AB 535

Generally under current law, and subject to a number of exceptions, a city,

village, town, or county (political subdivision) may not increase its levy by a

percentage that exceeds its "valuation factor," which is defined as the greater of

either zero percent or the percentage change in the political subdivision's equalized

value due to new construction, less improvements removed. The base amount of a

political subdivision's levy, on which the levy limit is imposed, is the actual levy for

the immediately preceding year.

In 2011, the Department of Revenue (DOR) undervalued a tax incremental

district in the village of Warrens. Under current law, if DOR makes an error in

determining the equalized value in any county or taxation district, DOR corrects the

error by adjusting the taxation district's equalized value in the year after the year

in which DOR made the error. Because of the 2011 valuation error, should the village

impose its intended 2012 levy, the resulting tax rate would be higher than the village

intended. If the village reduces its levy and resulting tax rate, however, the levy will

be less than initially intended and the levy limit for 2013 would be based at the

reduced levy for 2012. Under this bill, the levy limits applicable to the village of

Warrens for 2013 are increased by the amount by which the village reduces its levy

from the amount it would have levied in 2012 if not for the valuation error to

compensate for that error. The actual levy limit increase amount is determined by

the Department of Revenue.