Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                            HB 587.1
                                                HOUSE BILL NO. 587
    INTRODUCED BY L. JONES, E. BUTTREY, D. SALOMON, S. FITZPATRICK, G. HERTZ, D. ZOLNIKOV, M.
   REGIER, D. LOGE, F. ANDERSON, S. VINTON, T. WELCH, J. ELLSWORTH, K. BOGNER, B. GILLESPIE, J.
                KASSMIER, D. BEDEY, B. LER, K. ZOLNIKOV, L. REKSTEN, K. WALSH, B. BARKER
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  A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING SCHOOL FINANCE LAWS;
  ESTABLISHING A SCHOOL EQUALIZATION AND PROPERTY TAX REDUCTION ACCOUNT IN THE STATE
  SPECIAL REVENUE FUND; PROVIDING THAT THE REVENUE FROM THE SCHOOL EQUALIZATION
  LEVIES IS DEPOSITED IN THE ACCOUNT AND THAT THE ACCOUNT IS THE SECOND SOURCE OF
  FUNDING FOR STATE EQUALIZATION AID FOLLOWING THE GUARANTEE ACCOUNT; PROVIDING
  ADJUSTMENTS TO SCHOOL FUNDING EQUALIZATION MECHANISMS BASED ON REVENUE
  DEPOSITED IN THE ACCOUNT; INCREASING THE COUNTY RETIREMENT GTB MULTIPLIER TO LOWER
  COUNTY PROPERTY TAXES; CLARIFYING AND PROVIDING A CAP ON BASE GTB ADJUSTMENTS
  FROM MARIJUANA REVENUE; REVISING DEFINITIONS; AMENDING SECTIONS 20-9-331, 20-9-333, 20-9-
  360, 20-9-366, 20-9-525, AND 20-9-622, MCA; AND PROVIDING AN EFFECTIVE DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          NEW SECTION. Section 1.        School equalization and property tax reduction account -- uses. (1)
  There is a school equalization and property tax reduction account in the state special revenue fund. Contingent
  on appropriation by the legislature, money in the account is for distribution to school districts as the second
  source of funding for state equalization aid as provided in 20-9-343. At fiscal yearend, any fund balance in the
  account exceeding what was appropriated must be transferred to the guarantee account established in 20-9-
  622.
          (2)      The account receives revenue as described in 20-9-331, 20-9-333, and 20-9-360.
          (3)      Beginning in fiscal year 2025, each December the superintendent of public instruction shall
  forecast the amount of revenue the account will receive in that fiscal year by dividing the sum of the taxable
  value of all property in the state reported by the department of revenue pursuant to 20-9-369 by 1,000 to
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68th Legislature 2023                                                                                             HB 587.1
  determine a statewide value mill and then multiplying that amount by 95 mills, or the number of mills calculated
  by the department of revenue under 15-10-420(8) for the applicable fiscal year. If the forecasted amount differs
  from the amount determined through the same calculation in the prior fiscal year by $2 million or more and is:
           (a)     less, then the superintendent shall:
           (i)     decrease the multiplier used to calculate the statewide elementary and high school guaranteed
  tax base ratios used for funding BASE budgets under 20-9-366 to the nearest whole number determined by the
  superintendent to result in a decrease in the amount of guaranteed tax base aid distributed to eligible school
  districts equal to 85% of the decrease in the calculated amount between the 2 years; and
           (ii)    decrease the multiplier used to calculate the statewide elementary and high school mill value
  per ANB for school retirement guaranteed tax base purposes under 20-9-366 to the nearest whole number
  determined by the superintendent to result in a decrease in the amount of retirement guaranteed tax base aid
  distributed to eligible school districts equal to 15% of the decrease in the calculated amount between the 2
  years;
           (b)     more, then the superintendent shall increase the multipliers used in the guaranteed tax base
  formulas under 20-9-366 and in the formula for school major maintenance aid under 20-9-525 to the nearest
  whole number by an amount calculated by the superintendent to result in an increase in the amount of
  guaranteed tax base aid and school major maintenance aid distributed to eligible counties and school districts
  equal to one-third of the increase in the calculated amount between the 2 years in the following order, with any
  amount exceeding the caps under subsections (3)(b)(i) through (3)(b)(iii) flowing to the next mechanism:
           (i)     first, the multiplier used in calculating the statewide mill value per elementary and high school
  ANB for retirement purposes, not to exceed 305%;
           (ii)    second, the multiplier used in calculating the amount of state school major maintenance aid
  support for each dollar of local effort, not to exceed 365%; and
           (iii)   third, the multiplier used in calculating the facility guaranteed mill value per ANB for school
  facility entitlement guaranteed tax base purposes, not to exceed 300%.
           (4)     (a) The adjustments to the multipliers under subsection (3) are applicable to state equalization
  aid distributions in the fiscal year following the adjustment.
           (b)     Adjustments to the multipliers made under subsection (3) remain in effect in subsequent years
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68th Legislature 2023                                                                                            HB 587.1
  unless further changed under 20-9-366 or subsection (3) of this section or as otherwise provided by law.
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          Section 2. Section 20-9-331, MCA, is amended to read:
          "20-9-331.   Basic county tax for elementary equalization and other revenue for county
  equalization of elementary BASE funding program. (1) Subject to 15-10-420, the county commissioners of
  each county shall levy an annual basic county tax of 33 mills on the dollar of the taxable value of all taxable
  property within the county, except for property subject to a tax or fee under 61-3-321(2) or (3), 61-3-529, 61-3-
  537, 61-3-562, 61-3-570, and 67-3-204, for the purposes of elementary equalization and state BASE funding
  program support. The revenue collected from this levy must be apportioned to the support of the elementary
  BASE funding programs of the school districts in the county and to the state general fund school equalization
  and property tax reduction account established in [section 1] in the following manner:
          (a)      In order to determine the amount of revenue raised by this levy that is retained by the county,
  the sum of the estimated revenue identified in subsection (2) must be subtracted from the total of the BASE
  funding programs of all elementary districts of the county.
          (b)      If the basic levy and other revenue prescribed by this section produce more revenue than is
  required to repay a state advance for county equalization, the county treasurer shall remit the surplus funds to
  the department of revenue, as provided in 15-1-504, for deposit to the state general fund immediately upon
  occurrence of a surplus balance and each subsequent month, with any final remittance due no later than June
  20 of the fiscal year for which the levy has been set.
          (2)      The revenue realized from the county's portion of the levy prescribed by this section and the
  revenue from the following sources must be used for the equalization of the elementary BASE funding program
  of the county as prescribed in 20-9-335, and a separate accounting must be kept of the revenue by the county
  treasurer in accordance with 20-9-212(1):
          (a)      the portion of the federal Taylor Grazing Act funds designated for the elementary county
  equalization fund under the provisions of 17-3-222;
          (b)      the portion of the federal flood control act funds distributed to a county and designated for
  expenditure for the benefit of the county common schools under the provisions of 17-3-232;
          (c)      all money paid into the county treasury as a result of fines for violations of law, except money
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68th Legislature 2023                                                                                            HB 587.1
  paid to a justice's court, and the use of which is not otherwise specified by law;
            (d)    any money remaining at the end of the immediately preceding school fiscal year in the county
  treasurer's accounts for the various sources of revenue established or referred to in this section;
            (e)    any federal or state money distributed to the county as payment in lieu of property taxation,
  including federal forest reserve funds allocated under the provisions of 17-3-213;
            (f)    gross proceeds taxes from coal under 15-23-703; and
            (g)    oil and natural gas production taxes."
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            Section 3. Section 20-9-333, MCA, is amended to read:
            "20-9-333.   Basic county tax for high school equalization and other revenue for county
  equalization of high school BASE funding program. (1) Subject to 15-10-420, the county commissioners of
  each county shall levy an annual basic county tax of 22 mills on the dollar of the taxable value of all taxable
  property within the county, except for property subject to a tax or fee under 61-3-321(2) or (3), 61-3-529, 61-3-
  537, 61-3-562, 61-3-570, and 67-3-204, for the purposes of high school equalization and state BASE funding
  program support. The revenue collected from this levy must be apportioned to the support of the BASE funding
  programs of high school districts in the county and to the state general fund school equalization and property
  tax reduction account established in [section 1] in the following manner:
            (a)    In order to determine the amount of revenue raised by this levy that is retained by the county,
  the sum of the estimated revenue identified in subsection (2) must be subtracted from the sum of the county's
  high school tuition obligation and the total of the BASE funding programs of all high school districts of the
  county.
            (b)    If the basic levy and other revenue prescribed by this section produce more revenue than is
  required to repay a state advance for county equalization, the county treasurer shall remit the surplus funds to
  the department of revenue, as provided in 15-1-504, for deposit to the state general fund immediately upon
  occurrence of a surplus balance and each subsequent month, with any final remittance due no later than June
  20 of the fiscal year for which the levy has been set.
            (2)    The revenue realized from the county's portion of the levy prescribed in this section and the
  revenue from the following sources must be used for the equalization of the high school BASE funding program
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68th Legislature 2023                                                                                               HB 587.1
  of the county as prescribed in 20-9-335, and a separate accounting must be kept of the revenue by the county
  treasurer in accordance with 20-9-212(1):
          (a)      any money remaining at the end of the immediately preceding school fiscal year in the county
  treasurer's accounts for the various sources of revenue established in this section;
          (b)      any federal or state money distributed to the county as payment in lieu of property taxation,
  including federal forest reserve funds allocated under the provisions of 17-3-213;
          (c)      gross proceeds taxes from coal under 15-23-703; and
          (d)      oil and natural gas production taxes."
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          Section 4. Section 20-9-360, MCA, is amended to read:
          "20-9-360.    State equalization aid levy. Subject to 15-10-420, there is a levy of 40 mills imposed by
  the county commissioners of each county on all taxable property within the state, except property for which a
  tax or fee is required under 61-3-321(2) or (3), 61-3-529, 61-3-537, 61-3-562, 61-3-570, and 67-3-204.
  Proceeds of the levy must be remitted to the department of revenue, as provided in 15-1-504, and must be
  deposited to the credit of the state school general equalization fund and property tax reduction account
  established in [section 1] for state equalization aid to the public schools of Montana."
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          Section 5. Section 20-9-366, MCA, is amended to read:
          "20-9-366.      Definitions. As Subject to adjustments pursuant to [section 1], as used in 20-9-366
  through 20-9-371, the following definitions apply:
          (1)      "County retirement mill value per elementary ANB" or "county retirement mill value per high
  school ANB" means the sum of the taxable valuation in the previous year of all property in the county divided by
  1,000, with the quotient divided by the total county elementary ANB count or the total county high school ANB
  count used to calculate the elementary school districts' and high school districts' prior year total per-ANB
  entitlement amounts.
          (2)      (a) "District guaranteed tax base ratio" for guaranteed tax base funding for the BASE budget of
  an eligible district means the taxable valuation in the previous year of all property in the district, except for
  property value disregarded because of protested taxes under 15-1-409(2) or property subject to the creation of
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68th Legislature 2023                                                                                               HB 587.1
  a new school district under 20-6-326, divided by the district's prior year GTBA budget area.
          (b)      "District mill value per ANB", for school facility entitlement purposes, means the taxable
  valuation in the previous year of all property in the district, except for property subject to the creation of a new
  school district under 20-6-326, divided by 1,000, with the quotient divided by the ANB count of the district used
  to calculate the district's prior year total per-ANB entitlement amount.
          (3)      "Facility guaranteed mill value per ANB", for school facility entitlement guaranteed tax base
  purposes, means, subject to adjustment under [section 1], the sum of the taxable valuation in the previous year
  of all property in the state, multiplied by 140% and divided by 1,000, with the quotient divided by the total state
  elementary ANB count or the total state high school ANB count used to calculate the elementary school
  districts' and high school districts' prior year total per-ANB entitlement amounts.
          (4)      "Guaranteed tax base aid budget area" or "GTBA budget area" means the portion of a district's
  BASE budget after the following payments are subtracted:
          (a)      direct state aid;
          (b)      the total data-for-achievement payment;
          (c)      the total quality educator payment;
          (d)      the total at-risk student payment;
          (e)      the total Indian education for all payment;
          (f)      the total American Indian achievement gap payment; and
          (g)      the state special education allowable cost payment.
          (5)      (a) Except as provided in subsection (6), "Statewide elementary guaranteed tax base ratio" or
  "statewide high school guaranteed tax base ratio", for guaranteed tax base funding for the BASE budget of an
  eligible district, means, subject to adjustment under [section 1], the sum of the taxable valuation in the previous
  year of all property in the state, multiplied by 250% for fiscal year 2022 and 254% for fiscal year 2023 and each
  succeeding fiscal year and divided by the prior year statewide GTBA budget area for the state elementary
  school districts or the state high school districts. For fiscal year 2024 and subsequent fiscal years, the
  superintendent of public instruction shall increase the multiplier, not to exceed 262%, in this subsection (5)(a)
  as follows:
          (i)      for fiscal years 2024 through 2031, if the revenue transferred to the state general fund pursuant
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68th Legislature 2023                                                                                                HB 587.1
  to 16-12-111 in the prior fiscal year is at least $1 million more than the revenue transferred in the fiscal year 2
  years prior, then:
           (A)        multiply the amount of increased revenue transferred to the state general fund pursuant to 16-
  12-111 in the prior fiscal year above the amount of revenue transferred in the fiscal year 2 years prior by 0.25,
  divide the resulting product by $500,000, and round to the nearest whole number; and
           (B)        add the number derived in subsection (5)(a)(i)(A) as a percentage point increase to:
           (I)     if the prior year was not affected by a contingency under subsection (6), the multiplier used for the
  prior fiscal year; or
           (II) if the prior year was affected by a contingency under subsection (6), the multiplier for the prior fiscal
  year had the prior fiscal year not been affected by a contingency under subsection (6);
           (ii)       for fiscal years 2024 through 2031, if the revenue transferred to the state general fund pursuant