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S.B. 87

             1     

SCHOOL PROPERTY TAX EQUALIZATION

             2     
REVISIONS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Gene Davis

             6     
House Sponsor: ____________

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill amends the Property Tax Act and provisions related to public education
             11      financing to repeal certain school property tax equalization provisions.
             12      Highlighted Provisions:
             13          This bill:
             14          .    repeals the requirement to impose and distribute certain school capital outlay
             15      property tax revenues in school districts located within a first class county or
             16      divided school district; and
             17          .    makes technical changes.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          This bill has retrospective operation for a taxable year beginning on or after January 1,
             22      2010.
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          53A-16-107, as last amended by Laws of Utah 2008, Chapter 236
             26          59-2-924, as last amended by Laws of Utah 2009, Chapters 152, 204, 356, and 388
             27      REPEALS:


             28          53A-2-118.3, as enacted by Laws of Utah 2008, Chapter 236
             29          53A-16-107.1, as enacted by Laws of Utah 2008, Chapter 236
             30          59-2-924.3, as last amended by Laws of Utah 2009, Chapter 204
             31          59-2-924.4, as last amended by Laws of Utah 2009, Chapter 204
             32     
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 53A-16-107 is amended to read:
             35           53A-16-107. Capital outlay levy -- Maintenance of school facilities -- Authority to
             36      use proceeds of .0002 tax rate -- Restrictions and procedure.
             37          (1) [Subject to Subsection (3), a] A local school board may annually impose a capital
             38      outlay levy not to exceed .0024 per dollar of taxable value to be used for:
             39          (a) capital outlay;
             40          (b) debt service; and
             41          (c) subject to Subsection (2), school facility maintenance.
             42          (2) (a) A local school board may utilize the proceeds of a maximum of .0002 per dollar
             43      of taxable value of the local school board's annual capital outlay levy for the maintenance of
             44      school facilities in the school district.
             45          (b) A local school board that uses the option provided under Subsection (2)(a) shall:
             46          (i) maintain the same level of expenditure for maintenance in the current year as it did
             47      in the preceding year, plus the annual average percentage increase applied to the maintenance
             48      and operation budget for the current year; and
             49          (ii) identify the expenditure of capital outlay funds for maintenance by a district project
             50      number to ensure that the funds are expended in the manner intended.
             51          (c) The State Board of Education shall establish by rule the expenditure classification
             52      for maintenance under this program using a standard classification system.
             53          [(3) Beginning January 1, 2009, in order to qualify for receipt of the state contribution
             54      toward the minimum school program described in Section 53A-17a-104 , a local school board
             55      in a county of the first class shall impose a capital outlay levy of at least .0006 per dollar of
             56      taxable value.]
             57          [(4) (a) The county treasurer of a county of the first class shall distribute revenues
             58      generated by the .0006 portion of the capital outlay levy required in Subsection (3) to school


             59      districts within the county in accordance with Section 53A-16-107.1 .]
             60          [(b) If a school district in a county of the first class imposes a capital outlay levy
             61      pursuant to this section which exceeds .0006 per dollar of taxable value, the county treasurer of
             62      a county of the first class shall distribute revenues generated by the portion of the capital outlay
             63      levy which exceeds .0006 to the school district imposing the levy.]
             64          Section 2. Section 59-2-924 is amended to read:
             65           59-2-924. Report of valuation of property to county auditor and commission --
             66      Transmittal by auditor to governing bodies -- Certified tax rate -- Calculation of certified
             67      tax rate -- Rulemaking authority -- Adoption of tentative budget.
             68          (1) Before June 1 of each year, the county assessor of each county shall deliver to the
             69      county auditor and the commission the following statements:
             70          (a) a statement containing the aggregate valuation of all taxable real property assessed
             71      by a county assessor in accordance with Part 3, County Assessment, for each taxing entity; and
             72          (b) a statement containing the taxable value of all personal property assessed by a
             73      county assessor in accordance with Part 3, County Assessment, from the prior year end values.
             74          (2) The county auditor shall, on or before June 8, transmit to the governing body of
             75      each taxing entity:
             76          (a) the statements described in Subsections (1)(a) and (b);
             77          (b) an estimate of the revenue from personal property;
             78          (c) the certified tax rate; and
             79          (d) all forms necessary to submit a tax levy request.
             80          (3) (a) The "certified tax rate" means a tax rate that will provide the same ad valorem
             81      property tax revenues for a taxing entity as were budgeted by that taxing entity for the prior
             82      year.
             83          (b) For purposes of this Subsection (3):
             84          (i) "Ad valorem property tax revenues" do not include:
             85          (A) interest;
             86          (B) penalties; and
             87          (C) revenue received by a taxing entity from personal property that is:
             88          (I) assessed by a county assessor in accordance with Part 3, County Assessment; and
             89          (II) semiconductor manufacturing equipment.


             90          (ii) "Aggregate taxable value of all property taxed" means:
             91          (A) the aggregate taxable value of all real property assessed by a county assessor in
             92      accordance with Part 3, County Assessment, for the current year;
             93          (B) the aggregate taxable year end value of all personal property assessed by a county
             94      assessor in accordance with Part 3, County Assessment, for the prior year; and
             95          (C) the aggregate taxable value of all real and personal property assessed by the
             96      commission in accordance with Part 2, Assessment of Property, for the current year.
             97          (c) (i) Except as otherwise provided in this section, the certified tax rate shall be
             98      calculated by dividing the ad valorem property tax revenues budgeted for the prior year by the
             99      taxing entity by the amount calculated under Subsection (3)(c)(ii).
             100          (ii) For purposes of Subsection (3)(c)(i), the legislative body of a taxing entity shall
             101      calculate an amount as follows:
             102          (A) calculate for the taxing entity the difference between:
             103          (I) the aggregate taxable value of all property taxed; and
             104          (II) any redevelopment adjustments for the current calendar year;
             105          (B) after making the calculation required by Subsection (3)(c)(ii)(A), calculate an
             106      amount determined by increasing or decreasing the amount calculated under Subsection
             107      (3)(c)(ii)(A) by the average of the percentage net change in the value of taxable property for the
             108      equalization period for the three calendar years immediately preceding the current calendar
             109      year;
             110          (C) after making the calculation required by Subsection (3)(c)(ii)(B), calculate the
             111      product of:
             112          (I) the amount calculated under Subsection (3)(c)(ii)(B); and
             113          (II) the percentage of property taxes collected for the five calendar years immediately
             114      preceding the current calendar year; and
             115          (D) after making the calculation required by Subsection (3)(c)(ii)(C), calculate an
             116      amount determined by subtracting from the amount calculated under Subsection (3)(c)(ii)(C)
             117      any new growth as defined in this section:
             118          (I) within the taxing entity; and
             119          (II) for the following calendar year:
             120          (Aa) for new growth from real property assessed by a county assessor in accordance


             121      with Part 3, County Assessment and all property assessed by the commission in accordance
             122      with Section 59-2-201 , the current calendar year; and
             123          (Bb) for new growth from personal property assessed by a county assessor in
             124      accordance with Part 3, County Assessment, the prior calendar year.
             125          (iii) For purposes of Subsection (3)(c)(ii)(A), the aggregate taxable value of all
             126      property taxed:
             127          (A) except as provided in Subsection (3)(c)(iii)(B) or (3)(c)(ii)(C), is as defined in
             128      Subsection (3)(b)(ii);
             129          (B) does not include the total taxable value of personal property contained on the tax
             130      rolls of the taxing entity that is:
             131          (I) assessed by a county assessor in accordance with Part 3, County Assessment; and
             132          (II) semiconductor manufacturing equipment; and
             133          (C) for personal property assessed by a county assessor in accordance with Part 3,
             134      County Assessment, the taxable value of personal property is the year end value of the personal
             135      property contained on the prior year's tax rolls of the entity.
             136          (iv) For purposes of Subsection (3)(c)(ii)(B), for calendar years beginning on or after
             137      January 1, 2007, the value of taxable property does not include the value of personal property
             138      that is:
             139          (A) within the taxing entity assessed by a county assessor in accordance with Part 3,
             140      County Assessment; and
             141          (B) semiconductor manufacturing equipment.
             142          (v) For purposes of Subsection (3)(c)(ii)(C)(II), for calendar years beginning on or after
             143      January 1, 2007, the percentage of property taxes collected does not include property taxes
             144      collected from personal property that is:
             145          (A) within the taxing entity assessed by a county assessor in accordance with Part 3,
             146      County Assessment; and
             147          (B) semiconductor manufacturing equipment.
             148          (vi) For purposes of Subsection (3)(c)(ii)(B), for calendar years beginning on or after
             149      January 1, 2009, the value of taxable property does not include the value of personal property
             150      that is within the taxing entity assessed by a county assessor in accordance with Part 3, County
             151      Assessment.


             152          (vii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             153      the commission may prescribe rules for calculating redevelopment adjustments for a calendar
             154      year.
             155          (viii) (A) For purposes of Subsection (3)(c)(i), for a calendar year beginning on or after
             156      January 1, 2010, a taxing entity's ad valorem property tax revenues budgeted for the prior year
             157      shall be decreased by an amount of revenue equal to the five-year average of the most recent
             158      prior five years of redemptions as reported on the county treasurer's final annual settlement
             159      required under Subsection 59-2-1365 (2).
             160          (B) For the calendar year beginning on January 1, 2010 and ending on December 31,
             161      2010, a taxing entity is exempt from the notice and public hearing provisions of Section
             162      59-2-919 if the taxing entity budgets an increased amount of ad valorem property tax revenue
             163      equal to or less than the taxing entity's five-year average of the most recent prior five years of
             164      redemptions as reported on the county treasurer's final annual settlement required under
             165      Subsection 59-2-1365 (2).
             166          (d) (i) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
             167      the commission shall make rules determining the calculation of ad valorem property tax
             168      revenues budgeted by a taxing entity.
             169          (ii) For purposes of Subsection (3)(d)(i), ad valorem property tax revenues budgeted by
             170      a taxing entity shall be calculated in the same manner as budgeted property tax revenues are
             171      calculated for purposes of Section 59-2-913 .
             172          (e) The certified tax rates for the taxing entities described in this Subsection (3)(e) shall
             173      be calculated as follows:
             174          (i) except as provided in Subsection (3)(e)(ii), for new taxing entities the certified tax
             175      rate is zero;
             176          (ii) for each municipality incorporated on or after July 1, 1996, the certified tax rate is:
             177          (A) in a county of the first, second, or third class, the levy imposed for municipal-type
             178      services under Sections 17-34-1 and 17-36-9 ; and
             179          (B) in a county of the fourth, fifth, or sixth class, the levy imposed for general county
             180      purposes and such other levies imposed solely for the municipal-type services identified in
             181      Section 17-34-1 and Subsection 17-36-3 (22); and
             182          (iii) for debt service voted on by the public, the certified tax rate shall be the actual


             183      levy imposed by that section, except that the certified tax rates for the following levies shall be
             184      calculated in accordance with Section 59-2-913 and this section:
             185          (A) school leeways provided for under Sections 11-2-7 , 53A-16-110 , 53A-17a-127 ,
             186      53A-17a-133 , 53A-17a-134 , 53A-17a-143 , and 53A-17a-145 ; and
             187          (B) levies to pay for the costs of state legislative mandates or judicial or administrative
             188      orders under Section 59-2-1604 .
             189          (f) (i) A judgment levy imposed under Section 59-2-1328 or 59-2-1330 shall be
             190      established at that rate which is sufficient to generate only the revenue required to satisfy one
             191      or more eligible judgments, as defined in Section 59-2-102 .
             192          (ii) The ad valorem property tax revenue generated by the judgment levy shall not be
             193      considered in establishing the taxing entity's aggregate certified tax rate.
             194          [(g) The ad valorem property tax revenue generated by the capital outlay levy described
             195      in Section 53A-16-107 within a taxing entity in a county of the first class:]
             196          [(i) may not be considered in establishing the school district's aggregate certified tax
             197      rate; and]
             198          [(ii) shall be included by the commission in establishing a certified tax rate for that
             199      capital outlay levy determined in accordance with the calculation described in Subsection
             200      59-2-913 (3).]
             201          (4) (a) For the purpose of calculating the certified tax rate, the county auditor shall use:
             202          (i) the taxable value of real property assessed by a county assessor contained on the
             203      assessment roll;
             204          (ii) the taxable value of real and personal property assessed by the commission; and
             205          (iii) the taxable year end value of personal property assessed by a county assessor
             206      contained on the prior year's assessment roll.
             207          (b) For purposes of Subsection (4)(a)(i), the taxable value of real property on the
             208      assessment roll does not include new growth as defined in Subsection (4)(c).
             209          (c) "New growth" means:
             210          (i) the difference between the increase in taxable value of the following property of the
             211      taxing entity from the previous calendar year to the current year:
             212          (A) real property assessed by a county assessor in accordance with Part 3, County
             213      Assessment; and


             214          (B) property assessed by the commission under Section 59-2-201 ; plus
             215          (ii) the difference between the increase in taxable year end value of personal property
             216      of the taxing entity from the year prior to the previous calendar year to the previous calendar
             217      year; minus
             218          (iii) the amount of an increase in taxable value described in Subsection (4)(e).
             219          (d) For purposes of Subsection (4)(c)(ii), the taxable value of personal property of the
             220      taxing entity does not include the taxable value of personal property that is:
             221          (i) contained on the tax rolls of the taxing entity if that property is assessed by a county
             222      assessor in accordance with Part 3, County Assessment; and
             223          (ii) semiconductor manufacturing equipment.
             224          (e) Subsection (4)(c)(iii) applies to the following increases in taxable value:
             225          (i) the amount of increase to locally assessed real property taxable values resulting
             226      from factoring, reappraisal, or any other adjustments; or
             227          (ii) the amount of an increase in the taxable value of property assessed by the
             228      commission under Section 59-2-201 resulting from a change in the method of apportioning the
             229      taxable value prescribed by:
             230          (A) the Legislature;
             231          (B) a court;
             232          (C) the commission in an administrative rule; or
             233          (D) the commission in an administrative order.
             234          (f) For purposes of Subsection (4)(a)(ii), the taxable year end value of personal
             235      property on the prior year's assessment roll does not include:
             236          (i) new growth as defined in Subsection (4)(c); or
             237          (ii) the total taxable year end value of personal property contained on the prior year's
             238      tax rolls of the taxing entity that is:
             239          (A) assessed by a county assessor in accordance with Part 3, County Assessment; and
             240          (B) semiconductor manufacturing equipment.
             241          (5) (a) On or before June 22, each taxing entity shall annually adopt a tentative budget.
             242          (b) If the taxing entity intends to exceed the certified tax rate, it shall notify the county
             243      auditor of:
             244          (i) its intent to exceed the certified tax rate; and


             245          (ii) the amount by which it proposes to exceed the certified tax rate.
             246          (c) The county auditor shall notify property owners of any intent to levy a tax rate that
             247      exceeds the certified tax rate in accordance with Sections 59-2-919 and 59-2-919.1 .
             248          Section 3. Repealer.
             249          This bill repeals:
             250          Section 53A-2-118.3, Imposition of the capital outlay levy in qualifying divided
             251      school districts.
             252          Section 53A-16-107.1, School capital outlay in counties of the first class --
             253      Allocation.
             254          Section 59-2-924.3, Adjustment of the calculation of the certified tax rate for a
             255      school district imposing a capital outlay levy in a county of the first class.
             256          Section 59-2-924.4, Adjustment of the calculation of the certified tax rate for
             257      certain divided school districts.
             258          Section 4. Retrospective operation.
             259          This bill has retrospective operation for a taxable year beginning on or after January 1,
             260      2010.




Legislative Review Note
    as of 9-1-09 6:54 AM


Office of Legislative Research and General Counsel


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