Bill Summary – FastDemocracy

67th Legislature                                                                                                      HB 372.1
                                                    HOUSE BILL NO. 372
                                                  INTRODUCED BY B. LER
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   A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO THE ELIMINATION
   OF THE PROPERTY TAX ON CLASS EIGHT BUSINESS EQUIPMENT TAX; REPEALING THE PROPERTY
   TAX ON CLASS EIGHT BUSINESS EQUIPMENT; PROVIDING A REIMBURSEMENT TO LOCAL
   GOVERNMENTS AND TAX INCREMENT FINANCING DISTRICTS UNDER THE ENTITLEMENT SHARE
   PROGRAM, TO SCHOOL DISTRICTS THROUGH THE BLOCK GRANT PROGRAM, AND TO THE
   MONTANA UNIVERSITY SYSTEM FOR THE LOSS OF REVENUE; REVISING A STATUTORY
   APPROPRIATION; AMENDING SECTIONS 15-1-101, 15-1-121, 15-1-123, 15-6-141, 15-6-156, 15-6-158, 15-
   6-202, 15-6-207, 15-6-219, 15-6-228, 15-8-301, 15-23-101, 15-24-301, 15-24-303, 15-24-3001, 30-20-204,
   AND 76-6-109, MCA; REPEALING SECTIONS 15-6-138 AND 15-6-220, 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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              NEW SECTION. Section 1.         School district block grants. (1) (a) The office of public instruction shall
   provide a block grant to each school district based on the reimbursement to be made to a school district
   pursuant to 15-1-123.
              (b)   Block grants must be calculated using the electronic reporting system that is used by the office of
   public instruction and school districts. The electronic reporting system must be used to allocate the block grant
   amount into each district's budget as an anticipated revenue source by fund.
              (2)   (a) The reimbursement made under 15-1-123 must be added to all other distributions to the
   school district in the fiscal year to determine the distribution for the subsequent fiscal year.
              (b)   If the legislature enacts a reimbursement provision that is to be distributed pursuant to this section,
   the office of public instruction shall determine the reimbursement amount as provided in the enactment and add
   the appropriate amount to block grant distributions under this section.
              (3)   Each year, 70% of each district's block grant must be distributed in November and 30% of each
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   district's block grant must be distributed in May at the same time that guaranteed tax base aid is distributed.
              (4)   The school district shall deposit the block grant into a budgeted fund of the district.
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              Section 2. Section 15-1-101, MCA, is amended to read:
              "15-1-101.     Definitions. (1) Except as otherwise specifically provided, when terms mentioned in this
   section are used in connection with taxation, they are defined in the following manner:
              (a)   The term "agricultural" refers to:
              (i)   the production of food, feed, and fiber commodities, livestock and poultry, bees, biological control
   insects, fruits and vegetables, and sod, ornamental, nursery, and horticultural crops that are raised, grown, or
   produced for commercial purposes; and
              (ii) the raising of domestic animals and wildlife in domestication or a captive environment.
              (b)   The term "assessed value" means the value of property as defined in 15-8-111.
              (c) The term "average wholesale value" means the value to a dealer prior to reconditioning and the
   profit margin shown in national appraisal guides and manuals or the valuation schedules of the department.
              (d)   (i) The term "commercial", when used to describe property, means property used or owned by a
   business, a trade, or a corporation as defined in 35-2-114 or used for the production of income, including
   industrial property defined in subsection (1)(j), and excluding property described in subsection (1)(d)(ii).
              (ii) The following types of property are not commercial:
              (A)    agricultural lands;
              (B)    timberlands and forest lands;
              (C)    single-family residences and ancillary improvements and improvements necessary to the function
   of a bona fide farm, ranch, or stock operation;
              (D) mobile homes and manufactured homes used exclusively as a residence except when held by a
   distributor or dealer as stock in trade; and
              (E)    all property described in 15-6-135.
              (e)   The term "comparable property" means property that:
              (i)   has similar use, function, and utility;
              (ii) is influenced by the same set of economic trends and physical, governmental, and social factors;
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   and
              (iii) has the potential of a similar highest and best use.
              (f) The term "credit" means solvent debts, secured or unsecured, owing to a person.
              (g)   (i) "Department", except as provided in subsection (1)(g)(ii), means the department of revenue
   provided for in 2-15-1301.
              (ii) In chapters 70 and 71, department means the department of transportation provided for in 2-15-
   2501.
              (h)   The terms "gas" and "natural gas" are synonymous and mean gas as defined in 82-1-111(2). The
   terms include all natural gases and all other fluid hydrocarbons, including methane gas or any other natural gas
   found in any coal formation.
              (i)   The term "improvements" includes all buildings, structures, fences, and improvements situated
   upon, erected upon, or affixed to land. When the department determines that the permanency of location of a
   mobile home, manufactured home, or housetrailer has been established, the mobile home, manufactured
   home, or housetrailer is presumed to be an improvement to real property. A mobile home, manufactured home,
   or housetrailer may be determined to be permanently located only when it is attached to a foundation that
   cannot feasibly be relocated and only when the wheels are removed.
              (j)   "Industrial property" for purposes of this section includes all land used for industrial purposes,
   improvements, and buildings used to house the industrial process and all storage facilities. Under this section,
   industrial property does not include personal property classified and taxed under 15-6-135 or 15-6-138.
              (k) The term "leasehold improvements" means improvements to mobile homes and mobile homes
   located on land owned by another person. This property is assessed under the appropriate classification, and
   the taxes are due and payable in two payments as provided in 15-24-202. Delinquent taxes on leasehold
   improvements are a lien only on the leasehold improvements.
              (l)   The term "livestock" means cattle, sheep, swine, goats, horses, mules, asses, llamas, alpacas,
   bison, ostriches, rheas, emus, and domestic ungulates.
              (m)    (i) The term "manufactured home" means a residential dwelling built in a factory in accordance
   with the United States department of housing and urban development code and the federal Manufactured
   Home Construction and Safety Standards.
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              (ii) A manufactured home does not include a mobile home, as defined in subsection (1)(o), or a mobile
   home or housetrailer constructed before the federal Manufactured Home Construction and Safety Standards
   went into effect on June 15, 1976.
              (n)   The term "market value" means the value of property as provided in 15-8-111.
              (o)   The term "mobile home" means forms of housing known as "trailers", "housetrailers", or "trailer
   coaches" exceeding 8 feet in width or 45 feet in length, designed to be moved from one place to another by an
   independent power connected to them, or any trailer, housetrailer, or trailer coach up to 8 feet in width or 45
   feet in length used as a principal residence.
              (p)   The term "personal property" includes everything that is the subject of ownership but that is not
   included within the meaning of the terms "real estate" and "improvements" and "intangible personal property" as
   that term is defined in 15-6-218.
              (q)   The term "poultry" includes all chickens, turkeys, geese, ducks, and other birds raised in
   domestication to produce food or feathers.
              (r)   The term "property" includes money, credits, bonds, stocks, franchises, and all other matters and
   things, real, personal, and mixed, capable of private ownership. This definition may not be construed to
   authorize the taxation of the stocks of a company or corporation when the property of the company or
   corporation represented by the stocks is within the state and has been taxed.
              (s) The term "real estate" includes:
              (i)   the possession of, claim to, ownership of, or right to the possession of land;
              (ii) all mines, minerals, and quarries in and under the land subject to the provisions of 15-23-501 and
   Title 15, chapter 23, part 8;
              (iii) all timber belonging to individuals or corporations growing or being on the lands of the United
   States; and
              (iv) all rights and privileges appertaining to mines, minerals, quarries, and timber.
              (t)   "Recreational" means hunting, fishing, swimming, boating, waterskiing, camping, biking, hiking,
   and winter sports, including but not limited to skiing, skating, and snowmobiling.
              (u)   "Research and development firm" means an entity incorporated under the laws of this state or a
   foreign corporation authorized to do business in this state whose principal purpose is to engage in theoretical
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   analysis, exploration, and experimentation and the extension of investigative findings and theories of a scientific
   and technical nature into practical application for experimental and demonstration purposes, including the
   experimental production and testing of models, devices, equipment, materials, and processes.
              (v)   The term "stock in trade" means any mobile home, manufactured home, or housetrailer that is
   listed by the dealer as inventory and that is offered for sale, is unoccupied, and is not located on a permanent
   foundation. Inventory does not have to be located at the business location of a dealer or a distributor.
              (w)   The term "taxable value" means the market value multiplied by the classification tax rate as
   provided for in Title 15, chapter 6, part 1.
              (x) The term "taxes" in relation to property under 15-6-133, 15-6-134, or 15-6-143 is the amount owed
   by a taxpayer that is the market value multiplied by the tax rate multiplied by the applicable mills, exclusive of
   local fees and assessments.
              (2)   The phrase "municipal corporation" or "municipality" or "taxing unit" includes a county, city,
   incorporated town, township, school district, irrigation district, or drainage district or a person, persons, or
   organized body authorized by law to establish tax levies for the purpose of raising public revenue.
              (3)   The term "state board" or "board" when used without other qualification means the state tax
   appeal board."
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              Section 3. Section 15-1-121, MCA, is amended to read:
              "15-1-121.    Entitlement share payment -- purpose -- appropriation. (1) As described in 15-1-
   120(3), each local government is entitled to an annual amount that is the replacement for revenue received by
   local governments for diminishment of property tax base and various earmarked fees and other revenue that,
   pursuant to Chapter 574, Laws of 2001, amended by section 4, Chapter 13, Special Laws of August 2002, and
   later enactments, were consolidated to provide aggregation of certain reimbursements, fees, tax collections,
   and other revenue in the state treasury with each local government's share. The reimbursement under this
   section is provided by direct payment from the state treasury rather than the ad hoc system that offset certain
   state payments with local government collections due the state and reimbursements made by percentage splits,
   with a local government remitting a portion of collections to the state, retaining a portion, and in some cases
   sending a portion to other local governments.
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              (2)   The sources of dedicated revenue that were relinquished by local governments in exchange for an
   entitlement share of the state general fund were:
              (a)   personal property tax reimbursements pursuant to sections 167(1) through (5) and 169(6),
   Chapter 584, Laws of 1999;
              (b)   vehicle, boat, and aircraft taxes and fees pursuant to:
              (i)   Title 23, chapter 2, part 5;
              (ii) Title 23, chapter 2, part 6;
              (iii) Title 23, chapter 2, part 8;
              (iv) 61-3-317;
              (v)   61-3-321;
              (vi) Title 61, chapter 3, part 5, except for 61-3-509(3), as that subsection read prior to the amendment
   of 61-3-509 in 2001;
              (vii) Title 61, chapter 3, part 7;
              (viii) 5% of the fees collected under 61-10-122;
              (ix) 61-10-130;
              (x)   61-10-148; and
              (xi) 67-3-205;
              (c)   gaming revenue pursuant to Title 23, chapter 5, part 6, except for the permit fee in 23-5-612(2)(a);
              (d)   district court fees pursuant to:
              (i)   25-1-201, except those fees in 25-1-201(1)(d), (1)(g), and (1)(j);
              (ii) 25-1-202;
              (iii) 25-9-506; and
              (iv) 27-9-103;
              (e)   certificate of title fees for manufactured homes pursuant to 15-1-116;
              (f) financial institution taxes collected pursuant to the former provisions of Title 15, chapter 31, part 7;
              (g)   all beer, liquor, and wine taxes pursuant to:
              (i)   16-1-404;
              (ii) 16-1-406; and
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              (iii) 16-1-411;
              (h)   late filing fees pursuant to 61-3-220;
              (i)   title and registration fees pursuant to 61-3-203;
              (j)   veterans' cemetery license plate fees pursuant to 61-3-459;
              (k)   county personalized license plate fees pursuant to 61-3-406;
              (l)   special mobile equipment fees pursuant to 61-3-431;
              (m)    single movement permit fees pursuant to 61-4-310;
              (n)   state aeronautics fees pursuant to 67-3-101; and
              (o)   department of natural resources and conservation payments in lieu of taxes pursuant to former
   Title 77, chapter 1, part 5.
              (3)   Except as provided in subsection (7)(b), the total amount received by each local government in the
   prior fiscal year as an entitlement share payment under this section is the base component for the subsequent
   fiscal year distribution, and in each subsequent year the prior year entitlement share payment, including any
   reimbursement payments received pursuant to subsection (7), is each local government's base component.
   The sum of all local governments' base components is the fiscal year entitlement share pool.
              (4)   (a) Except as provided in subsections (4)(b)(iv) and (7)(b), the base entitlement share pool must
   be increased annually by an entitlement share growth rate as provided for in this subsection (4). The amount
   determined through the application of annual growth rates is the entitlement share pool for each fiscal year.
              (b)   By October 1 of each year, the department shall calculate the growth rate of the entitlement share
   pool for the next fiscal year in the following manner:
              (i)   The department shall calculate the entitlement share growth rate based on the ratio of two factors
   of state revenue sources for the first, second, and third most recently completed fiscal years as recorded on the
   statewide accounting, budgeting, and human resource system. The first factor is the sum of the revenue for the
   first and second previous completed fiscal years received from the sources referred to in subsections (2)(b),