SB 2541 – Tweaks unused tax increment formula

SB 2541 is a small attempt to rein in the confusing and taxpayer-unfriendly “unused increment rate” that allows local taxing entities to hoard unused tax authority and use it later without voter consent. By trimming the formula from three years down to two, the bill takes a small step toward greater transparency and limits the ability of local governments to pile on taxes from prior years. This is a welcome — but totally incomplete — improvement. The better approach would be to eliminate the unused increment rate entirely, as the originally filed bill proposed, to ensure that property taxes reflect only current needs, not past opportunities to tax more. Continuing to allow any banking of tax capacity leaves the door open for manipulation and budget gamesmanship by local officials. This bill ultimately preserves a flawed mechanism that should be abolished, not restructured. Lawmakers should push to restore the original filed version to deliver real tax relief and accountability. Nevertheless, TFR supports SB 2541.