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The Federal Reserve’s second consecutive key rate cut could mean more than just lower borrowing costs for the average consumer — state and local governments stand to benefit, too. Lower interest rates may bring changes for housing development, tax revenue, debt refinancing and bread-and-butter projects like roads, water and sewer, state and local government officials told States Newsroom. The Fed’s cut earlier this month followed an aggressive rate-hiking campaign to beat down inflation, and it came years after the last time the U.S. central bank lowered interest rates. Key borrowing rates now stand at 4.5 to 4.75%, and inflation has cooled to 2.7%. Economists expect another rate cut in December. “On average, the lower the interest rates are expected to help stock market returns if historical trends hold,” said Liz Farmer, who focuses on budgets, fiscal distress, tax policy and pensions at The Pew Charitable Trusts. “So generally, you would expect a more positive effect on your average pension portfolio that has a good amount invested in equities.” This change means states and localities will have lower borrowing costs, which will make it easier to make big long-term changes in infrastructure, to see higher sales tax collections as a result of more spending, and it is likely to result in better pension performance in an environment where stocks tend to respond to lower rates, fiscal policy experts at Pew say . In 2021 and 2022, states had record high revenue growth due in part to federal pandemic aid and the impact of the federal aid on workers and businesses, according to Pew. But that kind of growth was unsustainable. Recently, nearly all states have entered into a slower revenue growth environment, said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers, a professional membership group for budget and finance officers. More than three dozen states had a fall in revenue in fiscal year 2023, Pew’s analysis found. At least five states experienced budget shortfalls in fiscal year 2024, the think tank explained. “States overall are remaining in a strong fiscal position. It’s just that we’re starting to see slower growth compared to what we did see for those a couple of years after the start of the pandemic,” he said. “That was really a unique set of circumstances where we had the additional federal aid provided by all the different COVID relief bills and at the same time where state revenue growth was growing so strongly, and that led to very strong growth in tax collections.” Sigritz said that states, which have to almost entirely use borrowing for infrastructure and capital projects, will benefit from lower borrowing costs as a result of the Fed rate cuts. David Schmiedicke, finance director for the city of Madison, Wisconsin’s finance department, said he’s hopeful that the lower cost of borrowing will reduce the cost of public infrastructure when seeking construction bids. “We’re seeing a lot of development, even with the higher rates. Madison is an attractive place to live. People from around the country are moving here,” he said. Rebecca Fleury, the city manager for Battle Creek, Michigan, said interest rates affect key services the public relies on, including fire departments. “[Interest rates] have an impact on our ability as a city of 52,000 to provide the full services that we do. Every little bit impacts us, because we have to buy fire trucks,” she said.“If there’s a decrease in one of our three largest revenue sources, we feel it.” But there are both pluses and minuses to the cut in the federal funds rate, Schmiedicke said, as it brings down the interest income states receive. “It probably will reduce the amount of investment income the city receives on its cash balances. We saw that go up dramatically in 2022 and 2023, so that’ll probably come down as the Fed cuts rates,” Schmiedicke said. Different tax policies also change how states and localities experience the Fed rate cuts. H.D. Palmer, deputy director for external affairs and principal spokesman on fiscal and financial issues for California Gov. Gavin Newsom, said that the lower interest rates are overall positive for the nation’s largest state because of the concentration of technology firms there, its progressive tax rate, and the taxing of capital gains and stock options as personal income. “When the markets are doing well, those types of firms that are concentrated in California do well and in consequence, our revenues do well,” Palmer said. The Alabama Department of Finance told States Newsroom that it is closely following the Fed’s actions as it “closely follows all actions that could impact our citizens and the State’s revenues.” But the state agency said it may take some time to see any of the effects of recent rate cuts. “While recent changes in the federal funds rate may lead to increased state revenues, absent a significant change in the rate, the impact on revenues and expenditures would not likely be seen immediately. We will continue to monitor and assess all economic indicators to ensure steady, sustainable, conservative growth for the benefit of all Alabamians,” the department said in a statement. Schmiedicke said Wisconsin is very reliant on property taxes because although state law allows a statewide sales tax and counties can impose a 0.5% sales tax, cities other than Milwaukee have not been able to do so. The state also has strict limits on property tax increases. “We could see more development in the city and that could definitely help with our overall property tax base, as well as if it results in more travel and room taxes,” he said. As states and localities wrestle with how to provide more affordable housing, with nearly half of renters having to spend more than 30% of their income on housing, lower interest rates could help spur more building. Fleury said the costs of loans and labor and materials has been “astronomical,” making it hard for developers to build. Although she said Battle Creek would love to take advantage of Low Income Housing Tax Credits, it’s challenging to fund projects. “I think that a lower interest rate could really help us get farther along in our housing plans,” she said “If you can’t get your project to pencil within what they’re able to fund or finance, we just never make the list.” Despite lower interest rates creating a better environment for affordable rent and homes, states will likely continue to spend a lot of energy on housing programs, Sigritz said. Governors’ budget proposals and state of the state speeches have prioritized affordable housing more and more in the past few years, he said, and he expects this to continue. “Housing affordability is not an issue that’s going to go away overnight, and there’s still a need for more housing,” Sigritz said. “It takes a while to build additional housing even in the lower-interest environment.” This story originally appeared at kentuckylantern.com. Before you go.... Can you help us make a difference? The reporters and editors at LINK nky are dedicated to covering Northern Kentucky and providing you with the information you need to be an informed citizen. If you value what you get from LINK nky, please join us with a tax-deductible donation so we can continue doing the local reporting that matters to you. Will you chip in to LINK nky today? YES, I'LL CHIP IN! SUPPORT LOCAL NEWS DONATEBLOOMINGTON — The two largest school districts in McLean County are exploring a 1% sales tax to help pay for needed building projects and potentially reduce property tax burdens, officials said. The plan, which could put the question before voters as soon as the April election, surfaced as school boards for McLean County Unit 5 and Bloomington District 87 discussed preliminary tax levies for the coming fiscal year during separate meetings Wednesday night. While both districts' proposals call for lower tax rates, officials acknowledged many people will face higher property tax bills because of the rising value of their homes. District 87 Superintendent David Mouser said the County Schools Facility Occupation Tax would add a small percentage on every sale in the county to help fund school districts for facilities, mental health resources for students and safety and security. Mouser That is "a 1% tax that is then put on prepared food, tangible personal items (and) retail items. It includes online purchases, now, that it did not in the past," he said. However, the tax would not affect groceries, unprepared food, over-the-counter medication and most farm equipment. That question, if approved by the school districts housing the majority of students in McLean County, would be put to voters in the upcoming April election. For Unit 5, the resolution must come before the board during its December meeting or during a special meeting in early January to appear on the April ballot. Mouser told the school board Wednesday, a large portion of the money spent in McLean County, upwards of 40%, "is spent by folks that do not live in McLean County that can thereby offset the cost for facilities, safety, security and mental health services for our students." As property values and property taxes increase for county residents, such a tax could alleviate the pressure on county residents, Mouser said. "The other thing that you can do with the 1% sales tax, the County Facility Sales Tax, is you can abate property taxes," Mouser said. Unit 5, meanwhile, is evaluating the sales tax as a possible revenue stream to cover more than $70 million in infrastructure and maintenance projects over the next 15 years. In September, district officials gave a presentation on the current infrastructure needs of district facilities. Over the next five years, the district estimated more than $50 million in work to the schools' roofs, running tracks, fire alarm systems, geothermal systems, heating equipment, cooling towers and chillers. Another $13.6 million in projects is anticipated between 2030 and 2034, and another $7.8 million is estimated between 2035 and 2039. One of the most urgent projects is a $10 million roof replacement at Chiddix Junior High that must be completed this summer. If approved, the tax is estimated to generate between $16 million and $20 million annually for Unit 5, officials said. McLean County would allocate the sales tax revenue to the Regional Office of Education, which would distribute the funds across each school district in the county based on enrollment. The sales tax was one of several funding mechanisms the board discussed on Wednesday. Other options could be grant funding or the issuance of building or working cash bonds. Board member Amy Roser said since the district doesn't have $50 million, it should be mindful of consequences of any revenue source. Roser "If it doesn't come from (the sales tax) where we can take every dollar that we get and put it directly to a project, it's going to have to come from one of those other sources, and a majority of those other sources have interest involved," Roser said. Cooperative resolution For a referendum to be included on the April ballot, Unit 5 and enough school districts to represent a majority of the total enrollment of McLean County would have to pass a resolution, said Mark Jontry, regional superintendent for the Regional Office of Education 17. His office oversees the school districts in Livingston, Logan, DeWitt and McLean counties. "The way the statute reads, school boards that represent 50.1%, or the majority, of K-12 students residing in the county can pass a board resolution," he told The Pantagraph on Thursday. That resolution would then go to his office where they would prepare the ballot's language, Jontry said. "Once I verify that enough boards have passed it ... then I file the ballot initiative with the clerk and the Bloomington Election Commission for the consolidated April election," he said. Jontry said, because Unit 5 has more than 50.1% of total student population of McLean County, its Board of Education needs to pass the resolution for the tax question to have a chance in April. According the Illinois Department of Revenue, any funding received through this tax "is to be used exclusively for 'school facility purposes' in that county as defined in the County School Facility Occupation Tax Law." The statute was "subsequently amended almost 10 years ago with a slight expansion to include ... safety and security as well as mental health services," Jontry said, noting this includes school resource officers, school psychologists and school social workers. "The language in the ballot question actually specifically denotes those areas," he said. Based on the Department of Revenue's figures for sales within McLean County, $29-30 million would be divided amongst school districts countywide, Jontry said. "It would have a significant impact on their ability to maintain their facilities. ... I have two other counties that currently have (the tax) — Livingston and Logan — they have realized a lot of benefit to maintain their facilities without having to touch their (Operations and Maintenance funds)," Jontry said. Asking less, but receiving more For the past several years, property values in the county have increased because of multiple reasons, including companies like Rivian Automotive and Ferrero establishing long-term homes in the Twin Cities. District leaders said they hope the sales tax can help to offset the increased property values. "Your homes are worth more," said Michael Cornale, District 87's chief facilities and financial officer. "And we are asking less by (tax) rate of you all. It may not end up being less dollars, but we are asking less rate." For the 2025-26 school year, Cornale advised the board to approve a tax levy that would generate between $52 and $56 million, keeping the property tax rate for homeowners in the district below 5.1%. Michael Cornale, chief financial and facilities officer for Bloomington District 87, delivers a presentation on the 2025-2026 tax levy at the regular board meeting on Nov. 20, 2024. School districts have no influence on the equalized assessed value (EAV) of properties in their townships, Cornale said. That belongs to township officials. The Bloomington Township Tax Assessor is projecting an increase of 8.95% in EAV, but, because of potential assessment challenges from property owners, Cornale said he conservatively estimates that number closer to 7.75%. "Here's the truth: if (property owners') home value were to stay the same as it did from the year prior, they would see relief," Cornale said. "I'm not ... necessarily sure that everybody will see the same home value." According to Cornale's calculations, if the value of property were to remain stagnant, the owner of a $225,000 home would pay $52.72 less than they had the previous year. But the value is estimated to increase. But if that same property owner experienced EAV growth of 8.95%, they could pay about $290 more than they did the previous year. "The EAV is a component that you all (the school board), we all (administration) have no ability to change. There is nothing we can do in this room to change what that EAV is," Cornale said. "That comes from our township assessor. He gives me that number to start working from. So that number is set in stone, and then we work backwards." Before the start of every fiscal year, the county's school districts use a calculated assessed value tax rate from the county and township assessors to determine a requested amount of funds from taxpayers, Cornale said. "When I levy, I levy for dollars ... because we ultimately don't know what that certified EAV will be," he said. In the interest of fiscal responsibility, Cornale said he uses a conservative estimate of that rate to calculate the levy he provides to the county. "We're going to do our part as a community member to give some relief as we can. I think it's a fiscally responsible thing to do," he said. Unit 5 estimated a $163.4 million property tax levy, a roughly 9.2% increase over the 2023 tax year. As a result, a truth in taxation hearing must be held before the levy can be approved. However, the district is estimating a tax rate reduction from $5.29 per $100 of assessed value to $5.07 per $100. The owner of a $225,000 home who experienced a 10.63% increase in value in 2024 would see a $239 increase to Unit 5's portion of their property tax bill. Unit 5 Chief Financial Officer Marty Hickman said this will be the first year the district will take advantage of the increased tax rate for its education fund that was approved by referendum in 2023 . Hickman As a result, the levy for the education fund increased from $76.3 million in 2023 to about $109 million in 2024. The district also saw a significant reduction to its levy for debt service after paying off building bonds. The levy amount for debt service dropped from roughly $37 million to about $13.6 million. Local officials from the community and college as well as with the company joined together Thursday at Country Financial headquarters, 1701 Towanda Avenue, in Bloomington, to announce the mile-long trail project which will be called the Country Financial Trail at Heartland and extend the Constitution Trail. Photo Credit: Artazum / Shutterstock Despite many economic experts’ worst fears early in the COVID-19 pandemic, state and local government budgets have proven resilient over the last two years. With much of the economy shut down or hobbled as a result of the pandemic, forecasters initially worried that states and localities would collect substantially lower amounts of sales and income tax and face major budget shortfalls as a result. But behind falling unemployment, rising wages, and strong consumer spending, income and sales taxes have produced stronger-than-expected revenues since the initial shock of the pandemic. One factor that has helped protect state and especially local revenues over this period is property taxes, which are taxes levied on real property like land and buildings or certain forms of personal property. Property taxes tend to be more stable over time because property values are less susceptible to economic volatility than income and sales tax. Depending on when taxes are assessed, it could take years for any significant changes in property values to become apparent in a government’s tax collections. This certainly helped keep property tax revenues steady during the pandemic—and for some communities, collections could potentially grow in coming years due to the skyrocketing values of residential real estate. Property taxes’ stability could help continue to protect state and local budgets if the U.S. is headed toward a recession in the near future. Property tax collections represent 16.6% of state and local general tax revenues, which makes it the largest form of “ own-source ” revenue generated by states and localities, ahead of individual income (12.9%) and general sales taxes (12.5%). And among all revenue sources, property tax trails only intergovernmental funds (22%), which comprises funds transferred from one government to another (most frequently federal to state or local) through grants, loans, and other agreements. However, the overall mix of state and local revenue sources looks different across the U.S. Each state and local government offers a unique collection of revenue sources that weights income, sales, property, and other taxes differently. For example, nine states have no state income tax , while five have no state sales tax. Others have caps on property tax rates or restrictions around how property valuations are conducted that limit the amount of revenue from property taxes . This means that individuals’ specific tax burdens will look different depending on what state and local tax laws are in place where they live. Property tax collections across the states show these differences in action. At the low end, only 6.9% of general tax revenue collected in Alabama comes from property tax, while at the high end, property tax is 36.5% of general tax revenue in New Hampshire. New Hampshire stands out in part because the state has neither an income nor a sales tax, so many services are funded at the local level through property taxes. Many of the other locations highly dependent on property taxes are nearby Northeastern states including New Jersey, Maine, and Connecticut. The data used in this analysis is from the U.S. Census Bureau’s 2019 Annual Survey of State and Local Government Finances . To determine the states that collect the most property tax revenue, researchers at Porch calculated property tax revenue as a share of total general tax revenue. In the event of a tie, the state with the greater annual property tax revenue per capita was ranked higher. Here are the states that collect the most property tax revenue. Photo Credit: Mihai_Andritoiu / Shutterstock Photo Credit: John S. Quinn / Shutterstock Photo Credit: Henryk Sadura / Shutterstock Photo Credit: Jacob Boomsma / Shutterstock Photo Credit: Ingus Kruklitis / Shutterstock Photo Credit: Shawn Dorsey / Shutterstock Photo Credit: Christian Delbert / Shutterstock Photo Credit: Sean Pavone / Shutterstock Photo Credit: f11photo / Shutterstock Photo Credit: Sean Pavone / Shutterstock Photo Credit: nektofadeev / Shutterstock Photo Credit: f11photo / Shutterstock Photo Credit: Sean Pavone / Shutterstock Photo Credit: Sean Pavone / Shutterstock Photo Credit: RaulCano / Shutterstock Contact D. Jack Alkire at (309)820-3275. Twitter: @d_jack_alkire Want to see more like this? Get our local education coverage delivered directly to your inbox. General Assignment Reporter {{description}} Email notifications are only sent once a day, and only if there are new matching items. Government Reporter {{description}} Email notifications are only sent once a day, and only if there are new matching items.NEW YORK, Dec. 05, 2024 (GLOBE NEWSWIRE) -- Why: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Macy’s, Inc. (NYSE: M) resulting from allegations that Macy’s may have issued materially misleading business information to the investing public. So What: If you purchased Macy’s securities you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement. The Rosen Law Firm is preparing a class action seeking recovery of investor losses. What to do next: To join the prospective class action, go to https://rosenlegal.com/submit-form/?case_id=31645 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action. What is this about: On November 25, 2024, The New York Times published an article entitled “Macy’s Discovers Employee Hid Millions in Delivery Expenses.” This article stated that “Macy’s said on Monday that an employee had “intentionally” misstated and hidden up to $154 million in delivery expenses over the past few years, forcing the retailer to delay a much-anticipated earnings report that Wall Street uses to gauge the strength of holiday shopping.” On this news, the price of Macy’s, Inc. stock fell 2.2% on November 25, 2024. Why Rosen Law: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm achieved the largest ever securities class action settlement against a Chinese Company at the time. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers. Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm , on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm/ . Attorney Advertising. Prior results do not guarantee a similar outcome. ------------------------------- Contact Information: Laurence Rosen, Esq. Phillip Kim, Esq. The Rosen Law Firm, P.A. 275 Madison Avenue, 40th Floor New York, NY 10016 Tel: (212) 686-1060 Toll Free: (866) 767-3653 Fax: (212) 202-3827 case@rosenlegal.com www.rosenlegal.com