A House panel has approved increases to the statewide property tax rate for fiscal year 2015. The homestead rate will go up 4 cents and the non-residential rate would go up 7.5 cents under the House Ways and Means Committee proposal. In December, the forecast for the rate was 7 cents for homestead property taxpayers.
The base rate for homeowners will be 98 cents, and the rate for non-residential taxpayers will be $1.515. The base education amount, which is used in the formula to calculate the actual rate property taxpayers are assessed, will go up to $9,382. The base rate for household income will go up to 1.9 percent under the proposal.
The committee was able to reduce property tax rates because statewide school spending increases were less than expected. Lawmakers also used reserve funds to help lower the rates.
After weeks of wrangling, the committee has also agreed to several significant changes to elements of the education funding system, including a phase-out of the small schools grant over a six-year period, a reduction in the maximum income sensitivity benefit for certain households and a new provision that would tie the excess spending threshold for school districts to inflation.
The property tax bill includes a commitment that the Legislature incorporate an education income tax into the current education financing system, which is currently funded by property taxes, a General Fund transfer, sales taxes, lottery proceeds and purchase and sales taxes.
The vote was 10-1. Rep. Patti Komline, R-Dorset, cast the sole dissenting vote. Komline plans to introduce an amendment that would require the Legislature to reform the statewide property tax system. This session, she launched an online petition drive calling for the repeal of Act 60 and Act 68.