Property tax-assessment rate 2.

09LSO-0069.L3

FISCAL NOTE

This bill contains an appropriation of $44,000,000 from the GENERAL FUND to the State Treasurer.

	FY 2010	FY 2011	FY 2012
NON-ADMINISTRATIVE IMPACT
Anticipated Revenue (Decrease):
AD VALOREM TAX	0	0	(45,790,000)
SCHOOL FOUNDATION FUND	0	(9,570,000)	(10,050,000)

Source of revenue decrease: Reduction of the assessment rate on “all other property, real and personal” from 9.5% to 8.25%

Reduction of assessment rates will result in reduction of property tax revenues to local governments and the School Foundation Program.

Assumptions:

The above estimates are based on the assessment of all other property for the 2008 tax year. The assessment of all other property is forecasted to increase by 5% each year, according to October 2008 CREG projections.

It is estimated that reducing the assessment rate for all other property from 9.5% to 8.25% will decrease the assessed valuation by $797,300,000 in tax year 2010 and by $837,200,000 in tax year 2011.

In 2008, the average mill levy applied to industrial and all other property was 66.696 mills. Mill levies are assumed to remain constant.

The projected revenue decrease in the 12 mill property tax paid to the School Foundation Program is estimated at $9,570,000 for tax year 2010 and $10,050,000 for tax year 2011. The projected revenue decrease in all other property taxes paid to local governments is estimated at $43,610,000 for tax year 2010 and $45,790,000 for tax year 2011. Local governments will receive reimbursement for the decrease in property taxes levied in tax year 2010 (FY 2011) by the $44 million appropriation in the bill, except for the 12 mills levied for payment to the School Foundation Program.  

This bill is effective January 1, 2010, which will impact property taxes collected in FY 2011.

Prepared by:   Dean Temte, LSO    Phone: 777-7881