Listen to a podcast interview with Melissa Carter, the Association's research and legislative liaison, as she discusses background and details about the millage cap.
The state Office of Revenue and Fiscal Affairs last week released the data that cities need to calculate their individual millage cap. Get the information for each city here.
Why is this number so important to cities each year?
In 2006, the General Assembly passed Act 388 (scroll to Section 6-1-320) that capped how much local governments can increase their operating millage each year.
The calculation for this cap on raising property tax rates is the increase in the Consumer Price Index plus the increase in the local government’s population.
If either the CPI or the population is a negative increase, then the number for the calculation is zero. The Revenue and Fiscal Affairs Office performs the calculation and typically releases this information annually in late May.
The RFA released the FY 2017 municipal millage caps on Friday, May 21. The CPI for the calculation is .12 percent. Get individual cities’ cap information here.
Are there any exceptions to the cap?
With a two-thirds vote, the council can use one of the following seven exceptions to increase millage beyond the amount established by the cap.
1- Make up a deficit from the preceding year
2- Pay for a catastrophic event
3- Comply with a court order
4- Cover a loss of 10 percent of more of property taxes due to taxpayer closure
5- Comply with state or federal mandate
6- Purchase undeveloped property near a military base
7- Purchase capital equipment in a county with less than 100,000 population and at least 40 acres of state forest land
The cap does not impact millage that is levied to pay bond debt, to purchase real property with a lease-purchase agreement or to maintain a reserve account.
So what if a city doesn’t use the increases allowed each year?
The General Assembly passed Act 57 in 2011 that created the millage bank. This allows a local government to raise the millage rate with any unused millage from the past three years’ cap plus the current year’s cap.
Get background on millage caps here. Listen to the podcast here.