As I’ve written, the revenue options under consideration by the Senate Democratic Caucus (SDC) include business and occupation (B&O) tax increases, a payroll tax, a wealth tax, and increases to the capital gains tax rate. The remaining tax increases included in their options would increase the property tax growth limit, increase the real estate excise tax, subject self-storage unit rentals to the retailing B&O tax and the sales tax, and impose a new tax on firearms.

Of course, as we’ve shown, the projected budget shortfall is not due to a drop in revenues—it is the result of legislative spending choices.

Property Tax Growth Limit Increase

Currently, property tax collection growth is limited by statute to the lesser of 101% or 100% plus inflation (as measured by the implicit price deflator), plus the value of new construction (and certain other increases in assessed value).

One of the SDC’s options is to increase the property tax growth limit from 101% to 103% for both state and local taxing districts. They estimate that this would increase property tax revenues by $104 million in 2025–27 and by $329 million in 2027–29. (It’s not clear if these revenue estimates represent the total revenue increase or just the portion of the increase that would go to the state. The current forecast for state property tax revenues in 2027–29 is $10.199 billion.)

HB 1334 would limit property tax collection growth to 100% plus population change and inflation, up to 103%. (The value of new construction and other increases in assessed value would still be added on top of this.) Additionally, HB 1334 would change the measure of inflation from the implicit price deflator to the consumer price index. There is no fiscal note for the bill yet.

Real Estate Excise Tax Increase

The SDC is also considering increasing the top tier for the real estate excise tax (REET) to $750,000 and adding a real estate transfer tax of 1% on the value of the selling price over $3.025 million. They estimate that this would increase revenues by $42 million in 2025–27 and by $256 million in 2027–29. No bill has been introduced, but this sounds like HB 2276 from last year. (I wrote about HB 2276 here.) The current forecast for REET revenues in 2027–29 is $3.966 billion, so this proposal would increase REET revenues by about 7%.

New Tax on Self-Storage Unit Rentals

Another SDC option would make self-storage unit rentals subject to the retailing B&O tax and the retail sales tax. They estimate it would increase revenues by $57 million in 2025–27 and by $90 million in 2027–29. (It’s not clear if the revenue estimates include both state and local revenue or just state revenue.) No bill has been introduced.

New Tax on Firearms

The final SDC tax increase option would impose an 11% tax on the sales of ammunition, firearms, and parts. They estimate it would increase revenues by $25 million in 2025–27 and by $37 million in 2027–29.

HB 1386 was heard by the House Finance Committee on Jan. 21. It would impose a tax of 11% on each retail sale of a firearm, parts for a firearm, and ammunition. The tax would be on top of retail sales and use taxes paid. Law enforcement would be exempt from the tax.

Revenues are not directed to a dedicated account, but the bill expresses the intent to use the revenue during 2025–27 for “agencies and programs that are focused on gun violence prevention.” The fiscal note for HB 1386 estimates that it would increase general fund–state revenues by $22.9 million in 2025–27 and by $33.5 million in 2027–29.