Tax Reduction Fund

Summary

The Tax Reduction Fund is a special fund that consists of money transferred to it by the legislature and any interest earned on money in the fund that can be used to temporarily reduce a state’s tax rate. The goal of the Tax Reduction Fund is to lower the bottom line of the budget by transferring funds that may be available in the budget that would otherwise be spent and returning those dollars to taxpayers by reducing the broadest state tax.

Tax Reduction Fund

Model Policy

Section 1. {Title} This act shall be known as the {chosen state tax} Tax Reduction Fund

Section 2. {Definition}

(a)  The {chosen state tax} tax reduction fund is a special fund in the state treasury outside the general revenue fund.  The comptroller shall administer the fund.  The fund consists of:

(1)  money transferred to the fund in accordance with Subsection (b); and

(2)  interest earned on money in the fund.

(b)  The comptroller shall transfer money to the fund as directed by the legislature in the General Appropriations Act or by other law.

(c)  Money in the fund may be used only for a state {chosen state tax} tax reduction period and is not subject to appropriation unless transferred to the general revenue fund, or an account in the general revenue fund, as provided by that section.

Section 3.

(a)  Not later than the 90th day of each state fiscal year, the comptroller shall determine whether there are sufficient balances in the {chosen state tax} tax reduction fund so that 95 percent of the balances would equal or exceed the amount necessary to reimburse the general revenue fund for the estimated amount of state {chosen state tax} tax revenue the state would forgo if the state {chosen state tax} tax rate were reduced by at desired percent for a period.

(b)  If the comptroller determines that 95 percent of the balances in the {chosen state tax} tax reduction fund would support a reduction in the state {chosen state tax} tax rate for at least the period described by Subsection (c), the comptroller shall declare a reduced {chosen state tax} tax rate.  The comptroller shall determine the length of the period during which the {chosen state tax} tax rate will be reduced, and the reduced {chosen state tax} tax rate for that period, in a manner that provides for the greatest reduction in the {chosen state tax} tax rate for the longest period of time possible given the comptroller’s determination of the fund’s available balance under Subsection (c).

(c)  The comptroller shall publish notice of the reduced state {chosen state tax} tax rate and the period during which the {chosen state tax} tax rate is reduced in the { state } Register, shall mail notice of the reduced {chosen state tax} tax rate to each permit holder, and may provide notice by other means the comptroller determines prudent.

(d)  On the day after the last day of the period for which the state {chosen state tax} tax rate is reduced under this section, the comptroller shall calculate the positive difference between the estimated state {chosen state tax} tax revenue anticipated to be collected during the period for which the {chosen state tax} tax rate is reduced and the estimated state {chosen state tax} tax revenue that would be collected during the same period if the {chosen state tax} tax rate were not reduced during that period.

Section 4. {Enforcement}

(h)  The comptroller shall adopt rules to implement this section.

Section 5. {Severability Clause}

Section 6. {Repealer Clause}

Section 7. {Effective Date}

 

Approved by ALEC’s Tax and Fiscal Policy Task Force at the ALEC Annual Meeting on Thursday July 23, 2015 and Friday, July 24, 2015. Approved by ALEC Board of Directors on September 4, 2015.

 

Voted to Sunset at Annual Meeting 2020