Analysis of Proposal to Replace School Property Taxes: House Bill 76 and Senate Bill 76

October 01, 2013 | Property Tax

This report provides an analysis of a proposal that replaces local school district property taxes with state-funded distributions. The distributions would come from increases to certain state taxes and the redirection of other funds. For this analysis, the Independent Fiscal Office (IFO) projects the net fiscal impact of the proposal and the impact on the various state funds and local entities directly affected by its provisions.

The proposal has been introduced as two separate pieces of legislation (House Bill 76, P.N. 1167 and Senate Bill 76, P.N. 673), and the bills are currently pending before the General Assembly. The two bills are identical for the purpose of this analysis, and all references to “the proposal” include both pieces of legislation. 

This report projects the fiscal impact, which is the difference between revenues collected under current law and revenues collected under the proposal. The analysis finds that there is no discernible fiscal impact in the first year (FY 2014-15), but the proposal has a negative net fiscal impact over the subsequent four years contained in the forecast. A simulation of the proposal using eleven years of historical data from FY 2002-03 to FY 2012-13 confirms this general pattern.

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