The Senate Finance Committee reconvened on Wednesday to review their changes to H.492, which sets the annual property tax rate calculation. The draft changes would decrease the income yield to $17,537 and the property value yield to $15,443. It’s worth noting that decreasing the yield will increase local tax rates. The non-homestead property tax rate would be increased from $1.388 to $1.391.
The last change was reducing the property tax rate offset reserve from $22M to $13M; these funds were intended to reduce property tax increases in future years.
Based on these changes, property tax payers can expect a $4.06% increase, on average, in their bills for FY2024.
Legislative Counsel and Jake Feldman (Senior Fiscal Analyst, Tax Department) noted that there were 16k households who applied for the income sensitivity credit but actually paid less based on their property value than based on income. An additional 10% of households would be eligible but did not apply for the credit.
Senator Chittenden brought the conversation back to their goals. He noted that they had originally been told that the concept was 80% of taxpayers would pay based on income and it seemed to him that they should try to get back to that.
Legislative Counsel reminded the Committee that there was no single number they could play with to get to that. The current income sensitivity program only covers the first $400k of property value up to $90k of household income, at which point it drops to $250k of property value. There is also a trail-off of the income percentage past that $90k income mark as well. Essentially, this means that homeowners are paying the regular property tax rate for any value above the threshold ($400k or $250k).
After much discussion over possible solutions, no clear solution emerged. The Committee agreed they would not take action on this topic this year.
The landed on the Senate Floor Friday. Senator Cummings introduced the bill by saying that this was “one of the least controversial and smoothest yield bills she had ever done.” She noted that the House had set aside $22M to buy down property tax rates next year. The Senate took the bill and “subtracted” universal school meals and another $9.1M for a one-time true-up of the teacher pension funds due to inflation.
She added that the average bill increase would be about 4.06% despite a decrease in tax rates. There were no questions, and the bill was passed on a voice vote.