Governor's Tax Cap Proposal

(S.8720-A, Rules) No same as

This bill would establish a school property tax cap for all school districts other than the "Big 5" fiscally dependent city school districts.

The proposal would:

• Establish a "cap" on school property tax cap increases of 4% over the total amount of taxes levied for the prior school year or 120% of CPI, whichever is less. The calculation of the tax cap limit includes payments in lieu of taxes that were receivable in the prior school year; but does not include the district's capital tax levy.

• Only allow a school district to override the cap through a "supermajority" - voter approval of 55% or 60% depending on the level of state aid the district expects to receive in the ensuing year.

• If a school district's state aid payment is expected to increase by less than five percent then a 55% voter approval is needed to override the cap. If a school district's state aid payment is expected to increase by at least five percent then 60% voter approval is needed to override the cap.
• Provide that if the proposal is rejected by the voters, the levy increase reverts back to the cap of 4% or 120% of CPI, whichever is less;

• Authorize qualified voters of a school district to place an "underride" proposal on the ballot if they wish to adopt a tax levy increase of less than the cap (or no increase at all);

• Provide for the "banking" of unused levy growth amounts as an incentive for school districts to propose increases of less than the cap.

• Once the foundation aid formula is fully phased-in in 2010-2011, school districts determined not to be meeting the local expected contribution under the foundation aid formula would be subject to an eased tax levy limit that would permit the tax levy to increase by up to the lesser of 5% or 150% of the CPI; and would also be subject to eased vote thresholds for tax levy propositions and underride propositions.

The "Underride" Provision

• An underride proposition could be initiated by submission of a petition signed by at least 10% of the registered voters in the district or, in districts that do not have voter registration, by the lesser of 250 voters or 20% of the voters in the previous annual election.

• If an underride vote is approved, (special district meeting, first Tuesday in May) then the district would be required to adopt a budget that complies with the underridden tax levy limit, and would be barred from advancing any other tax levy proposition.

• A 50% voter approval is required for an underride vote to be approved.

• Unless an underride proposition has been approved, any school district subject to a tax levy cap would be required to submit a tax levy proposition for approval by voters at the district's annual meeting on the 3rd Tuesday in May.