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Informational: state CAFA deposits fall while county assessment costs rise, DOR official tells committee
Summary
A Department of Revenue official told the Senate Finance and Revenue Committee that County Assessment Function Funding Assistance (CAFA) deposits — funded by recording fees and delinquent tax interest — have declined while county assessment and taxation (A&T) costs have increased, leaving CAFA covering a smaller share of costs.
State officials told the Senate Committee on Finance and Revenue in an informational session April 16 that deposits to the County Assessment Function Funding Assistance (CAFA) account have declined from earlier peaks while county assessment and taxation costs have steadily increased, shrinking the program’s ability to cover county A&T expenses.
Bo Olin of the Department of Revenue explained that CAFA was created in 1989 to help counties finance property assessment and taxation. The two primary revenue sources are a portion of county recording fees and interest on delinquent property taxes; up to 10% of CAFA funds may support central assessment of utilities and large industrial property, Olin said.
Olin provided recent figures: delinquent interest statewide has been roughly $12 million to $16 million annually; recording fees have varied with the mortgage and real‑estate market (about $12 million in a peak year and roughly $4 million in a recent low); total CAFA deposits in the most recent year were about $18 million. He said county A&T costs have risen about 4.5% per year over the past five to ten years.
As a result, the share of county A&T costs covered by CAFA falls: Olin said the account now funds about 15% of those costs on average, down from a substantially higher share during earlier decades when legislative appropriations supplemented CAFA.
Olin described the grant process: counties remit portions of their recording fees and delinquent tax interest to the state CAFA fund; the Department of Revenue reviews preliminary county A&T budgets against a staffing model and certifies budgets it finds adequate. If DOR deems a county budget inadequate, the department negotiates changes with the county before certification, he said.
Committee members asked whether falling recording fees reflect mortgage and refinancing cycles; members and Olin noted that the 2020–21 refinancing boom increased recording fees then, and current higher interest rates have reduced them. Members discussed options, including possible legislative appropriation to CAFA; Olin noted House Bill 3518 carries appropriation language and that committee consideration of options is expected.
The session was informational; no committee action was taken.
