The Department of Legislative Services presented its County Revenue Outlook, to the House Ways and Means Committee on January 23, 2014. According to the analysis, counties have experienced limited revenue growth in fiscal 2013 and 2014. While property, income, and transfer tax revenues are estimated to increase slightly in fiscal 2014; recordation, hotel/motel, and admissions taxes are expected to decline.
During the presentation, DLS commented on the effects of the Homestead Property Tax Credit on county property tax revenues; and revenue losses or gains associated with property tax rates being set below or above the constant yield rate. The constant yield tax rate is the property tax rate, that if established, would bring in the same amount of revenue as the prior year. If property assessments increase, the constant yield tax rate would decline. If property assessments fall, the constant yield tax rate would increase.
DLS also provided data showing the additional revenue yield if all counties imposed the local income tax at the maximum rate of 3.2%. This sparked a series of questions about counties not taking the necessary steps to raise their own revenues.
As pointed out by DLS, many factors go into a county’s decision to set its tax rates and you can not draw conclusions by just looking at the rate set for one revenue source. If a county derives a greater proportion of its revenues from other sources, tax rates may be set at lower levels. While all counties employ differing approaches for generating revenues, tax rates, whether property or income, are set to reflect the economic and demographic conditions of the jurisdictions in which people live. Forcing local governments to increase these rates could have a detrimental monetary effect on those living within the jurisdiction.
The County Revenue Outlook is an annual document prepared by DLS and can be found DLS’s website.