Joint Fiscal Office: December 1 letter projects 11.9% average property-tax-bill increase; yields bill, one-time funds and reversions will shape final rates

Julia Richter, of the Joint Fiscal Office, told the Ways & Means committee that the office's December 1 forecast estimates statewide education spending growth of 5.8% and, under statutory modeling rules, an estimated 11.9% average increase in property-tax bills for the coming fiscal year.

The December 1 letter, Richter said, contains two parts: the mandated forecast JFO prepares in consensus with the Tax Department and Agency of Education, and a separate policy commentary from the Commissioner. "The estimate is that the average property tax bill would increase by 11.9% compared to FY '26," Richter said, noting that the forecast produces potential impacts and that final rates depend on later policy choices.

Why the difference between a 5.8% rise in education spending and an 11.9% average bill change? Richter and committee members explained several factors: prior-year one-time buys that lowered the base for comparison, statutory requirements to model use of education-fund surplus and reversions as uniform buy-downs, changes in equalization and the statewide CLA, and other policy choices made during the yield-bill and budget processes. "We have to assume all education fund surplus and reversion" in the statutory modeling, Richter said, and the December 1 exercise used an estimated $21,000,000 in unallocated/unreserved funds to lower property taxes in the model.

Committee members asked about options to reduce the modeled increase. One suggestion is an executive general-fund buy-down contained in a budget adjustment; the presenters said those decisions are policy calls that typically are finalized in the yield bill and related budget votes. Richter emphasized that the December 1 letter does not assume additional executive transfers beyond the statutory inputs: "If we were to be booking any additional general fund money in FY '27, this is where that would show up," she said, referring to the outlook's place to record one-time transfers.

The committee also pressed for more granular data. Members requested a district-level distribution of per-weighted-pupil spending so they can see which districts have the highest and lowest per-pupil figures and how that distribution interacts with tax-rate changes. Richter said JFO economist Ezra Holban compiled a document listing the principal inputs and assumptions used in the December 1 modeling and that it is posted on the committee page to increase transparency.

On equalization and CLAs, Jake Feldman of the Tax Department explained the ongoing equalization study for FY27: "It looks like fair market value is growing, but not as much as the last couple of years," he said, which influences CLAs and the way statewide adjustments change local bill swings. The discussion noted that even strong grand-list growth does not automatically raise total tax bills if the amount of money required from property taxes does not change.

Members raised other modeling needs. A bill to move school-based Medicaid under the Agency of Human Services was discussed; a committee member asked JFO to model potential fiscal impacts. The committee also planned a separate session to review the CHIP implementation.

Richter detailed other numbers embedded in the Outlook: reversions of about $13.2 million are being booked back into the Education Fund (with roughly $9.8 million from special education), and a one-time general-fund transfer of about $77.8 million was used in FY26 to reduce property taxes but is not assumed in the FY27 December 1 baseline. Finally, Richter said the December 1 modeling fills the stabilization reserve to the statutory 5% and noted the Ed Fund bottom line in the Outlook is near $820,000.

The committee requested follow-up analysis, including district-level per-pupil spending comparisons and modeling of the school-based Medicaid bill's fiscal implications. JFO said it will continue to update the Outlook as the Emergency Board and economists release updated non-property revenue forecasts and as more district budget inputs arrive. The yields bill and any additional buy-down decisions will be addressed in the coming committee sessions and in the yield-bill drafting process.