By a vote of 44 to 5, the Senate adopted House Bill 1478. Voting “no” were Senators Rogers, Simpson, Skinner, Smith, and Tallian. This is Senator Kenley’s bill designed to ease the property tax hit — expected to be a 15% increase if the legislature does nothing — and to shift local government’s reliance on property taxes to something else.
I have to admit, my brain seized up about half way through the digest. It’s been a long day, sure, but i’s also a pretty complicated bill. But, in general, it accomplishes this by having the state assume some of the expenses traditionally borne by local government — such as juvenile detention fees and department of child services fees. In exchange, the state will phase out the property tax replacement credit — currently the mechanism by which the state essentially subsidizes the county property tax burden. It also allows local government to reduce property taxes by replacing them with a county adjusted gross income tax or county option income tax.
That’s my dumbed down version, anyway.
Also, if you want a very readable explanation of why property taxes will probably go up this year, check out the March 22, 2007 edition of Capital Comments by everybody’s favorite economist, Larry DeBoer. His guess (absent action by the General Assembly): a 17.5% increase. He lists five major items that will affect your property tax bill. Among those, there is the issue of trending — currently property taxes are based on the value of the property on March 1, 1999. Assessors are now required to “trend” the property — basically use recent data to adjust the value every year. Year-to-year, that might not be a big thing, but this year, they’ll have to use the March 1, 2005 value — a 6 year jump. There is also the issue of the property tax replacement credit – that big subsidy the state used to pay to local government to reduce the need for property taxes. A lot of the 2004 budget was balanced by substantially reducing the amount of that replacement credit. The State shifted its burdens down onto the counties.
So, I expect legislators to be very motivated to protect their constituents against a 17.5% property tax increase and would, therefore, be surprised if some version of this bill does not pass.