From the Executive Director: Week of March 1

Balancing Tax Relief and Funding for Local Services

The Legislature is still slowly moving towards a series of proposals to provide tax relief and fund infrastructure projects. I expect a new tax relief package to be introduced in the next week or two that will reduce income tax rates and provide ongoing funding from the general fund for state and local transportation projects. In addition, there continues to be discussion on how best to provide meaningful property tax relief. What is missing, is a broader discussion on how to fund local services with revenues other than property taxes.

Senate Bill 1108 (limiting local government budget growth) has run into speed bumps on the Senate floor. This has provided IAC with an opportunity to re-engage the legislature on potential alternatives, including transportation funding enhancements, and the possibility of tapping into state sales tax funds, including online sales tax revenues, to provide additional funding to counties that could result in real property tax relief. We are working with legislators to introduce a discussion draft in the coming weeks that would dedicate a greater portion of sales tax to state mandated county proprams. Once a draft is finalized, we’ll get it circulated for everyone’s review.

While IAC is excited to have the discussion, the current likelihood of increasing sales tax distribution to counties is slim, but we’d like to get a proposal introduced to further the conversation. Dedicating sales taxes to counties would allow funds to flow to counties to provide state mandated services while also allowing counties to reduce property tax budgets. In addition, there is also a new effort to introduce legislation to increase the homeowners exemption. Providing more state funds to counties and increasing the homeowners exemption would greatly lessen the impact of Senate Bill 1108.

The next two weeks are shaping up to be important weeks for counties. The Legislature will make important decisions related to transportation funding, tax relief, local government budget caps, and the use of online sales tax funds. Please continue engaging with your legislators and advocating for common-sense solutions to property tax reform.