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Comptroller seeks $50.4M to boost disabled‑veteran property tax reimbursements; senators warn of spiraling costs
Summary
The comptroller requested an additional $50.4 million to increase local reimbursements for disabled‑veteran property tax exemptions (on top of $19 million in the base) to restore a prior 77% replacement level; LBB did not include the request and senators raised concerns about eligibility growth and escalating costs to local governments.
Comptroller Glenn Hager told senators the agency requested an additional $50.4 million in the 2026–27 biennium to increase reimbursements to local governments that lose property tax revenue because of state‑authorized disabled‑veteran exemptions.
Hager said the requested $50.4 million would be added “on top of the $19,000,000 currently in the base” with the goal of restoring the program to the original 77% replacement level for affected local revenue. He suggested that at the program’s inception the appropriation replaced roughly 77% of exempted revenue but that due to growth in qualifying exemptions the program currently replaces roughly 27% of local revenue, and that local requests have risen from about $11 million in 2020 to roughly $35 million in 2024.
LBB staff told the committee the increase for disabled‑veteran assistance payments was the principal exceptional item not included in the LBB recommendations. Committee members asked how the program is administered and how funds are distributed; the comptroller’s office said distribution is pro rata among qualifying local governments and noted the existing pool would not be brought to 100% reimbursement by the requested funding — the request would restore reimbursement to the original 77% target for the current pool of eligible local entities.
Senators pressed on growth in the number of qualifying jurisdictions and applicants and warned the program’s cost has grown quickly; several members suggested policy options such as capping benefits, phasing benefits by home value, or otherwise tightening eligibility or apportionment to limit future biennial growth. Comptroller staff said historical appropriation last year was $9.5 million, the locals’ requested total was $34.7 million and that the appropriation funded roughly 27.4% on a pro rata basis for that cycle — figures the comptroller’s office said it would confirm and provide in writing.
Why it matters: the program shifts fiscal burden to local governments when state reimbursement does not match exemption growth. Senators signaled interest in examining eligibility metrics, pro‑rata distribution methods and whether the program should be capped or otherwise restructured to avoid runaway biennial cost increases.
The comptroller and LBB agreed further discussions are needed; LBB said it had not included the requested increase in its recommended package.
