Ways & Means hears explanation of CLAs and statewide adjustment intended to 'calm the waters' on property tax rates

The Ways & Means Committee heard a technical briefing on property valuation and the Common Level of Appraisal (CLA) on Friday, Jan. 17, as tax department and Joint Fiscal Office staff explained the mechanics and recent statutory changes intended to reduce year-to-year rate swings taxpayers see on bills.

Nut graf: Tax department analyst Jake Feldman and Joint Fiscal Office analyst Julia Richter told the committee that CLAs — a town-level correction comparing grand-list values to recent sale prices — have shifted sharply since the COVID housing market surge, producing wide local variation. The statewide adjustment enacted in last year’s yield bill mathematically aligns the pre-CLA (equalized) rates with post-CLA rates that appear on taxpayers’ bills, the analysts said, while not changing the actual tax amounts taxpayers pay.

Jake Feldman, senior fiscal analyst at the Department of Taxes, described CLAs as “general correction factors applied to every town's education property tax rates to make sure that the town is sending its fair share to the state's education fund.” He said the department’s equalization study compares grand-list values to sale prices over the prior three years and produces the CLA. Feldman explained that towns where listed values lag recent sales have CLAs below 100% and, because many towns saw sales prices rise faster than listed grand-list values during COVID, a large number of towns now show CLAs well under 85%.

Feldman walked the committee through a town-level example for FY25: Kingdom East’s per-weighted-pupil spending was $12,008 and the statewide yield was 98.93; the town of Linden had a CLA of 75.91%. On that basis the pre-CLA equalized rate calculates to 1.3017 and the CLA-adjusted homestead rate taxpayers see on the bill is 1.7148 — reflecting the CLA’s purpose to adjust local listed values to fair market comparators.

Julia Richter of the Joint Fiscal Office explained the recent change lawmakers enacted in the yield bill, the so-called statewide adjustment to the CLA. Richter said the adjustment is an algebraic step the tax department and JFO now perform to bring the equalized (pre-CLA) rate closer to the post-CLA rate that appears on bills by using the statewide average CLA in the yield math. “It doesn't impact the actual property tax rates,” she said; instead, the adjustment changes how the pre-CLA rate is presented so the two numbers are closer and taxpayers and local officials are less likely to see large seeming discrepancies between a district’s equalized rate and the town rate shown on the tax bill.

Committee members pressed on practical effects. Representative Holcomb asked whether large CLA changes from one year to the next will still lead to bill impacts; Richter and Feldman answered that substantial town-level reappraisals or very large, localized changes in value can still produce distributional differences for individual taxpayers, and that CLAs are one of several inputs JFO and the tax department incorporate into yield modeling. Members also asked about differential effects between homestead and nonhomestead classifications in towns with rapid second-home purchases; staff agreed to follow up with additional analysis.

Feldman and Richter told members where to find supporting documents: PVR’s 2024 equalization study (which will affect FY26) and JFO materials with the FY25 tax-rate calculations and frequently asked questions. The committee agreed the CLA mechanics and the statewide adjustment were technical but important topics to revisit, and planned further testimony and modeling work in upcoming meetings.

Ending: Members said they would continue the discussion in coming weeks with follow-up staff analysis on geographic and homestead/nonhomestead distributional impacts and with attention to reappraisals scheduled by individual towns.