed software
system for Auditors, Treasurers and Assessors.
• Deletes language added in 2007 that would have delayed property tax due
dates if a county hadn’t mailed Form 11 statements by March 26.
(Effective July 1, 2008)
Assessing Changes
• Simplifies the process by which a taxpayer can obtain a preliminary
informal meeting with the assessor to review an assessment.
• Provides that Assessors may not require taxpayers to present documentary
evidence at a preliminary informal meeting.
• Permits counties with cross-county taxing units to submit AV info to DLGF
as shown on the most current abstract. (So one county will not have to wait
on the other to complete its work)
• Repeals County Land Valuation Commissions
• Increases the Productivity Factor for agricultural land strip mined after
12/31/07 from .5 to .75
• Converts the 100% Deduction for Inventory to an Exemption
• Provides that if a Township Assessor discovers he/she has made an error,
the error must be corrected and reflected on the next tax installment.
Other Provisions in HEA 1001
• For Property Taxes Due & Payable in 2008, the Treasurer may
choose to use a tax statement that is different from the tax
statement prescribed by the DLGF.
– A property tax comparison statement (TS1) in either black and white or
color must be mailed to taxpayers along with the tax bill.
– Beginning with Pay 09 taxes, Treasurer must use the DLGF prescribed
tax bill.
• Delays from August 2009 to October 2010, the Budget
Statement that Auditors must mail to taxpayers.
• Provides that “Rebate Checks” are void if the checks are:
– Outstanding and unpaid for 180 days after issuance
– For an amount that is less than $10.
Questions???
AIC Legislative Staff:
-David Bottorff / [email protected]
-Andrew Berger / [email protected]
Phone: (317) 684-3710