Senate committee reviews Tax Department budget; questions on PRC administration funding and Gentax costs

The Senate appropriations Government Operations Division examined the Department of Taxation’s budget (House Bill 106) in a detailed staff presentation and subsequent questioning. Committee members and department officials discussed multiple operating pressures and optional requests, including vendor costs for the GenTax software, potential administrative funding for a primary residence credit (PRC), a salary equity package, and shifts in homestead and disabled veterans tax-credit appropriations.

Adam (department staff) walked the committee through differences between the executive (Armstrong) and House versions of the budget, noting few differences at the top-line items (salary, health insurance, and vacancy pool funding) and identifying several areas where the House and executive diverged. Sherry Anderson (chief fiscal officer) and Tax Commissioner Brian Croches answered member questions.

Key figures and requests discussed: - PRC administrative funds: The tax department has an outstanding request for $1,500,000 to develop and administer a PRC-style program (software development, marketing, estimated programming costs). That amount appears in fiscal notes for related bills but is not yet appropriated in the House budget; committee members discussed whether to include the amount in HB 106 or leave it to a standalone bill and then provide administrative funding later. - Equity package: The department requested $511,000 in equity pay adjustments to address pay gaps for certain classifications; that request was not included in the House version and remains under consideration. - GenTax vendor and IT costs: GenTax vendor (Gentax) increase was described as roughly 10%; NDIT IT rate increases were described as roughly 25% in some areas. The department said they negotiated vendor rates down from higher proposals. - Homestead and disabled-veteran tax credits: The committee reviewed base appropriations and projections. The homestead tax credit appropriation in the base was reported as $72.4 million, with the House reducing about $11.8 million (reflecting updated projections; the department projects actual biennial need around $40–41 million). The disabled-veteran tax credit baseline was discussed (base numbers given in testimony and the possible impact of Representative Pyle’s bill to change thresholds, which could add approximately $7.4 million). - Matching/grant language (House Bill 1591): The committee had previously adopted an amendment cutting a proposed appropriation and adding match language. Members asked whether in-kind contributions might be inflated and said they expected department guidelines to set valuation rules.

Committee members asked staff to prepare draft amendments and long‑sheet adjustments that would (a) add the $1.5 million PRC administrative funding to the budget as either one-time or ongoing, (b) show the effect of the $511,000 equity request, and (c) reflect NDIT/IT rate increases. Members noted the practical difficulty of pre-funding PRC administration before policy certainty; staff recommended a conservative approach (include one-time funding now or await the vehicle bill), and the committee discussed contingency options.

Several members emphasized procedural flexibility: the tax department already has some authority to transfer funds between homestead and disabled-veteran line items; the department requested that, if the PRC becomes a new funding source, the budget include transfer authority or line-item flexibility to avoid deficiencies. The committee recessed at the end of the tax-department segment to continue other business.