2021 Legislative Highlights

Property Tax Credit Claim form, Act 73 (H.436) Sec. 3

• Allows claimants to amend certain lines of their Property Tax Credit claim form, including:
  • housesite value,
  • housesite education tax,
  • housesite municipal tax, and
  • ownership percentage.
• Effective July 1, 2021.

Property Tax exemption to support broadband development, Act 71 (H.360) Sec. 12-13

• Provides an exemption for real and personal property, except land, owned by an electric distribution utility that comprises broadband infrastructure provided the infrastructure:
  • is leased to a Communications Union District (CUD) or an Internet Service Provider (ISP) working with a CUD;
  • is primarily for the purpose of providing broadband capable of speeds of at least 100 Mbps symmetrical;
  • is constructed on or after July 1, 2021.
• Effective July 1, 2021.

Energy storage facilities, Act 54 (H.431)

• Clarifies taxation of energy storage facilities.
• Sec. 3 clarifies that the term “development” does not include the construction of energy storage facilities.
• Sec. 5 defines “energy storage facility” as a stationary device or system that captures and stores energy produced elsewhere, delivering that energy as electricity to the grid (customers) for use at a future time.
• Secs. 16-20 clarify tax treatment of energy storage facilities for under the Uniform Capacity Tax, the education property tax, and municipal property tax.
  • For the purposes of the Uniform Capacity Tax, energy storage facilities having a plant energy rating of 600 kWh or larger, and which are not connected to a renewable energy plant (e.g., solar), shall be assessed $0.50 per kWh of plant rating, paid annually to the Department of Taxes.
    • Energy storage facilities with an energy rating of less than 600 kWh shall be exempt from the Uniform Capacity Tax.
    • The existence of an energy storage facility taxed under the Uniform Capacity Tax shall not alter the existing method of taxation applicable to the land underlying the facility.
  • Buildings and fixtures of energy storage facilities that are subject to Uniform Capacity Tax are not subject to Education Property Tax. The law accomplishes this by excluding energy storage facilities subject to UCT from the definition of “nonhomestead property” in the Education Property Tax chapter of title 32.
  • For the purposes of municipal property taxes, real and personal property comprising an energy storage facility with a plant energy rating of less than 600 kWh, not including the underlying land, shall be exempt.
  • Except for the underlying land and other property that is exempt, for municipal property taxes the appraisal value of real and personal property comprising an energy storage facility shall be $0.25 per kWh of plant energy rating.
• Effective July 1, 2021.

Setting the yield for Education Property Tax, Act 73 (H.436) Sec. 17

• Establishes the statewide education property tax yields and nonhomestead rate for fiscal year 2022.
  • property dollar equivalent yield:  $11,317
  • income dollar equivalent yield:  $13,770
  • nonhomestead rate:  $1.612
• Effective July 1, 2021.

Moratorium on Excess Spending Penalty, Act 59 (S.13)

Sec. 5 temporarily suspends the excess spending penalty and instructs that calculations to determine a school district’s education property tax rate, for fiscal years 2022 and 2023, shall be made without regard to a district’s “excess spending.”

Capital project costs excluded from Education Excess Spending Penalty, Act 73 (H.436) Sec. 18

• Adds an exclusion from the excess spending penalty calculation for capital project costs when such project costs have been granted preliminary approval.
• Effective July 1, 2021.

Correcting for declining enrollments, Act 73 (H.436) Sec. 19

• For the purposes of determining a school district’s weighted membership, expands the 3.5% limit on pupil count decline (“hold harmless”) to all districts.
• Effective on passage.

Small School Grants, Act 73 (H.436) Sec. 20

• Allows a school district that received a Small Schools Grant in Fiscal Year 2020 to continue to receive an annual Small Schools Grant under certain conditions:
  • Payment of the Small Schools Grant shall be discontinued in the fiscal year following the cessation of operations of the school that made the district eligible for the small school grant.
  • If the building that houses the school that made the district eligible for the Small Schools Grant is consolidated with another school into a new or renovated building, then the district shall continue to be eligible during the repayment term of any related bonded indebtedness.
• Effective on passage.