HB 7109 - Local Business Taxes Summary

• Establishes three standardized business classifications based on floor space: less than 2,500 sq ft, 2,500-10,000 sq ft, and more than 10,000 sq ft, effective October 1, 2014.

• Requires counties and municipalities to apply tax rates where the middle classification rate is 100-300% of the smallest classification rate, and the largest classification rate is 100-300% of the middle classification rate.

• Limits new revenue from the revised rate structure to 5-10% above the prior fiscal year's revenue base, with requirements to refund excess revenues on a pro-rata basis to taxpayers.

• Authorizes municipalities and counties to periodically increase or decrease tax rates by up to 5% beginning in fiscal year 2016-2017, with rate increases requiring a two-thirds vote of the governing body.

• Provides transition provisions allowing existing business taxes to continue under prior rules until September 30, 2014, with exceptions for jurisdictions with pledged revenues for bonds or those where business taxes comprise at least 20% of local tax revenue.