Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                            SB 125.1
                                                SENATE BILL NO. 125
                                             INTRODUCED BY G. HERTZ
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  A BILL FOR AN ACT ENTITLED: “AN ACT LIMITING THE DURATION OF CERTAIN MILL LEVIES
  SUBMITTED TO VOTERS; LIMITING MILL LEVIES TO 5 YEARS WITHOUT VOTER REAPPROVAL;
  AMENDING SECTIONS 7-15-4286, 15-10-425, AND 20-9-502, MCA; AND PROVIDING AN APPLICABILITY
  DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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           Section 1. Section 7-15-4286, MCA, is amended to read:
           "7-15-4286.   Procedure to determine and disburse tax increment -- remittance of excess portion
  of tax increment for targeted economic development district. (1) Mill rates of taxing bodies for taxes levied
  after the effective date of the tax increment provision must be calculated on the basis of the sum of the taxable
  value, as shown by the last equalized assessment roll, of all taxable property located outside the urban renewal
  area or targeted economic development district and the base taxable value of all taxable property located within
  the area or district. The mill rate determined must be levied against the sum of the actual taxable value of all
  taxable property located within as well as outside the area or district.
           (2)     (a) Except as provided in subsections (2)(b), (2)(c), and (3) and subject to subsection (6), the
  tax increment, if any, received in each year from the levy of the combined mill rates of all the affected taxing
  bodies against the incremental taxable value within the area or district must be paid into a special fund held by
  the treasurer of the local government and used as provided in 7-15-4282 through 7-15-4294.
           (b)     For targeted economic development districts in existence prior to July 1, 2022, and urban
  renewal areas, the combined mill rates used to calculate the tax increment may not include mill rates for:
           (i)     the university system mills levied pursuant to 15-10-109 and 20-25-439; and
           (ii)    a new mill levy approved by voters as provided in 15-10-425 after the adoption of a tax
  increment provision.
           (c)     For targeted economic development districts created after June 30, 2022, the combined mill
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68th Legislature 2023                                                                                              SB 125.1
  rates used to calculate the tax increment may not include mill rates for:
          (i)      the university system mills levied pursuant to 15-10-109 and 20-25-439;
          (ii)     one-half of the elementary, high school, and state equalization mills levied pursuant to 20-9-
  331, 20-9-333, and 20-9-360;
          (iii)    a new mill levy approved by voters as provided in 15-10-425 after the adoption of a tax
  increment provision; and
          (iv)     any portion of an existing mill levy designated by the local government as excluded from the tax
  increment.
          (3)      (a) Subject to 7-15-4287 and subsection (3)(b) of this section, a targeted economic
  development district with a tax increment provision adopted after October 1, 2019, may expend or accumulate
  tax increment for:
          (i)      the payment of the costs listed in 7-15-4288;
          (ii)     the cost of issuing bonds; or
          (iii)    any pledge to the payment of the principal of any premium, if any, and interest on the bonds
  issued pursuant to 7-15-4289 and sufficient to fund any reserve fund in respect of the bonds in an amount not
  to exceed 125% of the maximum principal and interest on the bonds in any year during the term of the bonds.
          (b)      Any excess tax increment remaining after the use or accumulation of funds as set forth in
  subsection (3)(a) must be:
          (i)      remitted to each taxing jurisdiction for which the mill rates are included in the calculation of the
  tax increment as provided in subsections (1) and (2); and
          (ii)     proportional to the taxing jurisdiction's share of the total mills levied.
          (c)      A targeted economic development district is not subject to the provisions of this subsection (3)
  if bonds have not been issued to finance the project.
          (4)      Any portion of the excess tax increment remitted to a school district pursuant to subsection (3)
  is subject to the provisions of 7-15-4291(2) through (5).
          (5)      The balance of the taxes collected in each year must be paid to each of the taxing bodies as
  otherwise provided by law.
          (6)      For the purposes of subsections (2)(b)(ii) and (2)(c)(iii), a mill levy reapproved as provided in
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68th Legislature 2023                                                                                                 SB 125.1
  15-10-425(2)(c) is not considered a new mill levy."
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           Section 2. Section 15-10-425, MCA, is amended to read:
           "15-10-425. Mill levy election. (1) A county, consolidated government, incorporated city,
  incorporated town, school district, or other taxing entity may impose a new mill levy, increase a mill levy that is
  required to be submitted to the electors, or exceed the mill levy limit provided for in 15-10-420 by conducting an
  election as provided in this section.
           (2)         An election pursuant to this section must be held in accordance with Title 13, chapter 1, part 4
  or 5, or Title 20 for school elections, whichever is appropriate to the taxing entity. The governing body shall
  pass a resolution, shall amend its self-governing charter, or must receive a petition indicating an intent to
  impose a new levy, increase a mill levy, or exceed the current statutory mill levy provided for in 15-10-420 on
  the approval of a majority of the qualified electors voting in the election. The resolution, charter amendment, or
  petition must include:
           (a)         the specific purpose for which the additional money will be used;
           (b)      either:
           (i)(b)      the specific amount of money to be raised and the approximate number of mills to be imposed;
  or and
           (ii) the specific number of mills to be imposed and the approximate amount of money to be raised; and
           (c)         whether the levy is permanent or the durational limit on the levy, which may not exceed 5 years
  except as provided in 20-9-308, 20-9-353, 20-9-502(2)(b), and 20-9-533. The governing body may submit to the
  qualified electors for reapproval a levy that will expire before the next election.
           (3)         Notice of the election must be prepared by the governing body and given as provided in 13-1-
  108. The form of the ballot must reflect the content of the resolution or charter amendment and must include a
  statement of the impact of the election on a home valued at $100,000 and a home valued at $200,000 in the
  district in terms of actual dollars in additional property taxes that would be imposed on residences with those
  values if the mill levy were to pass. The ballot may also include a statement of the impact of the election on
  homes of any other value in the district, if appropriate.
           (4)         If the majority voting on the question are in favor of the additional levy, the governing body is
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68th Legislature 2023                                                                                              SB 125.1
  authorized to impose the levy in either the amount or the number of mills specified in the resolution or charter
  amendment.
          (5)      A governing body, as defined in 7-6-4002, may reduce an approved levy in any fiscal year
  without losing the authority to impose in a subsequent fiscal year up to the maximum amount or number of mills
  approved in the election. However, nothing in this subsection authorizes a governing body to impose more than
  the approved levy in any fiscal year or to extend the duration of the approved levy."
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          Section 3. Section 20-9-502, MCA, is amended to read:
          "20-9-502.    Purpose and authorization of building reserve fund -- subfund structure. (1) The
  trustees of any district may establish a building reserve fund to budget for and expend funds for any of the
  purposes set forth in this section. Appropriate subfunds must be created to ensure separate tracking of the
  expenditure of funds from voted and nonvoted levies and transfers for school safety pursuant to 20-9-236.
          (2)      (a) A voted levy may be imposed and a subfund must be created with the approval of the
  qualified electors of the district for the purpose of raising money for the future construction, equipping, or
  enlarging of school buildings or for the purpose of purchasing land needed for school purposes in the district. In
  order to submit to the qualified electors of the district a building reserve proposition for the establishment of or
  addition to a building reserve, the trustees shall pass a resolution that specifies:
          (i)      the purpose or purposes for which the new or addition to the building reserve will be used;
          (ii)     the duration of time over which the new or addition to the building reserve will be raised in
  annual, equal installments;
          (iii)    the total amount of money that will be raised during the duration of time specified for the levy;
  and
          (iv)     any other requirements under 15-10-425 and 20-20-201 for the calling of an election.
          (b)      Except as provided in subsection (4)(b), a building reserve tax authorization may not be for
  more than 20 years.
          (c)      The election must be conducted in accordance with the school election laws of this title, and
  the electors qualified to vote in the election must be qualified under the provisions of 20-20-301. The ballot for a
  building reserve proposition must be substantially in compliance with 15-10-425.
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68th Legislature 2023                                                                                             SB 125.1
          (d)      The building reserve proposition is approved if a majority of those electors voting at the election
  approve the establishment of or addition to the building reserve. The annual budgeting and taxation authority of
  the trustees for a building reserve is computed by dividing the total authorized amount by the specified number
  of years. The authority of the trustees to budget and impose the taxation for the annual amount to be raised for
  the building reserve lapses when, at a later time, a bond issue is approved by the qualified electors of the
  district for the same purpose or purposes for which the building reserve fund of the district was established.
  Whenever a subsequent bond issue is made for the same purpose or purposes of a building reserve, the
  money in the building reserve must be used for the purpose or purposes before any money realized by the
  bond issue is used.
          (3)      (a) A subfund must be created to account for revenue and expenditures for school major
  maintenance and repairs authorized under this subsection (3). The trustees of a district may authorize and
  impose a levy of no more than 10 mills on the taxable value of all taxable property within the district for that
  school fiscal year for the purposes of raising revenue for identified improvements or projects meeting the
  requirements of 20-9-525(2). The 10-mill limit under this subsection (3) must be calculated using the district's
  total taxable valuation most recently certified by the department of revenue under 15-10-202. The amount of
  money raised by the levy, the deposits and transfers authorized under subsection (3)(f) of this section, and
  anticipated state aid pursuant to 20-9-525(3) may not exceed the district's school major maintenance amount.
  For the purposes of this section, the term "school major maintenance amount" means the sum of $15,000 and
  the product of $110 multiplied by the district's budgeted ANB for the prior fiscal year. To authorize and impose a
  levy under this subsection (3), the trustees shall:
          (i)      following public notice requirements pursuant to 20-9-116, adopt no later than March 31 of
  each fiscal year a resolution:
          (A)      identifying the anticipated improvements or projects for which the proceeds of the levy, the
  deposits and transfers authorized under subsection (3)(f) of this section, and anticipated state aid pursuant to
  20-9-525(3) will be used; and
          (B)      estimating a total dollar amount of money to be raised by the levy, the deposits and transfers
  authorized under subsection (3)(f) of this section, anticipated state aid pursuant to 20-9-525(3), and the
  resulting estimated number of mills to be levied using the district's taxable valuation most recently certified by
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68th Legislature 2023                                                                                                  SB 125.1
  the department of revenue under 15-10-202; and
          (ii)     include the amount of any final levy to be imposed as part of its final budget meeting noticed in
  compliance with 20-9-131.
          (b)      Proceeds from the levy may be expended only for the purposes under 20-9-525(2), and the
  expenditure of the money must be reported in the annual trustees' report as required by 20-9-213.
          (c)      Whenever the trustees of a district impose a levy pursuant to this subsection (3) during the
  current school fiscal year, they shall budget for the proceeds of the levy, the deposits and transfers authorized
  under subsection (3)(f) of this section, and anticipated state aid pursuant to 20-9-525(3) in the district's building
  reserve fund budget. Any expenditures of the funds must be made in accordance with the financial
  administration provisions of this title for a budgeted fund.
          (d)      When a tax levy pursuant to this subsection (3) is included as a revenue item on the final
  building reserve fund budget, the county superintendent shall report the levy requirement to the county
  commissioners by the later of the first Tuesday in September or within 30 calendar days after receiving certified
  taxable values and a levy on the district must be made by the county commissioners in accordance with 20-9-
  142.
          (e)      A subfund in the building reserve fund must be created for the deposit of proceeds from the
  levy, the deposits and transfers authorized under subsection (3)(f) of this section, and anticipated state aid
  pursuant to 20-9-525(3).
          (f)      If the imposition of 10 mills pursuant to subsection (3)(a) is estimated by the trustees to
  generate an amount less than the maximum levy revenue specified in subsection (3)(a), the trustees may
  deposit additional funds from any lawfully available revenue source and may transfer additional funds from any
  lawfully available fund of the district to the subfund provided for in subsection (3)(a), up to the difference
  between the revenue estimated to be raised by the imposition of 10 mills and the maximum levy revenue
  specified in subsection (3)(a). The district's local effort for purposes of calculating its eligibility for state school
  major maintenance aid pursuant to 20-9-525 consists of the combined total of funds raised from the imposition
  of 10 mills and additional funds raised from deposits and transfers in compliance with this subsection (3)(f).
          (4)      (a) A voted levy may be imposed and a subfund must be created with the approval of the
  qualified electors of the district to provide funding for transition costs incurred when the trustees:
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68th Legislature 2023                                                                                              SB 125.1
          (i)      open a new school under the provisions of Title 20, chapter 6;
          (ii)     close a school;
          (iii)    replace a school building;
          (iv)     consolidate with or annex another district under the provisions of Title 20, chapter 6; or
          (v)      receive approval from voters to expand an elementary district into a K-12 district pursuant to
  20-6-326.
          (b)      Except as provided in subsection (4)(c), the total amount the trustees may submit to the
  electorate for transition costs may not exceed the number of years specified in the proposition times the greater
  of 5% of the district's maximum general fund budget for the current year or $250 per ANB for the current year.
  The duration of the levy for transition costs may not exceed 6 5 years.
          (c)      If the levy for transition costs is for consolidation or annexation:
          (i)      the limitation on the amount levied is calculated using the ANB and the maximum general fund
  budget for the districts that are being combined; and
          (ii)     the proposition must be