HB 5396 — AN ACT LIMITING THE ASSESSMENT OF INTEREST ON CERTAIN DELINQUENT PROPERTY TAX PAYMENTS.

House of Representatives General Assembly FileRaised Bill No.

4495396 February Session, 2024 HouseLCO Bill No.

53962148 HouseReferred ofto Representatives, April 11, 2024 The Committee on PlanningPLANNING andAND DevelopmentDEVELOPMENT reportedIntroduced throughby: REP.

KAVROS(PD) DEGRAWAN ofACT theLIMITING 17thTHE Dist.,ASSESSMENT ChairpersonOF ofINTEREST theON CommitteeCERTAIN onDELINQUENT thePROPERTY partTAX ofPAYMENTS. the House, that the bill ought to pass.

AN ACT LIMITING THE ASSESSMENT OF INTEREST ON CERTAIN DELINQUENT PROPERTY TAX PAYMENTS.

Each HB5396such /notice Fileshall give each date on which such tax shall become due and LCO 2148 1 of 2 Bill No.

4495396 1payable HB5396and Fileeach No.date on which such tax shall become delinquent, and shall state that, as soon as such tax becomes delinquent, it shall be subject to interest at the rate of one and one-half per cent of such tax for each month or fraction thereof which elapses from the time when such tax becomes due and payable until the same is paid.

449 such notice shall give each date on which such tax shall become due and payable and each date on which such tax shall become delinquent, and shall state that, as soon as such tax becomes delinquent, it shall be subject to interest at the rate of one and one-half per cent of such tax for each month or fraction thereof which elapses from the time when such tax becomes due and payable until the same is paid.

Section 1 October 1, 2024, and Section 1 12-145 applicable to assessment years commencing on or after October 1, 2024 PD Joint Favorable HB5396APP /Joint FileFavorable No.LCO 2148 2 of 2

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449 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

None Municipal Impact:

Municipalities Effect FY 25 $ FY 26 $ All Municipalities Revenue Potential Potential Loss Explanation The bill caps the total interest that tax collectors may charge on delinquent property tax at 12% if the collector and assessor jointly determine the delinquency was because of a mistake made by the collector or assessor.

This results in a potential revenue loss to municipalities beginning in FY 25 to the extent the lower interest rate is charged.

Under current law, the interest rate on delinquent taxes is 18%.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the number of property tax delinquencies that are at the fault of the tax collector or assessor.

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449 OLR Bill Analysis HB 5396 AN ACT LIMITING THE ASSESSMENT OF INTEREST ON CERTAIN DELINQUENT PROPERTY TAX PAYMENTS.

SUMMARY Existing law allows municipal tax collectors to waive interest on delinquent property taxes when the collector and assessor jointly find that the delinquency was because of a mistake by one of them and not the taxpayer’s action or failure.

This bill caps at 12% of the principal amount the total interest that tax collectors may charge on these delinquencies if they decline to waive the interest.

It appears the interest rate cap applies regardless of the reasons for the waiver’s denial.

By law, unchanged by the bill, the interest rate on delinquent taxes is 1.5% per month (18% per year).

Presumably, under the bill, tax collectorsmustimpose interestat1.5%permonthuntilreachingthe12% cap.

EFFECTIVE DATE:

October 1, 2024, and applicable to assessment years starting on or after that date.

BACKGROUND Related Bills HB 5171 (File 4), favorably reported by the Planning and Development Committee, requires rather than allows municipal tax collectors to waive interest on these delinquencies and requires the municipality’s legislative body to approve these waivers.

HB 5144 (File 168), favorably reported by the Banking Committee, reduces, from18% to12%,theannualinterestrateonunpaidtaxeswhen a tax collector files a lien on the property and assigns the lien.

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449 COMMITTEE ACTION Planning and Development Committee Joint Favorable Yea 14 Nay 6 (03/22/2024) HB5396 / File No.

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