The Senate on Monday approved a bill that would increase the homestead property tax credit from $350 to $375 per parcel, divert $8.2 million from the property tax relief trust fund to the county voting system grants fund and move additional money to state general revenue.
The Senate voted 34-0 to approve Senate Bill 447 by Sen. Jim Hendren, R-Sulphur Springs.
The action comes after the Senate Revenue and Taxation Committee on Wednesday recommended Senate approval of Hendren's bill, and declined to endorse a competing bill, House Bill 1321 by Rep. Lanny Fite, R-Benton, for a second time. HB1321 also would increase the credit to $375 per parcel, but it would authorize a study by the House and Senate tax committees on the future use of the property tax trust fund. The fund is financed by a half-percent sales tax.
In 2018, 716,525 property owners received tax credits totaling $229.9 million, according to the state Department of Finance and Administration. The trust fund is used to reimburse counties for what the credit costs them.
Hendren told senators that his bill would increase the homestead property tax credit by $25 because the money raised by the half-percent sales tax is more than what's needed to fund the tax credit.
Hendren said the $8.2 million would be used by the secretary of state's office to buy new voting equipment for counties without that updated equipment.
With about $5 million in matching funds from the counties, the $8.2 million "will fund the rest of them [that lack the updated voting equipment] and pay back the counties that did not get the matching funds that they expected" when they purchased the equipment, he said.
"We believe it is a fair way to try to get this finished out so by the 2020 elections they can be efficient and secure, which I think is one of our fundamental responsibilities," Hendren said.
The bill also would give the state Department of Finance and Administration the ability to transfer funds out of the property tax relief trust fund after the fund's obligations are paid, he said. The department projects that $24.5 million in surplus funds in calendar year 2020 and $29.5 million in calendar year 2021 would be transferred to general revenue, and this is money that could be be used however the Legislature decides, he said.
The state forecasts a $149 million balance in the property tax relief trust fund on Dec. 31.
In calendar year 2020, the finance department projects the increased homestead tax credit would increase reimbursements to the counties by $12.5 million. The department forecasts a $135.7 million balance in the trust fund on Dec. 31, 2020.
After the Senate action, Hendren said he would give people time to completely understand his bill.
He said he'll ask the House Revenue and Taxation Committee to approve it when he feels like he has the votes.
Last week, Fite said he would ask the House tax committee to reject Hendren's bill.
House Revenue and Taxation Committee Chairman Joe Jett, R-Success, said the House committee will consider the bill on Thursday if Hendren wants to run it through the committee at that time.
A Section on 03/12/2019