Ways and Means Committee adopts revenue summary, advances multiple tax changes and funding transfers

The Ways and Means Committee adopted a revenue summary sheet and voted on a series of tax and revenue items affecting the state’s general fund, transportation trust fund and several targeted credit programs, concluding with a favorable report on House Bill 352 as amended.

The summary presented by a Department of Legislative Services analyst outlined a package of revenue changes that would, among other provisions, accelerate the reduction of the film production activity tax credit cap to $12,000,000 beginning in fiscal 2026 and permit local jurisdictions to raise the maximum local income tax rate from 3.2% to 3.3% if they choose. It also directs new and modified transportation-related charges into the Transportation Trust Fund, including higher vehicle excise and registration fees.

Why it matters: The actions alter revenue flows to major state funds and shift some costs and program caps that can affect counties, vehicle owners and higher-income taxpayers differently. Several adopted items redirect or cap funds that previously were dedicated to specific programs.

Key provisions and fiscal details

- Film production credit: The committee accelerated a decline in the production activity tax credit cap so it is capped at $12,000,000 beginning in fiscal 2026 rather than 2027. The analytic summary noted the cap had been scheduled to decline already; the change moves that date up by one year.

- Transportation funding and vehicle levies: The package would raise the vehicle excise tax from 6% to 6.8%, with an estimated generation of about $158,000,000; increase registration testing fees under the Vehicle Emissions Inspection Program (VEEP) to a maximum of $30; make short-term vehicle rentals subject to a 3.5% excise tax (estimated $47,000,000); and double certificate-of-title fees from $100 to $200 for most vehicles (estimated $80,000,000). The Transportation Trust Fund was identified as a recipient of several of these amounts.

- Historic vehicle tag: The proposal would tighten eligibility for historic vehicle tags so only pre-1999 models qualify; vehicles currently tagged between the prior threshold and that date would no longer qualify for the historic designation unless otherwise grandfathered (the committee record shows no grandfathering provision was adopted).

- Income-tax structure and local option: The proposal restructures income tax brackets and increases the maximum allowable local “piggyback” income tax cap from 3.2% to 3.3%, an option that local jurisdictions may or may not adopt. Committee discussion noted that any locality that adopts the higher local…