Swapping Property Taxes for Highway Fund Donations

H.3744 would exempt property that is owned or leased by manufacturers, and used in the conduct of business from property tax, provided the manufacturer agrees to donate an amount equal to what they would have paid in property tax to the State highway fund or a country transportation fund. Manufacturers would also have the option of making a donation to one of the above mentioned funds in place of the assessment they would pay under a fee in lieu of taxes (FILOT) agreement.

Like other tax swaps that shift money into or out of dedicated funds this bill robs Peter to pay Paul. Lawmakers may be happy to put more funding into transportation, but they’re less likely to be pleased with the reduction of general funds this bill will create. Unless the authors of this bill are quick to specify what spending items they will be cutting to make up for the loss of general fund revenues it’s safe to assume they don’t plan on cutting anything. And absent spending cuts, a loss of revenues from one source means these revenues be made up somewhere else, which in the long run means more tax and fee increases.

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