SJR63: Joint Resolution Text

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2005 - 2006 LEGISLATURE

2005 Senate JOINT RESOLUTION 63

February 14, 2006 - Introduced by Senators Grothman, Lazich, Darling, S. Fitzgerald, A. Lasee, Kedzie, Kanavas, Zien, Leibham, Reynolds, Schultz and Stepp, cosponsored by Representatives Wood, Honadel, Huebsch, Gard, Pridemore, Strachota, Kerkman, Nass, Lothian, F. Lasee, J. Fitzgerald, Gundrum, Hundertmark, Jensen, Musser, Pettis, Nischke, LeMahieu, Vos, Kleefisch, Gunderson, Newcomer, Kestell, Vukmir, Suder and Montgomery. Referred to Select Committee on Taxpayer Protection Amendment.

SJR63,1,10 To create section 11 of article VIII of the constitution; relating to: creating a revenue limit for the state and local governmental units, depositing excess revenue into an emergency reserve, returning excess revenue to taxpayers, elector approval for exceeding the revenue limit, state and local governmental approval for reducing the revenue limit, allowing local governmental units to raise revenue to compensate for reductions in state aid, requiring the state to reduce its revenue limit in conjunction with reduction in state aid, reimbursing the reasonable costs of imposing state mandates, standing to bring a suit to enforce the revenue limits, and requiring the approval of only one legislature to amend the revenue limit provisions (first consideration).

Analysis by the Legislative Reference Bureau

This proposed constitutional amendment, proposed to the 2005 legislature on first consideration, limits the amount of revenue from taxes and fees that the state or a special purpose district, school district, technical college district, county, city, village, or town may receive in any year to the amount it received in the previous year, for the year in which the limit takes effect, or the maximum amount it could have received in the previous year, for subsequent years, increased by the percentage that is the average of the annual percentage increases, if any, in the consumer price index for each of the three years preceding the previous year, but not to exceed the annual percentage increase, if any, in state personal income for the year preceding the previous year, plus the percentage increase in population for the state, a special purpose district, a county, or a technical college district; the percentage that is the average of the annual percentage increases, if any, in student enrollment for a school district in each of the three years preceding the previous year; and 60 percent of the percentage increase from the first to the second of the two previous years in property values related to new construction for a city, village, or town.

Under the proposed amendment, a "special purpose district" is defined as any entity other than the state, a school district, a technical college district, a county, a city, a village, or a town that is authorized to collect taxes or fees.

The proposed amendment defines "revenue," generally, as all moneys received from taxes, fees, licenses, permits, assessments, fines, and forfeitures imposed by the state or a special purpose district, school district, technical college district, county, city, village, or town, lottery proceeds less the amount of any prizes, tribal gaming proceeds, and all moneys received from bonds not including moneys generated from municipal economic development bonds, from the refinancing of bonds, or from short-term cash flow borrowing. However, for the base year upon which the revenue limit is calculated, "revenue" does not include moneys generated from bonds.

Generally, all revenue from taxes and fees that the state receives in excess of the limit must be placed in an emergency reserve fund. Any remaining excess revenue must be returned to the taxpayers. In addition, all revenue from taxes and fees that a special purpose district, school district, technical college district, county, city, village, or town receives in excess of the entity's limit must be returned to the taxpayers.

Under the proposed amendment, generally, if a special purpose district, school district, technical college district, county, city, village, or town receives state aid in any year in an amount that is less than the amount of state aid that the entity received in any previous year beginning, generally, after the ratification of the proposed amendment, the entity may collect additional revenue in the current year in an amount not to exceed the greatest amount of state aid received by the entity in any previous year beginning, generally, after the ratification of the proposed amendment, minus the current year's state aid. The additional revenue is not included in determining the entity's revenue limit. Furthermore, the state must reduce its revenue limit by the amount of any aggregate reduction in state aid. However, if a program or function for which the state aid is provided is eliminated or commensurately reduced in scope or applicability, as determined by the legislature, the state is not required to reduce its revenue limit by the amount of the reduction in state aid, and an entity may not collect additional revenue to compensate for the reduction in state aid.

The state may make expenditures from its emergency reserve fund with the approval of a majority of the members of each house of the legislature for tax relief or in a year in which the amount of the state's revenue limit is greater than the amount of its revenue. The expenditures are included in the calculation of the state's revenue limit.

Under the proposed amendment, the state, or a special purpose district, school district, technical college district, county, city, village, or town may reduce the revenue limit imposed under this section by a majority vote of the governing body of the entity or, in the case of the state, by the vote of a majority of the members elected to each house of the legislature; and may exceed the revenue limit only with the approval of the electors of the state, county, special purpose district, school district, technical college district, city, village, or town, respectively, at a referendum as prescribed by the legislature by law. The referendum must specify whether the increase in the revenue limit is on a recurring or nonrecurring basis.

Under the proposed amendment, the legislature may, by law, adjust the revenue limit for any governmental unit to accommodate the transfer of services from one governmental unit to another. In addition, generally, a state law or administrative rule that requires a special purpose district, school district, technical college district, county, city, village, or town to expend money may not be enacted or adopted after the ratification of this proposed amendment unless the state provides for the payment to the entity of an amount that is equal to the reasonable costs incurred by the entity to comply with the law or rule, as determined by the legislature.

The proposed amendment allows any individual or class of individuals residing in this state to bring a suit to enforce the revenue limits imposed on the state or on the local governmental unit where the individual or class of individuals resides or pays property taxes. In addition, the provisions created in the amendment may be amended with the approval of one legislature, rather than two, and ratification by the people.

A proposed constitutional amendment requires adoption by two successive legislatures, and ratification by the people, before it can become effective.

SJR63,3,1 Resolved by the senate, the assembly concurring, That:

SJR63, s. 1 Section 1. Section 11 of article VIII of the constitution is created to read:

SJR63,3,3 [Article VIII] Section 11 (1) In this section:

SJR63,3,5 (a) "Calendar year entity" means a local governmental unit that has a calendar year as its fiscal year.

SJR63,3,7 (b) "Fiscal year entity" means the state or a local governmental unit that has a fiscal year that is not a calendar year.

SJR63,3,9 (c) "Local governmental unit" means a county, municipality, special purpose district, school district, or technical college district.

SJR63,4,3 (d) "Municipal economic development bond" means a bond issued to finance real property improvement that is directly related to economic developments, as defined by the legislature by law.

SJR63,4,18 (e) "Municipality" means a city, village, or town, not including a town whose budgeted revenue is less than $1,000,000 for the 2009 calendar year or, in subsequent calendar years, less than $1,000,000 increased by the percentage increase, if any, in the consumer price index for Milwaukee-Racine or its successor index from the 2007 calendar year to the calendar year preceding the previous calendar year. "Municipality" includes a district, utility, or other entity that receives moneys from taxes or fees and that is authorized, created, or established by a city, village, or town, regardless of whether the governing body of the city, village, or town retains any authority or control over the district, utility, or other entity. For purposes of this section, the moneys received by such a district, utility, or other entity from taxes or fees shall be considered revenue of the city, village, or town that authorized, created, or established the district, utility, or other entity, unless such moneys would not be revenue under this section if received by the city, village, or town or unless considering them revenue would result in the inclusion of such moneys twice in revenue.

SJR63,4,20 (f) "Population" means annual population estimates adjusted by the most recent federal decennial census, as determined by the state.

SJR63,5,25 (g) "Revenue" means all moneys received from taxes, fees, licenses, permits, assessments, fines, and forfeitures imposed by the state or a local governmental unit, lottery proceeds net of prizes, tribal gaming proceeds, and all moneys received from bonds, but not including moneys generated from municipal economic development bonds, from the refinancing of bonds, or from short-term cash flow borrowing. "Revenue" includes revenue transferred or spent from a fund under sub. (3), not including moneys transferred or spent for refunds or relief from taxes imposed by the state, and, in the case of the state, the amount of any tax credit enacted into law after December 31, 2008, if the credit percentage exceeds the applicable highest marginal tax rate. "Revenue" does not include excess revenue deposited into a fund under sub. (3), moneys used for debt service on a municipal economic development bond, moneys used to pay a damage award, or moneys received from the federal government, from the state or a local governmental unit providing governmental services to governmental entities, from gifts, from damage awards, or from real property sales to taxable entities, moneys received for the operation of a telephone, gas, electric, or water utility, or moneys received for medical care provided by hospitals, nursing homes, assisted living facilities, or other medical facilities operated by any entity that is subject to the limits imposed under this section, from unemployment insurance taxes, from insurance assessments or premiums, from employee payments for fringe benefits, from governmental property insurance, from investment trusts, from private purpose trusts, from college savings programs, from fees imposed for airport or mass transportation systems, or from tuition or fees imposed on students to support university or technical college functions. The legislature, by law, may exclude from "revenue" moneys generated by a local governmental unit from any source other than taxes, except that the legislature may not exclude any amount of money generated from licenses that exceeds the cost of issuing the license or any amount of money generated by a fee that exceeds the cost of providing the service associated with the fee. For the 2008 calendar year, for calendar year entities, and for the 2009 fiscal year, for fiscal year entities, "revenue" does not include moneys generated from bonds.

SJR63,6,3 (h) "Special purpose district" means any entity other than the state, a school district, a technical college district, a county, or a municipality that is authorized to collect taxes or fees.

SJR63,6,5 (i) "State aid" means all of the following, as defined by the legislature by law, but does not include a one-time grant:

SJR63,6,6 1. Shared revenue.

SJR63,6,7 2. Equalization aids.

SJR63,6,8 3. Community aids that are used to provide social services.

SJR63,6,9 4. General transportation aids.

SJR63,6,10 5. Categorical school aids.

SJR63,6,11 6. Aid to technical college districts.

SJR63,6,23 (2) (a) Subject to subs. (3), (4), and (6) to (8), for the 2009 calendar year, for calendar year entities, and for the 2010 fiscal year, for fiscal year entities, the state or a local governmental unit may not collect more in revenue than the amount it collected in the previous calendar year, for calendar year entities, or in the previous fiscal year, for fiscal year entities, increased by the percentage that is the average of the annual percentage increases, if any, in the consumer price index for Milwaukee-Racine, or its successor index, for each of the 3 calendar years preceding the previous calendar year, for calendar year entities, or for each of the 3 fiscal years preceding the previous fiscal year, for fiscal year entities, but not to exceed the annual percentage increase, if any, in state personal income from the 2006 calendar year to the 2007 calendar year, for calendar year entities, or from the 2007 calendar year to the 2008 calendar year, for fiscal year entities, plus:

SJR63,7,2 1. For the state, a special purpose district, a county, or a technical college district, the percentage increase from the first to the 2nd of the 2 years preceding the previous year in the population of the state, special purpose district, county, or technical college district, respectively.

SJR63,7,5 2. For a school district, the percentage that is the average of the annual percentage increases, if any, for each of the 3 years preceding the previous year in enrollment of students in 5-year-old kindergarten through the 12th grade.

SJR63,7,8 3. For a municipality, 60 percent of the percentage increase from the first to the 2nd of the 2 previous years in property values attributable to new construction, less the value of any property removed or demolished, in the municipality.

SJR63,7,24 (b) Subject to subs. (3), (4), and (6) to (8), for calendar years beginning in 2010, for calendar year entities, and for fiscal years beginning in 2011, for fiscal year entities, the state or a local governmental unit may not, in any calendar year or in any fiscal year, as applicable, collect more in revenue than the maximum amount that it was permitted to collect in the previous calendar year, for calendar year entities, or in the previous fiscal year, for fiscal year entities, under this subsection, increased by the percentage that is the average of the annual percentage increases, if any, in the consumer price index for Milwaukee-Racine, or its successor index, for each of the 3 calendar years preceding the previous calendar year, for calendar year entities, or for each of the 3 fiscal years preceding the previous fiscal year, for fiscal year entities, but not to exceed the annual percentage increase, if any, in state personal income from the 3rd calendar year preceding the current calendar year, for calendar year entities, or preceding the end of the current fiscal year, for fiscal year entities, to the 2nd calendar year preceding the current calendar year, for calendar year entities, or preceding the end of the current fiscal year, for fiscal year entities, plus the applicable percentage increase under par. (a) 1., 2., or 3.

SJR63,8,5 (3) (a) If the revenue received by the state in any state fiscal year exceeds its limit under this section, the state shall deposit into an emergency reserve fund all of the excess revenue, except that the total amount in the emergency reserve fund may not exceed an amount that is equal to 8 percent of the state's total revenue in the previous state fiscal year.

SJR63,8,9 (b) The state may make expenditures from its emergency reserve fund only by a majority vote of the members of each house of the legislature, and only for relief from taxes imposed by the state or in a fiscal year in which the amount of the state's limit determined under this section is greater than the amount of the state's revenue.

SJR63,8,23 (4) If a local governmental unit receives state aid in any calendar year, in the case of calendar year entities, or in any fiscal year, in the case of fiscal year entities, in an amount that is less than the amount of state aid that it received in or after the 2008 calendar year, for calendar year entities, or in or after the 2009 fiscal year, for fiscal year entities, the local governmental unit may collect additional revenue in the current calendar year or current fiscal year, as applicable, in an amount not to exceed the greatest amount of state aid received by the local governmental unit in or after the 2008 calendar year, for calendar years entities, or in or after the 2009 fiscal year, for fiscal year entities, minus the current year's state aid. Any additional revenue collected under this paragraph shall not be included in determining the local governmental unit's limit under this section. A local governmental unit may not collect additional revenue under this paragraph for a reduction in state aid if a program or function for which the state aid is provided is eliminated or commensurately reduced in scope or applicability, as determined by the legislature.

SJR63,9,3 (5) (a) The state shall return to the taxpayers the amount of any excess revenue received in any fiscal year that is not deposited into an emergency reserve fund under sub. (3) (a).

SJR63,9,8 (b) If the revenue received by a local governmental unit in any calendar year, for calendar year entities, or in any fiscal year, for fiscal year entities, exceeds the local governmental unit's limit under this section, it shall return to the taxpayers the amount of the excess revenue received in that calendar year or fiscal year, as applicable.

SJR63,9,12 (c) A refund made under this subsection shall be made in the calendar year, for calendar year entities, or in the fiscal year, for fiscal year entities, immediately following the calendar or fiscal year in which the state or the local governmental unit has the excess revenue.

SJR63,9,23 (6) The state or a local governmental unit may reduce the revenue limit imposed under this section by a majority vote of the governing body of the local governmental unit or, in the case of the state, by the vote of a majority of the members elected to each house of the legislature; and may exceed the revenue limit imposed under this section only with the approval of the electors of the state or local governmental unit, respectively, at a referendum. The referendum shall be held in such manner and at such time as the legislature shall prescribe and shall specify whether the increase in the revenue limit is on a recurring or nonrecurring basis. The revenue limit imposed under this section may not be increased on a recurring basis by referendum in any year by more than the greater of $50,000 or 15 percent of the amount of the revenue limit that is in effect prior to the increase.

SJR63,9,25 (7) The legislature may, by law, adjust any limit imposed under this section to accommodate the transfer of services from any entity subject to a limit under this section to any other such entity, including the transfer of services that results from annexation. Any increase to a entity's limit under this subsection shall be offset with a corresponding decrease to the limit of other entities affected by the transfer of services.

SJR63,10,10 (8) The state revenue limit under this section for a fiscal year shall be reduced by the amount of any reduction in that fiscal year in the aggregate amount of state aid to local governmental units, as compared to the previous fiscal year. This subsection does not apply to a reduction in state aid if a program or function for which the state aid is provided is eliminated or commensurately reduced in scope or applicability, as determined by the legislature.