Ways & Means reviews Ed Fund outlook after $30M downward revision and models $10M tax shift

Julia Richter presented the committee’s updated Education Fund outlook, telling members that newly submitted district budgets have reduced projected education payments by about $30 million from the December 1 projection and that this revision is the primary data change since last week’s modeling.

Richter walked the committee through several model columns the chair requested. She explained one scenario that permanently reassigns $10 million of purchase-and-use tax to the Transportation Fund while using an offset from meals-and-rooms tax to replace it, and she modeled alternative uses of a one-time general-fund transfer (approximately $104.9 million) to blunt FY27 property-tax increases.

“Because budgets have come in lower than forecasted in the December 1 letter,” Richter said, “the average bill change would be 10.1%” under the baseline modeled scenario. She showed a one-time full buy-down scenario that would lower the FY27 average increase to about 3.8% but cautioned that such a buy-down pushes unresolved costs into FY28, producing higher year‑after increases if no other changes are made.

Other modeled permutations included using one-third of the one-time transfer in FY27 and holding two-thirds in reserve (producing roughly an 8% average bill increase in FY27), directing one-third solely to homestead taxpayers (about 5.4% average homestead increase while non‑homestead stays near 10.1%), and splitting the one-third to both lower homestead taxes and increase the property tax credit (a modeled 13% increase to the tax credit, yielding a roughly 7.7% average homestead increase before factoring the credit).

Members asked which consumption tax is more stable year to year; Richter said Ted Barnett (consumption-tax specialist) would be invited back to address volatility of purchase-and-use versus meals-and-rooms tax receipts. Representatives also asked for town-by-town spreadsheets and for clarification on who would benefit from property-tax-credit changes; Richter said expanding eligibility for credits already earned would require new data collection and statutory changes to affect FY27 bills.

The committee scheduled follow-up with tax experts and asked agency staff to return with more granular district and revenue volatility data before deciding whether to adopt any of the modeled approaches.

No formal votes were taken during the session; the committee paused for a brief break and set next steps for additional testimony and analysis.