Lawmakers split over whether towns should keep excess SWEP funds as court cases loom

Members of the House education committee spent the morning debating multiple bills that would change how the statewide education property tax (commonly called SWEP or “swept”) is treated when a municipality’s local share exceeds calculated adequacy aid.

The committee discussed HB137, introduced by Representative Cordelli, which would allow municipalities to keep excess SWEP funds and spend them on education-related purposes. Representative Spilsbury framed the debate as the opposite approach, noting he had introduced a bill the previous day that would remit excess swept funds to the Department of Revenue Administration (DRA). “I do think it’s a fundamental conversation for the committee,” Spilsbury said, “our hand hasn’t been forced yet, but it’s moving towards the inevitable that we need to call for the excess to be remitted to the DRA.”

Why it matters: the committee heard that roughly $363 million is set as the statewide swept allocation and that current estimates of “excess” swept — the amount above the cost of an adequate education that some municipalities currently retain — are in the tens of millions of dollars. A staff analyst at the Department of Revenue (identified during the hearing as “Mark”) said implementing the remittance approach would freeze the swept allocation and change the benchmark used to calculate state aid; under that approach, some towns that now keep excess swept would no longer receive those excess dollars. Historian Doug Hall noted the SWEP rate was created in 1999 and has changed over time, and that the $363,000,000 benchmark has been used for many recent years.

Positions and concerns: supporters of remittance argued keeping swept in municipal coffers effectively treats a statewide-designated tax as local revenue, which could conflict with court rulings. Representative Damon flagged the legal risk, saying several members expect the courts to scrutinize the current practice. Opponents said remitting excess swept back to the state would force many municipalities to raise local taxes to replace funds they have budgeted as part of their school spending; Representative Fellowes described the SWEP share as a longstanding local contribution and warned that municipalities would need to “fill in” the lost revenue.

Fiscal and legal uncertainty: staff told the committee that current data identify about 43 municipalities with excess swept, totaling roughly $28 million; one staff analyst said that under some proposed changes the number of excess-swept communities could rise (he cited a rough model suggesting the list could grow to about 55 towns). Committee members repeatedly asked for town-by-town modeling and a draft fiscal note; staff indicated they were preparing spreadsheet-level analyses and a draft fiscal estimate for the Legislature’s fiscal office to review.

Next steps: committee members directed staff to produce more detailed fiscal modeling and town-level estimates and to coordinate with the Legislative Budget Assistant (LBA) so the committee can assess the distributional effects of each bill. No formal motions or votes were recorded during the session.

Ending: several lawmakers said they expect the legal questions to remain central — some warned that a court ruling could require a different treatment of swept regardless of legislative action — and the committee scheduled follow-up modeling work before deciding on language to send forward.