For the years 2023 and 2024, reducing the real property taxation, reducing the assessment rates for certain classes of nonresidential property and residential property, and adjusting the amount of actual value to which the assessment rate will apply for all residential real estate and commercial property in 2023.; reducing the assessment rates for all multi-family residential real property to a set amount for 2024; reducing the assessment rates for all residential real property other than multi-family residential real property for 2024 by an amount determined by the property tax administrator to cumulatively with the other provisions of the bill reduce statewide property tax revenue for 2023 and 2024 by a specified amount; reducing the assessment rates for real and personal property that is classified as agricultural or renewable energy production property for 2024; and requiring the state to reimburse local governments, excluding school districts, in 2024 for 2023 reductions in their property tax revenue resulting from the bill.
For the 2023 property tax year:
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In section 1 of the act, nonresidential property is assessed at 27.9% of its actual value, excluding agricultural and renewable energy production properties;
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Residential property, including multi-family residential property, is assessed at 6.765% of its actual value under Section 2; and
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As a result of Sections 1 and 3, the actual value used for purposes of valuing residential real property is reduced by $15,000 and that of commercial real property by $30,000.
For the 2024 property tax year:
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Real and personal property that is classified as agricultural or renewable energy production property will continue to be valued at 26.4% of its actual value under Section 1;
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Unless multi-family residential property is included in section 4, section 2 establishes the valuation of residential real property for assessment as a percentage of the actual value determined by the property tax administrator as required by section 4; and
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Multi-family residential real property is valued at 6.8% of its actual value under Section 2.
For the 2024 property tax year, section 4 requires adjusting the ratio of valuation to assessment for all residential real property other than multi-family residential real property. As a result of the act, local government property tax revenues will decrease by $700 million between 2023 and 2024.
Section 5 requires the state treasurer to reimburse counties for the reduction in property tax revenue resulting from the act during the 2023 property tax year and requires the property tax administrator, using information provided by each county treasurer, to report this amount to the general assembly. The state treasurer is required to fully reimburse any county that:
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Had an increase of less than 10% in assessed value of real property between the 2022 and 2023 property tax years; and
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Has a population of 300,000 or fewer.
In addition, the state treasurer must reimburse a county 90% of the reduction if the county:
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Had an increase of 10% or more in assessed value of real property between the 2022 and 2023 property tax years; and
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Has a population of 300,000 or fewer.
Also, if a county does not qualify for full or 90% reimbursement, the state treasurer is required to reimburse the county 65% of the reduction amount. During the 2023 and 2024 property tax years, the act is expected to result in a decrease in local government property tax revenue for municipalities, fire districts, health services districts, water districts, sanitation districts, school districts, and library districts within those counties. The state treasurer is required to reimburse the entire amount of the aggregate decrease in local government property tax revenue during the 2023 property tax years, if municipalities, fire districts, health services districts, water districts, sanitation districts, and library districts in those counties had an increase in assessed value of real property of less than 10 percent between the 2022 and 2023 property tax years. During the 2022 and 2023 property tax years, municipalities, fire districts, health services districts, water districts, sanitation districts, and library districts in those counties must increase their assessed value by at least 10%. This act requires the state treasurer to reimburse local government entities 90% of the aggregate decrease in property tax revenue during the 2023 property tax year for those local governmental entities. These reimbursements must then be distributed to local governmental entities within the treasurer’s county, except for school districts, as if the revenue were regularly paid as property taxes. The lesser of $240 million of reimbursement or the amount of reimbursement that can be paid from such excess state revenues must be paid as a refund of state fiscal year 2022-23 excess state revenues that are not being refunded through specified existing refund mechanisms, and the rest of the reimbursement must be paid from the general fund.
Section 6 of the state constitution requires the state treasurer to transfer $200 million from the general fund to the state public school fund to offset reductions in property taxes in school districts.
As part of Section 5, the property tax administrator is also required to prepare a report detailing the aggregate reduction in local government property tax revenue during the 2023 tax year.
