HB 1042
In CommitteeHouse
County treasurer costs
Authorizing cost recovery for county treasurers.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill allows county treasurers to charge local taxing districts a fee to recover actual costs of collecting and distributing property taxes. It establishes limits on the fee, creates a dedicated fund for those costs, and updates related tax levy rules to allow districts to recoup the fees.
- County treasurers may charge a cost recovery fee to taxing districts (e.g., school, fire, and water districts) to recover actual prior-year costs for billing, collecting, and distributing property taxes.
- The fee is capped at 1% of the tax roll for counties with populations over 250,000, and 2% for smaller counties; the first $50,000 of each district’s collections is excluded from the fee calculation.
- Recovered funds go into a dedicated county treasurer’s cost recovery fund, used exclusively to support billing, collection, and distribution operations, and are not subject to budget caps or indirect charges.
- Cost recovery must be based on actual prior-year costs, and capitalized assets (e.g., equipment or software) can only be recovered over their useful life.
- Treasurers must notify taxing districts of the fee amount by September 1 each year.
- Amends existing law to clarify that taxing districts may include the cost recovery fee in their tax levies to reimburse themselves for payments made to the county.
Who is affected
- County treasurers — County treasurers gain the ability to charge fees to recover actual costs of collecting and distributing property taxes on behalf of other local governments, which helps fund their operations.
- Local taxing districts (e.g., school, fire, and water districts) — School districts, fire districts, water districts, and other local taxing districts may be charged a fee (up to 1% or 2% of tax roll, depending on county size) to cover the cost of tax collection and distribution services performed by the county treasurer.
- County residents and property owners — Residents and businesses in counties may see no direct change in tax bills, but local governments may adjust budgets based on reduced or shifted administrative costs.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Counties gain authority to recover actual prior-year costs for tax collection and distribution, improving budget predictability and reducing reliance on general fund subsidies — this enhances administrative efficiency without requiring new state funding.
Local GovernmentRef: Sec. 2(3), Sec. 2(1)The $50,000 exclusion per district and cap on fees (1%/2%) protect smaller taxing districts from disproportionate cost burdens, especially in rural counties where tax rolls are smaller and districts are more dependent on shared county services.
Local GovernmentRef: Sec. 2(1), Sec. 2(2)Mandating fee notification by September 1 ensures timely budget planning for taxing districts, reducing last-minute fiscal uncertainty during the annual budget cycle.
Local GovernmentRef: Sec. 2(4)Allowing taxing districts to include the cost recovery fee in their own levies creates a transparent, legally sound mechanism for cost pass-through — avoiding hidden budget shortfalls or surprise assessments.
Local GovernmentRef: Sec. 3(1)(c)Depreciating capitalized assets over their useful life prevents windfalls from one-time investments and promotes long-term financial discipline in county treasurer operations.
Local GovernmentRef: Sec. 2(5)
Potential Concerns (5)
Local taxing districts (e.g., school, fire, water districts) will face a new cost (up to 1% or 2% of tax roll, minus first $50k) to reimburse counties for tax collection services — effectively shifting administrative costs from counties to districts, which may reduce funds available for frontline services like teachers, firefighters, or water infrastructure maintenance.
Local GovernmentRef: Sec. 2(2), Sec. 2(1)The cost recovery fund is dedicated and exempt from budget caps or indirect charges, which improves county treasurer operational stability — but this benefit is structural and does not directly benefit residents; instead, it may indirectly strain districts with limited flexibility to raise levies, especially smaller or poorer districts.
Local GovernmentLean peopleRef: Sec. 2(3), Sec. 2(1)Because the fee is calculated as a percentage of the tax roll (i.e., total assessed value), wealthier districts with higher property values but lower collection volumes per dollar (e.g., due to exemptions or appeals) may face disproportionately high effective rates — potentially leading to budget pressures in districts serving low- and middle-income households.
HousingLean peopleRef: Sec. 2(1), Sec. 2(2)Capitalized assets (e.g., software, equipment) can only be recovered over their useful life, which limits front-loaded cost shifts — but this constraint does not offset the broader regressive effect: districts with older systems or less efficient operations may be charged more relative to their actual service needs.
Local GovernmentLean peopleRef: Sec. 2(5), Sec. 2(1)Excluding real estate excise tax (REET) and other existing recoverable costs from the fee definition prevents double-counting, but also means counties cannot recover full costs — potentially leading to underfunded operations or pressure to expand into other fee-based services over time.
Local GovernmentRef: Sec. 2(6)(b), Sec. 2(2)
Who Is Most Affected
County treasurers benefit significantly — they gain explicit legal authority and a dedicated funding source for tax collection services, improving budget stability and reducing reliance on general fund support.
Local taxing districts face a new cost burden (up to 2% of tax roll), which may reduce funds for frontline services — especially impactful for districts with limited taxing flexibility (e.g., fire, water) or those in high-cost counties.
Property owners in low-wealth districts may see indirect harm if districts cut services (e.g., school programs, fire response) to absorb new fees — while wealthier districts can more easily pass costs through levies without service reductions.
Smaller counties (pop. <250k) face a higher cap (2% vs. 1%), but may benefit more from cost recovery due to proportionally larger shares of tax collection work performed for multiple districts — net impact depends on local structure.
Larger counties (pop. >250k) benefit from the lower 1% cap, but may see higher total recoveries due to larger tax rolls — overall, larger counties likely gain net administrative efficiency with minimal fiscal strain.