SUMMARY

This bill repeals the service charge section of the State's property tax law that authorized municipalities to adopt ordinances that would govern the application of a service charge against a limited category of tax-exempt property. That service charge was calculated as the portion of the property tax commitment related to the municipal services being provided to the exempt property. This bill creates a phased-in system that gradually limits the exemption for all property that is currently 100% exempt from taxation. The phased-in limitation does not apply to municipal, federal or church property or parcels of real estate that do not have structures built on them. The system of limited exemption begins with property tax year 2000, when the qualifying exempt property receives an exemption of 96% of its just value. Each subsequent year, the exemption decreases by 4% of the property's just value until the exemption reaches 60% of the property's just value in the year 2009, where it remains. This would be the equivalent of the property being assessed at 40% of its just value.

This bill also establishes 3 standards of eligibility or performance criteria that benevolent and charitable organizations have to meet to obtain or retain their tax-exempt status. Those 3 standards of criteria are:

1. The organization must provide a significant portion of its services to a substantial class of persons who are legitimate subjects of charity or otherwise relieve the government of its burden;

2. The organization must report on its charitable performance annually to the municipal assessors and publish that report in a daily newspaper of general circulation; and