Providing funding, creating an individual income tax credit, and providing a levy limit exception for lead service line replacement and making an appropriation. (FE)

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 public utility is not unjust, unreasonable, insufficient, unfairly discriminatory, or preferential or otherwise unreasonable or unlawful if the water public utility uses the revenues from the rate increase to pay for replacing service lines containing lead.