Tax commissioner: December 1 education-tax outlook points to about 5.9% average property-tax increase

Tax Commissioner Craig Boelio told the House Ways and Means Committee that the statutory December 1 “education tax rate” letter projects an average increase in property tax bills of about 5.9% if the December 1 yields were implemented.

The commissioner described the December 1 product as a legally required, formulaic forecast prepared in consensus with the Joint Fiscal Office (JFO), the Agency of Education and other state fiscal staff. "I think legally, it's called the education tax rate letter, but I'm not a lawyer, so I call it the December 1 letter because it needs to be published by the tax commissioner by every December 1," Boelio said. He said the math portion of the letter is consensus-driven and prescribed by statute.

Why it matters: the projected increase is driven mainly by an estimated 6.1% rise in education spending — about $115,000,000 on the JFO table — and by the fact that last year’s package of one‑time resources that lowered rates (which the parties described together as roughly $69,000,000) is not fully available this year. "If the rates that are projected go into effect, that would be an average increase in property tax bills of 5.9%," Boelio said.

JFO analyst Julia Richter told the committee the $69,000,000 figure reflects a mix of prior-year unreserved unallocated funds, a $13,000,000 tax-rate offset reserve and a $25,000,000 general‑fund transfer made in the most recent yield bill. "The commissioner was correct with respect to that 69,000,000," Richter said. JFO also reported a forecasted Education Fund surplus of about $33,000,000 for fiscal year 2025, a smaller amount than the one‑time resources used the prior year.

How the numbers are produced: Boelio and JFO described the technical process as a yield model that combines town-level grand‑list data, school district budgets, pupil counts and weights, and consensus non‑property revenue forecasts. The model solves for the homestead and non‑homestead yields necessary to fully fund the Education Fund under the statute’s assumptions. Boelio said the law prescribes the method, limiting discretionary adjustments. The tax commissioner and JFO emphasized the December 1 outlook is a snapshot and that numbers typically change during the session as new budget and revenue data arrive.

Volatility drivers and recent changes: Boelio explained that a statutory change in the most recent yield bill introduced a statewide adjustment tied to the statewide common level of appraisal (CLA) to reduce volatility between equalized pre‑CLA rates and final rates on tax bills. "The purpose of the statewide adjustment...is now it's not we're not bringing property values up to 1 on the CLA. It's instead up to what the statewide average is," he said, noting the statewide CLA figure discussed in the meeting as roughly "2072 and change."

What could change the outlook: committee members asked about possible revenue softness, school budget behavior, and the governor’s statements about using one‑time surplus money to limit tax increases. JFO and Boelio said weaker non‑property revenues or higher-than‑expected school budgets would require either more property tax revenue (i.e., higher yields) or increased use of one‑time general‑fund transfers or other policy choices. "If the non property tax revenues came in a little softer, then that would necessitate...an increase in the property taxes to make up that shortfall," a JFO staff member stated.

On the question of whether the yield includes conservative adjustments for likely district reactions (for example, districts raising budgets if rates are bought down), JFO said the December 1 outlook reflects the best available current information and not speculative guesses about future district behavior. "This is reflecting the best available information that we have right now," said staff member Alyssa Mullins.

Related items: committee members raised tax‑expenditure issues such as tax increment financing (TIF) and current‑use exemptions. JFO staff said they would follow up with the detailed line items and expected separate testimony later this session on tax expenditures taken out of the Education Fund.

Next steps: Boelio and JFO highlighted that the revenue forecast by the consensus economists (the “E Board” forecast) will be updated next week and that JFO will publish updated Education Fund outlooks about every two weeks as new AOE budget submissions and updated revenue forecasts arrive. Committee chair Representative Emily Forteiser closed the session by reminding members that the December 1 letter is intended as a starting point for school boards, the governor and the legislature rather than a final determination.

No formal votes were taken during the committee’s half‑hour session; staff indicated additional hearings and data updates are scheduled in the coming days.