Agenda - Council - 09/08/1981 - Laserfiche WebLink

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I I The Honorable Thomas G. Gamec August 21, 1981 Page 2 I I ! I I i I I I I I I I I I As you know, through the state-paid homestead credit program, the state pays fifty-eight percent of each homeowner's property tax bill up to a maximum of $650. When property taxes go up, the state must pay fifty-eight percent of each dollar increase in a homeowner's property tax bil~ up to a maximum of $650. When this happens, the state ends up paying out more dollars through the homestead credit program. My proposal to limit increases in property taxes by limiting increases in amounts raised by local governments would have helped to hold down the amount of money the state pays out through the homestead credit program as well as the property tax refund program. Therefore, there would not have been a need to increase state taxes even more to pay for increased homestead credit amounts. Following my proposal, I received many letters and other expressions of concern from representatives of local governments~ Many opposed the limit on special levies, and presented welt-considered arguments against it. In mid-MaY I was able to work out a compromise which I submitted as an amendment to my original April proposal. As part of the compromi.se, I dropped my call for a limit on increases in special levies. The amendment was incorporated into the omnibus tax bill and ultimately passed the legislature. Thus, under the law, local governments are still permitted to increase essentially by any percentage the amount of funds raised through special levies. However, in my co~promise proposal there were other elements pertaining to special levies which were also incorporated into law. Under the compromise-now enacted .into-law, although increases in special 'levies are not limited, 'there are'three important differences from the old law.. F~rst, the special levy'for the decline in non-tax revenues has been eliminated. Funds for the decline .in non-tax revenues will have to be raised as part of the general levy. Second, although under the old law local governments were limited to increasing the general levy amount to eight percent, they were allowed to add to a year's eight percent, increase the difference between increases for previous years--if less than eight percent--and eight percent. Under the new law this is no longer permissible. .If increases in previous years were less than eight percent, the amount of-the difference between the actual increases and eight percent may no longer be added to the next year's increase. However, the new law retains the provision of the old 'law which permits increases in the levy amount of more'than eight percent in cases where a community has grown since its previous year's levy amount was established. Specifically, the law permits the amount of the general levy to be increased to provide for'i'ncreases in the volume of community services