Sections 13-3401 to 13-3408 shall be known and may be cited as the Property Tax Growth Limitation Act.

For purposes of the Property Tax Growth Limitation Act:

(1) Approved bonds means bonds as defined in subdivision (1) of section 10-134 that are approved according to law, excluding any bonds issued to finance a project or projects if the issuance of bonds for such project or projects was the subject of a general obligation bond election held at the most recent regularly scheduled election and was not approved at such election;

(2) Auditor means the Auditor of Public Accounts;

(3) Emergency means an emergency, as defined in section 81-829.39, for which a state of emergency proclamation or local state of emergency proclamation has been issued under the Emergency Management Act;

(4) Growth percentage means the percentage obtained by dividing (a) the political subdivision's growth value by (b) the political subdivision's total property valuation from the prior year;

(5) Growth value means the increase in a political subdivision's total property valuation from the prior year to the current year due to (a) improvements to real property as a result of new construction and additions to existing buildings, (b) any other improvements to real property which increase the value of such property, (c) annexation of real property by the political subdivision, (d) a change in the use of real property, (e) any increase in personal property valuation over the prior year, and (f) the accumulated excess valuation over the redevelopment project valuation described in section 18-2147 of the Community Development Law for redevelopment projects within the political subdivision in the year immediately after the division of taxes for such redevelopment project has ended;

(6) Inflation percentage means the percentage change in the State and Local Consumption Expenditures and Gross Investment for the twelve-month period ending on December 31 of the prior year, as reported by March 31 of the current year by the United States Bureau of Economic Analysis;

(7) Political subdivision means any county, city, or village;

(8) Property tax request means the total amount of property taxes requested to be raised for a political subdivision through the levy imposed pursuant to section 77-1601;

(9) Property tax request authority means the amount that may be included in a political subdivision's property tax request as determined pursuant to the Property Tax Growth Limitation Act; and

(10) State aid means:

(a) For all political subdivisions, state aid paid pursuant to sections 60-3,202 and 77-3523 and reimbursement provided pursuant to section 77-1239;

(b) For cities and villages, state aid to cities and villages paid pursuant to sections 39-2501 to 39-2520, 60-3,190, and 77-27,139.04 and insurance premium tax paid to cities and villages; and

(c) For counties, state aid to counties paid pursuant to sections 60-3,184 to 60-3,190, insurance premium tax paid to counties, and reimbursements to counties from funds appropriated pursuant to section 29-3933.

(1) Except as otherwise provided in the Property Tax Growth Limitation Act, for fiscal years beginning on or after July 1, 2025, a political subdivision's property tax request for any year shall not exceed its property tax request authority as determined under this section. The preliminary property tax request authority for each political subdivision shall be the amount of property taxes requested and approved by each political subdivision and included on the budget document filed with the auditor in the prior fiscal year pursuant to subsection (2) of section 13-506, less the sum of exceptions utilized in the prior year pursuant to subdivisions (1) to (7) of section 13-3404.

(2) In addition to the preliminary property tax request authority, the political subdivision's property tax request authority may be increased by:

(a) The product of (i) the amount of property taxes levied in the prior year, less the sum of exceptions utilized in the prior year pursuant to subdivisions (1) and (2) of section 13-3404, and (ii) the political subdivision's growth percentage; and

(b) The product of (i) the amount of property taxes levied in the prior year, less the sum of exceptions utilized in the prior year pursuant to subdivisions (1) and (2) of section 13-3404, and (ii) the greater of zero or the inflation percentage.

A political subdivision may increase its property tax request authority over the amount determined under section 13-3403 by:

(1) The amount of property taxes budgeted for approved bonds;

(2) The amount of property taxes needed to respond to an emergency declared in the preceding year, as certified to the auditor;

(3) The amount of unused property tax request authority determined in accordance with section 13-3406;

(4) The amount of property taxes budgeted in support of (a) a service relating to an imminent and significant threat to public safety that (i) was not previously provided by the political subdivision and (ii) is the subject of an agreement or a modification of an existing agreement executed after August 21, 2024, whether provided by one of the parties to the agreement or by an independent joint entity or joint public agency or (b) an interlocal agreement relating to public safety;

(5) The increase in property tax request authority approved by the legal voters as provided in section 13-3405;

(6) The amount of property taxes budgeted for public safety services as defined in section 13-320; and

(7) The amount of property taxes budgeted for county attorneys and public defenders.

(1) A political subdivision may increase its property tax request authority over the amount determined under section 13-3403 if such increase is approved by a majority of legal voters voting on the issue at an election described in subsection (2) of this section. Such issue shall be placed on the ballot (a) upon the recommendation of the governing body of such political subdivision or (b) upon the receipt by the county clerk or election commissioner of a petition requesting such issue to be placed on the ballot which is signed by at least five percent of the legal voters of the political subdivision. The recommendation of the governing body or the petition of the legal voters shall include the amount by which the political subdivision would increase its property tax request authority over and above the amount determined under section 13-3403.

(2) Upon receipt of such recommendation or legal voter petition, the county clerk or election commissioner shall place such issue on the ballot at the next regularly scheduled election or a special election called for such purpose. The election shall be held pursuant to the Election Act, and all costs shall be paid by the political subdivision. The issue may be approved on the same question as a vote to exceed the levy limits provided in section 77-3444. If a majority of the votes cast on the issue are in favor of increasing the political subdivision's property tax request authority, the political subdivision shall be empowered to do so.

(1) A political subdivision may choose not to increase its total property taxes levied by the full amount of the property tax request authority allowed in a particular year. In such cases, the political subdivision may carry forward to future budget years the amount of unused property tax request authority, but accumulation of unused property tax request authority shall not exceed an aggregate of five percent of the total property tax request authority from the prior year.

(2) A political subdivision may choose to convert its accumulated amount of unused restricted funds authority existing on June 30, 2025, as determined in accordance with section 13-521, into unused property tax request authority. The amount converted may then be used by the political subdivision as unused property tax request authority for fiscal years beginning on or after July 1, 2025. The amount converted shall not exceed five percent of the total property taxes levied for the political subdivision in calendar year 2024.

(1) The auditor shall prepare forms to be used by political subdivisions for the purpose of calculating property tax request authority and unused property tax request authority. Each political subdivision shall calculate such amounts and submit the forms to the auditor on or before September 30, 2025, and on or before September 30 of each year thereafter. If a political subdivision fails to submit such forms to the auditor or if the auditor determines from such forms that a political subdivision is not complying with the limits provided in the Property Tax Growth Limitation Act, the auditor shall notify the political subdivision and the State Treasurer of the noncompliance.

(2)(a) Upon receiving notice from the auditor, the State Treasurer shall then suspend distribution of state aid allocated to the political subdivision until the political subdivision complies. The funds shall be held for six months. If the political subdivision complies within the six-month period, it shall receive the suspended funds. If the political subdivision fails to comply within the six-month period, the suspended funds shall be forfeited and shall be (i) redistributed to other recipients of the state aid in the county where such noncompliant political subdivision is located or returned to the Highway Allocation Fund if there is no eligible recipient or (ii) in the case of a homestead exemption reimbursement, returned to the General Fund.

(b) The political subdivision shall continue to forfeit state aid until the political subdivision reaches compliance and the State Treasurer has received notification of such compliance from the auditor. All state aid that was forfeited shall remain forfeited and redistributed according to subdivision (a)(i) of this subsection.

(3) If any political subdivision fails to reach compliance within twelve months after the time of the order and notice of delinquency given by the auditor to the State Treasurer, such political subdivision shall be ineligible for future distributions of state aid. Upon reaching compliance, the political subdivision shall be eligible for future distributions of state aid.

The auditor may adopt and promulgate rules and regulations to carry out the Property Tax Growth Limitation Act.