Senator proposes single property tax rate with vacancy surcharge; committee to study implementation

At a committee meeting, a state senator outlined a proposal to move to a single property tax rate for commercial and residential property and to add a surcharge tied to vacancy, saying the approach would tax behavior rather than property type.

The senator said the idea is to set one uniform rate and then “change how you tax different behaviors and specifically get at vacancy,” arguing the change would reduce incentives to leave housing or commercial space unused. The senator described adapting mechanisms used in last year’s property transfer tax—homestead declarations and landlord certificates—as possible ways to identify nonresidential or nonprimary-use properties.

Committee members asked how the plan would handle avoidance tactics, such as creating low-rent leases or shell LLCs to appear occupied. Staff noted enforcement would likely involve assessor/lister observation on vacant storefronts and reliance on documentation already used for the property transfer tax. The senator acknowledged the system will have “flaws in every system” and that some subjectivity (for example, habitability determinations) will remain; habitability issues were described as a basis for some exemptions.

Speakers also cited early revenue signals from last year’s property transfer tax change: administrators said the transfer tax produced more revenue than forecast, which the senator offered as an indication that many property owners complied rather than attempt evasion. The senator said landlord certificate participation was above 90% during that implementation year and noted narrow exemptions were created for seasonal or remote recreational properties (described in the discussion as about 10% of the second-home market).

Committee direction was procedural: the sponsor asked staff to produce written materials and charts, to coordinate with tax department staff (named in the meeting as Kirby and Ted), and to return for further consideration. No formal motion or vote was taken.

The discussion addressed multiple implementation questions the committee will need to resolve before advancing any statutory change: how to define vacancy for commercial buildings versus residential units, how assessors would detect and document vacancy, whether landlord certificates and homestead declarations provide a legally robust mechanism, and how habitability exemptions should be defined. Members requested additional language and fiscal detail before the committee takes further action.