Property tax reform has been top of mind for legislators for the past few years, and school districts have anxiously followed legislative efforts. There were initial promises from legislators that career technical education programs might be insulated from property tax law changes. However, such assurances are nowhere to be seen in the final versions of the new laws set to take effect this year. As a result, Joint Vocational School Districts (“JVSDs”) are set to lose millions in funding over the next few years.
This is largely the result of new caps put into place to limit increases in property taxes overtime. Property taxes are a primary source of funding for taxing authorities, which include JVSDs.Prior to the passage of recent laws, JVSDs generally experienced an increase in revenue as property value increased over time. However, HB 186 has capped revenue growth to the rate of inflation for JVSDs at the two-mill floor. Under HB 186 alone, some industry groups are projecting nearly $240 million in losses for JVSDs across the state between tax years 2025 and 2027.
HB 129, which changes how the twenty and two-mill floors are calculated, and HB 335 which limits inside millage growth to the rate of inflation, will also result in millions of lost revenues for schools across the state. Many JVSDs already have budgets in place based on previously forecasted increases in funding. By capping revenue growth, the state is effectively clawing back this money and hampering long-term planning and growth.
These reforms come at a time where demand for career technical education is at an all-time high, and the state is actively calling for expanding access. HB 33 dedicated $300 million to construction projects to expand and support career technical education programs across the state, and HB 96 mandates that all districts offer career technical education to 7th and 8th-grade students next year by eliminating waivers. But this loss in funding is almost certain to result in less student access, not more. With many programs already at capacity, any decrease in revenue will seriously limit a CTCs ability to provide the additional facilities and staff necessary for the type of expansion envisioned by the General Assembly.
A final analysis of these property tax reforms, including examples of how the new calculations will change revenue growth, has been provided by the Legislative Service Commission and can be accessed here: HB 186; HB 129; HB 335.