Property Taxes Take Center Stage; And They Are Still There
This is a brief post on the debate on property tax cuts because the issue is not yet resolved, and clearly won’t be until there are more special sessions over the summer. But to give a context as we stretch into the summer months, the clear consensus among the legislature and leadership is that there needs to be some form of property tax cuts. The amount set aside to pay for the cuts is over $17 billion. But the details are what matters, and where there is no agreement, yet.
The House initially preferred to impose appraisal caps on all property. Similar to the current law limiting the maximum amount of taxable appraised value to 10 percent per year for residential homesteads, the House looked to expand that to apply to all property, not just residential and not just homesteads, and place a five percent annual cap. However, at this time it appears this option has been cleared from the debate stage.
The other broad based tax cut could come in the form of “rate compression.” This is basically when the state pays in more money to local school districts from state coffers so that the local tax rates can be offset and decrease. This policy would impact all real property.
And then the third option, championed along with compression by Lt. Gov. Patrick, is to increase the residential homestead tax credit from the current $40,000 up to $100,000.
On June 20th the Senate passed a new version of property tax cuts. The latest version still includes compression and homestead credit increases and adds a revenue cap on school districts to force them to lower their rates. The Senate’s latest then increases the revenue exemption level for businesses under the state’s franchise tax from the current $1 million up to $2.47 million. But at this time, no word on where the House or Governor’s office are on this latest proposal.
Time, more special sessions, and scorching summer heat outside of the Capitol to match the political heat inside the building will ultimately determine the final alchemy of property tax cuts. But make no mistake, the legislature will not be sent home until cutting property taxes is achieved.