Feb 4 JLBC Presentation to Senate Finance and House Ways & Means

TAX REVOLT CONSEQUENCES

Senator Gould has introduced his own versions of the tax limiting measure: SCR1024; property tax levy rollback and SCR 1026; property tax valuation rollback. On Monday, JLBC gave a presentation summarizing the provisions and consequences of the measure to a joint meeting of Senate Finance and House Ways & Means. JLBC determined the following possible impact:
Disconnects a property’s market value from its taxable value
The tax base (as measured by the full cash value) will be reduced by several hundred billion dollars
If the 2% levy limit is not altered, there will likely be a sharp increase in tax rates
Higher tax rates will increase the state cost for the Homeowner’s Rebate and the 1% cap
There will be a tax burden shift to business personal property and centrally valued property
Shrinkage of tax base may increase state share of school funding under formulas
The impact on the state general fund may be in the hundreds of millions.
Concerning the levy rollback, JLBC concluded:
Local tax will decline but unevenly across taxing districts
Levy rollback for K-12 will likely result in significant higher basic state aid for schools
JLBC also prepared an analysis of what a Prop 13-like constitutional amendment would do:
Disconnects a property’s market value from its taxable value
Disparity in values within neighborhoods based on when properties were last sold
Local tax revenues would be significantly reduced
If state is required to backfill when a property’s taxes exceeds the 1% cap, the cost to the state may be in the hundreds of millions
If the state is not required to backfill, the losers will be local taxing districts who stand to lose in the hundreds of millions
The reduction in property values is likely to significantly increase basic state aid to schools.