From the Executive Director: Week of March 15

15 Mar 2021, by Seth Grigg Share :

As we head down the homestretch of the legislative session, county officials must stand vigilant and be prepared to reach out to their legislators. The legislature has set a target date of March 26 to wrap up (most) of their work. I say most, because unlike in previous years, the legislature is poised to recess rather than adjourn. The recess could be a few weeks or a few months. It all depends on how quickly the US Treasury is able to issue guidance on how American Rescue Plan funds can be spent. This includes a new wrinkle related to tax relief. Regarding state revenues, the American Rescue Plan includes language which appears to prohibit a state from using American Rescue Plan funds to directly or indirectly offset state revenues resulting from a change in law. States will also be required to report on state revenues and expenditures. This may preclude the state from reducing income and sales tax rates. The act does not appear to impact the ability of locals to backfill lost revenue due to tax relief efforts. As such, we may see attempts to reduce revenues to counties. This may bleed into discussions on property tax relief.

Here is what we know about ongoing property tax reform efforts:

  • The House introduced a measure last week to authorize the formation of another interim committee focused on property taxes. We anticipate the interim committee to take a closer look at the assessment process, urban renewal, and forgone property taxes.
  • There currently aren’t enough votes to advance Senate Bill 1108 out of the Senate. Senate Bill 1108 has once again been referred to the Senate’s 14th Order for possible amendments. If amended, it will be for the second time. While IAC has not seen the potential amendments, it’s our understanding that amendments will result in local governments being able to budget a higher percentage of new construction than is currently allowed in the bill. Currently, S1108 caps new construction at 75% except for new construction associated with the termination of a revenue allocation area which is capped at 50%. It is likely that the amended cap will be around 80% of new construction, including new construction associated with urban renewal. The new amendments should be made public in the next few days.
  • IAC has circulated the concept approved by the membership last year which would cap annual budget growth at 5% in jurisdictions with limited growth and CPI plus full new construction in jurisdictions with robust growth.
  • IAC is making progress with both the House and Senate on reasonable property tax reform efforts. While some reform may happen this year, most is expected to occur over the interim and into next year.

As we enter the final weeks of the session, I expect to see action on legislation related to more than just property taxes. The legislature is poised to take action on transportation funding, elections, the county indigent program, and health district funding. As the game clock winds down, please keep an eye on your inbox as IAC will be sending our regular updates and alerts. Please don’t hesitate to reach out to me with any questions or concerns.

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