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Appropriations committee advances H.397 to correct TIF overpayments and authorize education-fund transfers
Summary
The committee approved H.397 as pared down by the senate proposal of amendment; the bill transfers $621,479 from the general fund to the Education Fund to reimburse two municipalities for tax-increment financing (TIF) overpayments and includes a two‑year extension for Barrie’s TIF indebtedness-incurrence period.
The House Appropriations Committee advanced H.397 on May 29 after the senate’s proposal of amendment narrowed the bill and added two sections that transfer money to correct education-fund accountings for two municipalities’ TIF districts.
The senate amendment directs a transfer of $621,479 from the general fund to the Education Fund so the Department of Taxes can reimburse two local jurisdictions for audit-identified overpayments to the Education Fund. The Joint Fiscal Office told the committee $437,028 of the transfer would be paid to the city of Barrie and $184,451 to the town of Milton.
“TIFs are not easy to do,” one committee member observed during the briefing. Tucker Anderson, legislative counsel, described the amendment’s mechanics: the general fund transfer moves the cash into the Education Fund, then an appropriation to the Department of Taxes authorizes the department to cut the checks to the jurisdictions.
Chris Rupp of the Joint Fiscal Office explained why the general fund is used. The amounts were not incorporated into the prior yield calculation and, if left unaddressed, could have put the Education Fund into a deficit next year. Rupp said the transfer draws on a small unappropriated general-fund balance that resulted from delaying the repeal of the telephone personal property tax for one year, and he characterized the action as a one-time accounting correction that “will not have any impact to the budget you all passed.”
The committee also heard that the bill removes several municipal grant and flood-related provisions that earlier drafts had included because those provisions are already in the budget lawmakers passed. The bill retains a provision, requested by the tax department, that delays an effective date to Oct. 1 and includes a request by the city of Barrie for a two-year extension of the TIF indebtedness-incurrence period to allow more time to incur project-related debt.
Members discussed the administrative and software errors that prompted the audit finding and the corrective transfer. One legislative staff member summarized: the transfer and subsequent appropriation are “really just to deal with an accounting correction” after audits flagged insufficient retention calculations for properties within the two TIF zones.
The committee took a straw poll and then voted to advance H.397 as amended; committee staff and members described the net fiscal effect as minimal and one-time. The bill will proceed to the floor with the transfers and the Barrie TIF extension included.
