AB 964

This bill creates at the Department of Natural Resources a program to provide

financial assistance to municipalities for the replacement of public water system

service lines containing lead. The bill also creates a nonrefundable state income tax

credit and levy limit exception related to the replacement of lead service lines.

Under current law, DNR administers a safe drinking water loan program that

provides financial assistance for projects for the planning, designing, construction,

or modification of public water systems, if the projects will facilitate compliance with

national primary drinking water regulations.

The bill appropriates funds to DNR for the purpose of providing financial

assistance to municipalities to replace service lines containing lead. The amount

allocated to a municipality under the bill is required to be based on the estimated

number of lead service lines in the municipality. The bill provides that, as a condition

of receiving financial assistance, a municipality is required to provide matching

funds in an amount equal to at least 25 percent of the financial assistance received.

Generally under current law, local levy limits are applied to the property tax

levies that are imposed in December of each year. Current law prohibits any political

subdivision from increasing 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. Current law contains a number of exceptions to the levy

limit, such as amounts a county levies for a countywide emergency medical system,

for a county children with disabilities education board, and for certain bridge and

culvert construction and repair. In addition, a political subdivision may exceed the

levy limit that is otherwise applicable if its governing body adopts a resolution to do

so and if that resolution is approved by the electors in a referendum.

The bill creates another exception to local levy limits. Under the bill, amounts

levied by a political subdivision for costs related to lead water service line

replacement do not apply to the levy limit that is otherwise applicable. With regard

to amounts that are levied for such costs, the amounts may be used only to benefit

homeowners. If the political subdivision imposes a fee or charge on homeowners for

such costs, the fee or charge may not result in a lien on their property if the fee or

charge is unpaid, notwithstanding current-law provisions under which such unpaid

amounts would otherwise become a lien against the property.

The bill creates a nonrefundable individual income tax credit for qualifying

expenses incurred by an individual to replace a lead pipe that carries water to the

individual's principal dwelling. The maximum amount of credit that may be claimed

each year for an individual dwelling is $200 and the amount may be claimed for not

more than 10 years. Because the credit is nonrefundable, it may be claimed only up

to the amount of the claimant's tax liability.

The bill provides that an increase in water service rates proposed by a water