Proposal would cut taxable values and cap annual increases

The proposal would reduce taxable values for residential, agricultural, and commercial property. The reduction would cover residential, agricultural, and commercial property, including mobile homes used for residential or commercial purposes. Non-spouse co-owners who are not dependents would receive shares based on their ownership interests. The reduction would not lower special assessments or the taxable value used to calculate a school district's state aid reduction. The bill would appropriate up to $483.4 million from the legacy property tax relief fund for state reimbursement during the 2025–27 budget period. The reduction would apply to taxable years beginning after December 31, 2024. The stated reimbursement appropriation covers July 1, 2025, through June 30, 2027.

The proposal would limit yearly increases in each parcel's taxable value and allow voters to approve higher local tax limits. The valuation limit would apply to any taxable property parcel. The voter approval provision would apply to taxing districts. The three percent limit would not cover value added by improvements missing from the previous year's valuation, and it would apply even when ownership changes. A taxing district could exceed its usual levy limit only after majority voter approval at a statewide primary or general election. The ballot would state the number of mills, purpose, and duration; approval could last no more than six taxable years. Cities and counties could not change how the limit applies through home rule powers. These provisions would apply to taxable years beginning after December 31, 2024.

The proposal would allocate legacy fund distributions first to debt payments, then to highway programs, and then to property tax relief. The state treasurer would distribute legacy fund earnings. The highway allocation would go to state, township, and public transportation funds, and to cities and counties for road work. The distribution would equal 7% of the legacy fund's average balance over the five fiscal years ending with the most recently completed even-numbered fiscal year. The first allocation would go to debt payments, up to $102,624,000 or the amount appropriated for those payments for a biennium, whichever is less. The next $100 million would go to highway programs, and the remainder to the property tax relief fund. The proposal would transfer $85,001,793 from the general fund to the relief fund and appropriate up to $483,400,000 from that fund for property-tax reimbursements in the 2025–27 budget period. The distribution would happen each July in odd-numbered years. The stated general fund transfer and reimbursement appropriation cover July 1, 2025, through June 30, 2027.