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JFO projects multi-year property-tax pressures; one-time buydowns can shift but not eliminate future increases
Summary
Julia Richter of the Joint Fiscal Office showed scenarios in which Education Fund uses growing faster than nonproperty revenues would require property-tax increases of roughly 13% (FY27), 7% (FY28) and 4% (FY29) absent buydowns; using $105 million in one-time general fund money smooths or delays increases but creates larger follow-on pressure without additional one-time revenue.
The Ways & Means Committee heard a multi-year analysis of Education Fund growth and scenarios for using one-time general fund money to reduce property-tax bills.
Julia Richter of the Joint Fiscal Office presented charts and a set of assumptions to show how Education Fund appropriations have grown and how different uses of $105 million in one-time general fund money would affect aggregate property-tax collections. Richter emphasized the analysis is illustrative and relies on specific assumptions: a 5% annual growth in Education Fund uses (based on a 10-year trend), the consensus nonproperty revenue forecast, and no future one-time general-fund transfers, reversions into the Education Fund, or major policy changes such as impacts from Act 73.
Under Richter’s baseline scenario with no buydown, the model estimates aggregate property-tax collections would need to rise about 13% in FY '27, about 7% in FY '28 and about 4% in FY '29, partly because FY '26 included a $118 million one-time buydown that reduces the base for comparison. Richter said, “buying down property taxes using 1 time money puts upward pressure on future year property tax changes,” and that absent further one-time funds a substantial spike would appear in a subsequent year.
She presented three policy permutations: reserving two-thirds of a $105 million transfer and using one-third for homestead relief in FY '27 (column H), using one-third uniformly for homestead and nonhomestead relief (column G), and using one-third split between homestead relief and a one-time increase in the existing property-tax credit (column I). Under column H Richter reported an average homestead bill increase of about 7.3% and nonhomestead average bills rising about 11.9%. Column G returned a roughly uniform average bill increase of about 9.8%. Column I showed homestead and income-yield average bill changes near 9.6% and a 13% increase in the property-tax credit amount in the modeled year.
Members asked about capital-project timing (for example, Colchester bonds), the sustainability of general-fund transfers, and how reserve accounting affects reported totals. Richter acknowledged that a flat 5% growth assumption does not capture project-specific repayment timing and that the office does not forecast general-fund sustainability. She also explained that setting aside $69.9 million into a tax-rate offset reserve and filling the stabilization reserve accounts for the difference between total sources and allocations in the models.
No formal policy decisions or votes were taken during the presentation. Committee members signaled they will need to make choices in the coming week about whether and how to use one-time funds, how much to reserve, and whether to pursue policy changes that affect the multi-year trajectory of property taxes.
