Reverse Referendum Bill Impacts Local Government General Levy Authority

If a city increases its levy, voters would be able to trigger an election via a reverse referendum petition.
(Published Mar 13, 2017)

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A bill that would impact city referendum elections related to finance was considered by the House Government Operations and Elections Policy Committee last week.

The bill, HF 654 (Rep. Steve Drazkowski, R-Mazeppa), would restrict most city, county, and school referendum elections related to finance issues to the November general election. It would also create a new reverse referendum process whereby voters could challenge levy increases by city councils and county boards.

The bill was referred to the House Education Finance Committee for its next hearing, but will likely end up in the Taxes Committee for possible inclusion in an omnibus tax bill.

Voters allowed to challenge levy increase
Under section 10 of the bill, the general property tax levy of cities over 500 in population and counties would be subject to a reverse referendum process if the property tax levy increases from year to year. Given the annual cycle of the property tax system and the timing necessary for the system to function, the reverse referendum would actually be triggered in the following year.

For example, if a city decides this December to increase its levy for 2018 over its levy in 2017, voters would be able to trigger an election via a reverse referendum petition signed by 10 percent of those voting in the last general election. The petition for the referendum would be required to be filed by June of 2018.

If triggered, the election would be held at the November 2018 general election, which would be during a city’s 2019 budget and levy-setting process. In addition, a city would be prohibited from issuing any new debt from the time a petition is filed until the referendum in November.

If voters vote “no,” the city’s maximum levy for 2019 would revert to the 2017 levy. The calculations allow a city to cover any increase in debt levies above the 2017 levy level.

Affects a city’s budget process
The League testified in opposition to the bill indicating that the reverse referendum process would make budgeting very difficult. The process could also be confusing for citizens since the levy increase that triggered the reverse referendum would be the increase in the previous year.

The League also indicated that, similar to levy limits, including a reverse referendum process could distort local government levy decisions. For example, the 61 cities that reduced their levy for the 2017 budget might be more hesitant to reduce the property tax levy in the future if a subsequent increase in the levy could be challenged via reverse referendum.

November general election requirement
The bill would also modify most local referenda requirements to eliminate any authorization to hold an election as a special election. The one exception would be an election requirement related to a response to a natural disaster or emergency. This requirement would impact cities, counties, and school districts; however, the general election requirement would not extend to special elections to fill vacant seats.

A recent tally provided by the Office of Secretary of State on local special elections indicated that most city referenda are held at the November general election. By far the largest “users” of special elections are school districts.

School officials testified in opposition to the November general election requirement. The League also testified that the November general election requirement would reduce the flexibility of a city to respond to issues needing voter approval.

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