Tax department flags missed salary adjustment, IT costs and property-tax credit funding in budget hearing

Brian Croches, tax commissioner, and Sherry Anderson, the office's chief fiscal officer, told the House Appropriations — Government Operations Division that their base budget did not reflect a 4% cost-to-continue salary adjustment set for July 1, 2024 and that correcting that omission would add about $3,162,000 (with fringe) to the next biennium.

"The cost to continue ... the 4% increase ... was not included in our budget base that came out from OMB," Anderson said, and she told the committee the agency estimated that missing cost at about $3,162,000. Anderson also said a separate line item for NDIT (state IT) cost increases totals roughly $358,321 on the tax department's worksheet and that an additional roughly $68,000 would be needed for extra servers to support growing digital filings. "That is purely all going right back to another state agency, NDIT," she said of the IT amounts.

Members questioned an array of items on the tax office long sheet. The committee discussed a requested FTE for an information-services position tied to a separate proposal to build an online property-tax portal; the Armstrong administration's budget did not include the FTE and members instructed the department to await the outcome of Senate Bill 2166 (the portal proposal) before adding the position. Croches said the $5 million appropriation proposed in the other bill would pay for system work, not a salary, and that an FTE would be needed only if the portal work required dedicated ongoing management.

The department also described the status of property-tax relief programs the Legislature has expanded. Croches said the office handled about $72.4 million for homestead credits in the current biennium and that changes enacted in the last session increased program demand; the department requested roughly $41 million for future homestead expenditures and asked for $22 million for disabled-veteran credits in the next biennium. The commissioner's office warned the committee that multiple bills being considered (including House Bill 11.76 in the transcript record) could affect total appropriations and that the department's funding and staffing needs could grow substantially if lawmakers enact further expansions.

Committee members raised recruiting challenges inside the department; Croches said a recent advertising push for auditor positions produced few applicants despite posted salary ranges.

The division did not take a final vote on the tax department's budget during the discussion recorded in the transcript. Members indicated several items would be checked and possibly marked "question mark" on the long sheet for follow-up; staff said they would return an updated long sheet that incorporated committee direction. Members also noted that some appropriations tied to bills (for example, the comprehensive portal request) will be resolved by the outcome of separate bills and that final budget reconciliation will occur later in the session.