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JFO preliminary: prorated LUCT valuation change could lower revenue by about $900,000; affordable‑housing exemption impact unclear
Summary
Tim Burnett of the Joint Fiscal Office said reverting to an acreage‑pro rata valuation method for LUCT could reduce annual LUCT revenue by roughly $900,000, with an uncertain but likely smaller additional effect from an affordable‑housing exemption.
Tim Burnett, analyst with the Joint Fiscal Office, presented a preliminary fiscal review of House Bill H.134 and said reverting to a prorated, acreage‑based method for valuing withdrawn acreage could reduce statewide land‑use‑change tax (LUCT) revenue by roughly $900,000 under current‑withdrawal patterns.
Burnett said the JFO compared pre‑2015 valuation practices (a prorated, acreage‑based approach) with post‑2015 practice and found a substantial increase in LUCT revenue per acre after the 2015 valuation change. Using that historical difference and inflating earlier values to current dollars produced a preliminary estimate that average revenue per acre under the prorated method would be about 55% of revenue per acre under the current method, which he applied to FY2024 LUCT collections to estimate a roughly $900,000 revenue loss (about $500,000 to the education fund and $176,000 to the general fund in Ballpark figures presented).
Burnett flagged this finding as preliminary and said he will consult the Department of Taxes to confirm assumptions and confidentiality constraints in parcel‑level data. He emphasized the administrative simplification rationale: prorating by acreage reduces Department of Taxes’ appraisal burden when owners withdraw portions of larger enrolled parcels rather than treating withdrawn acreage as a separately appraised parcel.
Nut graf: Burnett also reviewed a second component of H.134 that would exempt certain withdrawals for affordable housing within geographic buffers (for example, parcels within 3 miles or within 0.5 miles of designated areas). He presented parcel‑count ceilings: roughly 8.5% of enrolled parcels intersect a 3‑mile buffer, but he cautioned that this is an upper bound; additional exemption requirements (affordability tests, road‑frontage requirements and the share of withdrawn acreage actually developed as affordable housing) would substantially reduce the likely revenue impact.
Burnett said available proxies suggest the exemption’s revenue impact may be much smaller than the valuation‑method change once all eligibility conditions are applied, but he did not present a final dollar estimate pending better data on the prevalence of affordable development on withdrawn parcels. He warned the committee that parcel counts are not a direct measure of revenue impact because parcels closer to population centers are often more valuable and therefore generate a disproportionate share of LUCT receipts.
Ending: Burnett recommended further work with the Department of Taxes to refine estimates and said confidentiality of taxpayer data may limit how much parcel‑level detail can be publicly reported. The committee paused for a break and scheduled follow‑up analysis.
