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Joint Fiscal Office outlines pilot special fund uses and growth as more towns adopt local option tax
Summary
JFO told the House Transportation Committee that pilot special fund expenditures in FY26 exceed estimated revenues, drawing down the fund balance, but projected FY27 revenues may roughly align as more municipalities adopt local option taxes; the briefing detailed line items that include general pilot payments, correctional facility supplements and one-time projects.
The Joint Fiscal Office on March 17 briefed the House Transportation Committee on the pilot special fund that receives a share of local option tax revenue and pays municipalities under the long-standing pilot program.
JFO staff explained how the fund is used and what is projected for FY26–FY27: the general pilot payments to municipalities (calculated from assessed values of state-owned buildings and multiplied by a town’s CLA) have an appropriation of $12.2 million in the current budget construct; correctional-facility pilot payments remain a long-standing $40,000 line item; and several one-time appropriations (telecom valuation contractor, municipal buyout stabilization, disaster-support funds) were included in FY26 appropriations.
Why it matters: the pilot special fund finances guaranteed payments to towns and several other statutory line items. JFO estimated FY26 revenues at about $14.9 million against expected expenditures near $16.7 million, reducing an opening fund balance of $15 million to roughly $13 million at fiscal year end. JFO said adding municipalities that recently adopted a 1% local option tax should lift FY27 revenue estimates to about $16.2 million.
Key details: JFO described how the general pilot payment is calculated and why the appropriation differs from final payments, noting that actual FY26 payments were slightly lower than the $12.2 million appropriation. The telecom valuation project is a one-time $500,000 appropriation to build a municipal valuation model for communications property; the municipal buyout stabilization program was budgeted with a $1 million appropriation but expects modest FY26/use in early years as properties move through FEMA buyout processes.
Participation trend: committee members and JFO noted recent growth in municipal adoption of local option taxes — Josh Hanford told the committee the change allowing adoption by voter initiative led to more towns signing on, with seven added in year one and 13 added in the most recent cycle.
What happens next: JFO agreed to provide more granular town-level revenue and payment mechanics on request; members asked for clarification on recurring versus one-time appropriations and the timeline for the telecom valuation contract and reappraisal payments.
Ending: The committee thanked JFO staff and moved to a subsequent briefing on purchase-and-use tax allocations and proposed T-bill language.
