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Comptroller warns Tennessee property tax relief program will exhaust reserves without additional funding
Summary
Comptroller told the Finance, Ways and Means Committee that increased enrollment and current benefit levels will deplete the program's reserves by FY2027 unless the Legislature provides additional funding or changes eligibility; he described how proration would work if funds fall short.
Comptroller Jason Mumpower told the House Finance, Ways and Means Committee that the state's property tax relief program for low-income elderly, disabled residents and 100% service-connected disabled veterans will continue to draw on a dedicated reserve and is on track to exhaust that reserve by fiscal year 2027 unless the General Assembly provides more funding or changes eligibility.
Mumpower said that for fiscal 2025 the office expects to provide about $47,300,000 in tax-relief payments while the current appropriation for the program is $41,200,000. "If you do that math, you can see that in this year, we will use about $6,000,000 of our $20,000,000 reserve to make up the difference," he said, and later warned that at current trends the program will need at least $10,300,000 more in FY2027 to remain solvent at existing eligibility levels.
Why it matters: the property tax relief program serves tens of thousands of Tennessee households and is funded through an annual appropriation plus a contingency reserve. Mumpower said the program is using nonrecurring reserve money to meet recurring obligations and that, if trends continue, the Legislature will face a choice next year to add recurring funding, change eligibility or allow proration to reduce individual payments.
Details from the hearing: Mumpower told lawmakers the office processed about 149,741 tax-relief applications in fiscal 2024. He described the program's beneficiary mix as roughly two-thirds low-income elderly and disabled recipients and one-third 100% service-connected disabled veterans and surviving spouses; he noted that while veterans make up about one-third of enrollees they receive about two-thirds of total payments. The comptroller said enrollment growth had been as high as 14.5% in the most recent year.
Mumpower also explained why the program's cost dipped in the most recent year despite higher enrollment: application of a county-level "sales ratio" in property assessments reduced the amount recipients qualified for in some counties, a technical effect that he described as largely one-time. He cautioned, however, that the sales-ratio effect merely postponed the underlying funding gap into FY2027.
On how shortfalls would be handled, Mumpower said: "the law currently calls for proration to occur. That is to say that we wait until we receive the total number of claims, and then we see how much money is available. And then we prorate the relief that's handed out." Under that scenario, recipients would receive a percentage of their expected relief and, because the program would move from front-end payments to proration, many would have to pay property taxes up front and wait for the prorated reimbursement.
Questions from lawmakers focused on numbers, outreach to disaster-affected homeowners and whether the office anticipates needing more staff. Mumpower said the office does not anticipate additional appropriations for operations this year but emphasized the funding risk to the tax relief program and offered to answer follow-up questions from members.
Looking ahead: the comptroller urged the Legislature to consider the program's trajectory when drafting the FY2027 budget next year and flagged bills already filed that would expand eligibility, which would increase the funding need if enacted.
