Legislation Introduced for 2-Rate Land Value Tax in Several States

Nadine Stoner

[Reprinted from GroundSwell, March-April 2005]

GroundSwell editor's note: The following is my compilation from various emails, newsletters, and legislative downloads. Jeffery J. Smith is president of the Geonomy Society, Portland, OR, and may be emailed at jjs@geonomics.org. Joshua Vincent is the Executive Director of the Center for the Study of Economics, Philadelphia, PA.

OREGON. Jeffery J. Smith reports that Senator Ryan Deckert of Beaverton (suburb of Portland) has introduced SJR 1, the first Senate Joint Resolution of the 2005 session, which proposes an amendment to the Oregon Constitution to allow a local taxing district to adopt site value taxation. A jurisdiction would have to submit the shift of the property tax to local voter approval. Deckert's action follows earlier efforts by Rep. Jackie Dingfelder and is at the request of last year's Interim Committee on Revenue. SJR 1 would amend the constitution of Oregon, if approved by the Legislature, signed by the governor, and then by the statewide Oregon electorate, to create a new section to llK of Article XI. ..." (1) The Legislative Assembly shall enact laws to authorize a local taxing district to adopt a site value taxation system that taxes land at one rate and all other property at a lesser rate. A site value taxation system adopted under this section is in lieu of the uniform ad valorem property taxes of the local taxing district, except for taxes imposed to pay principal and interest on bonds issued prior to the effective date of this section ... (2) taxes collected under a site value taxation system adopted under this section shall be assessed on the real market value of the property subject to tax. ... (3) A local taxing district may phase in a site value taxation system adopted under this section over a five-year period. ..."

In a related development, Dr. Tom Gihring of Portland emailed that he and Kris Nelson fulfilled a contract with METRO (regional government in the Portland area) to study the tax shift efforts of a LVT (Land Value Tax) on six commercial corridors in the metro area. Results were reported to Metro, Revenue Committee of the Oregon Senate, and other influential entities.

The following legislative efforts were reported by Joshua Vincent, Executive Director of the Center for the Study of Economics.

ALABAMA. An effort led by the City of Tuskegee, AL, Mayor and State Legislator Johnny Ford, has led to passing a statute for a narrow constitutional amendment bill in the Alabama Legislature. HB 449 to permit Land Value Taxation in Tuskegee is to be voted on in late 2005.

UTAH. Utah's Legislature in March 2005 passed SB 53, whose chief sponsor was Howard A. Stephenson. SB 53 authorizes a study of Land Value Taxation to be completed by November, 2005. The Utah Tax Review Commission will undertake the study, and CSE has offered its assistance. Previous efforts in Utah include those of the late Cedar City, UT activist Earl Hanson (who died in 1995). He got the Cedar City Council in 1993 to unanimously pass Resolution 93-0909-2. It was entitled "An Appeal to Governor Mike Leavitt and the Utah Legislature to Initiate a Resolution for a Constitutional Amendment to Reform Utah's Property Tax." Hanson had been behind getting two bills introduced in the 1990s in the Utah Legislature for a 2-rate property tax.

MINNESOTA. Senate/House joint bills SF 978 and HF 1035 would convert the statewide commercial/industrial property tax funding education inequities into a statewide commercial land tax. Support is from ISAIAH (a Gamaliel-associated group of congregations in the Minneapolis-St. Paul area) and from a study performed by Mark Haveman with the Minnesota Taxpayers.

Starting in 2006, the state general levy would first be divided into a commercial-industrial share and a seasonal recreation share, in proportion to the share of the state general tax levied on each of those classes for taxes payable in 2005. ... For each subsequent year there would be a shift until in 2016 and thereafter the full amount of the commercial- industrial share would be levied upon commercial-industrial land tax capacity. ... For each of the three component shares of the state general levy ... the tax must be distributed among the counties by applying a uniform rate to each county's tax capacity for the relevant class ..." Sponsors of SF 978 are Senators Mee Moua and Ann Rest. Sponsor of HB 1035 is Rep. Ron Abrams.

CONNECTICUT. Raised Bill (HB)5892, An Act Concerning Community Preservation, is the third LVT option bill in four years. The bill would permit split rates for real property in cities larger than 100,000 (Hartford, New Haven, Stanford, Bridgeport, Waterbury). It is supported by the Interfaith Coalition for Equity and Justice/ARISE. HB 5892 was initially referred to the Committee on Planning and Development, where a hearing was held February 23, 2005 on it and also SB 977 (raised) which passed out of the Joint Planning and Development Committee by a 13 to 5 vote. A Joint Committee's recommendation for the full General assembly is that it pass the bill.

Both HB 5892 and SB 977, An Act Authorizing Separate Rates of Taxation for Real Estate, contain the following words: "For assessment years commencing on and after October 1, 2006, any municipality with a population of more than one hundred thousand, by ordinance adopted by its legislative body, may (1) classify real estate as (a) land or land exclusive of buildings, or (b) buildings on land, and (2) establish a different rate of property tax for each class, provided the higher rate shall apply to land or land exclusive of buildings . As used in this subsection, the term "real estate"does not include farm land, forest land and open space land as such terms are defined in 12.107b."

As GroundSwell goes to press, SB 977 has a Senate number for a vote. SB 977 will also have to pass the House and be signed by the Governor. Josh Vincent reports endorsements for the House and Senate LVT bills by the Connecticut Home Builders Association and by the Mayor of the City of Hartford, CT. Land tax bills have been introduced previously (in 1997) in Connecticut.

MARYLAND. Four two-tiered LVT bills are being considered in this session.

Delegate Clarence Davis is the sponsor of HB 1036, which is entitled Land Value Taxation - Local Option for Baltimore City. The bill would establish separate classes for property tax assessment purposes for land and improvements to land, require that the property tax in Baltimore City for improvements to land be less than or equal to the rate for land; require that the property tax in Baltimore City applicable to specified property bear specified relationships to the rate for improvements on land; authorize the Mayor and the City Council of Baltimore City to set a tax rate of zero for improvements to land, etc.

Delegate Davis and Delegate Mike Gordon are sponsors, along with others of three bills: HB 842, HB 846, and HB 1075.

HB 842 is entitled Land Value Taxation - State Property Tax. It would establish separate classes for property tax purposes for land and improvements; establish a subclass of land for land that is used as a principal place of residence; exempt improvements to land from the state property tax, with specified exemptions; exempt from the state property tax the first $15,000 of value of agricultural land and the first $40,000 of land used as a principal place of residence; apply the act to taxpayers beginning after June 30, 2006. etc.

HB 846, is entitled Land Value Taxation - Funding for the Bridge to Excellence in Public Schools Act. It would impose an annual state tax on assessable property in rate and amount sufficient to provide funding for implementation of the Bridge to Excellence in Public Schools Act; establish separate property classes for land and improvements to land; exempt improvements to land from the state property tax, with specified exemptions; exempt from the state property tax specified portions of the value of agricultural land and land used as a principal place of residence. etc.

HB 1075 is entitled Land Value Taxation - Local Option for Counties and Baltimore City. It would establish separate classes for property tax purposes for land and improvements to the land; repeal a requirement that there be a single county property tax rate for all real property; require that a county tax rate for improvements to land be less than or equal to the rate for land; require the county tax rate applicable to specified property to bear specified relationships to the rate for improvements to land; authorize a tax rate of zero for improvements to land, etc.