SB 579

Under this bill, if the Department of Revenue recertifies the tax incremental

base of a tax incremental district because part of its territory is subtracted, the

political subdivision in which the TID is located may increase its levy limit by an

amount equal to the political subdivision's maximum allowable levy for the

preceding year, multiplied by a percentage equal to 50 percent of the amount

determined by dividing the value increment of the TID's territory that was

subtracted by the political subdivision's equalized value, as determined by DOR.

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

village, town, or county 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.

Under one of the current law exceptions, if DOR does not certify a value

increment for a TID as a result of the district's termination, the levy limit otherwise

applicable to the political subdivision is increased by a certain amount.

Also under current law, once a TID has been created, DOR calculates the “tax

incremental base" value of the TID, which is the equalized value of all taxable

property within the TID at the time of its creation. If the development in the TID

increases the value of the property in the TID above the base value, a “value

increment" is created. That portion of taxes collected on the value increment in

excess of the base value is called a “tax increment."

Under the current law exception to the levy limit relating to DOR not certifying

a value increment for a TID that is terminated, the allowable increase is an amount

equal to the political subdivision's maximum allowable levy for the preceding year,

multiplied by a percentage equal to 50 percent of the amount determined by dividing

the terminated TID's value increment by the political subdivision's equalized value,

as determined by DOR. This bill allows for a similar adjustment when territory is

subtracted from a TID.