Levy Limits

Issue
Strict levy limits tied to net new construction encourages a use it or lose it mentality. Municipal officials feel pressure to tax to the maximum allowed whenever the community experiences growth. Current law severely restricts the amount of unused levy capacity that municipalities can carry forward to 1.5% of the community’s total prior year levy.

Solution
The solution is to eliminate the cap and allow municipalities to carry forward any unused levy capacity from the prior year.

Talking Points
  • The state has imposed strict levy limits on municipalities since 2005.
  • Under the current limit, a municipality may increase its property tax levy over the prior year by the percentage increase in equalized value from net new construction.
  • While every community is different, in 2014, the growth in the state’s total equalized value from net new construction was 1.12%.
  • Levy limits this strict are unsustainable and are negatively impacting the ability of municipalities to provide the services their citizens and businesses need.
  • Current law severely restricts the amount of unused levy capacity that municipalities can carry forward to 1.5% of the community’s total prior year levy.
  • End the use it or lose it mentality by restoring to municipalities the ability to fully carry forward any unused levy capacity from the prior year.
  • Restore to local elected officials at least some minimal control over municipal budgeting decisions by modifying levy limits in the manner described above.