(AP Photo/Vermont Yankee Corporation)
(AP Photo/Vermont Yankee Corporation)

VERNON -- The Vermont Senate says Vernon residents should keep their property tax break for a little longer than previously proposed.

The Senate has voted to gradually phase out Vernon's 25-percent reduction in the state property tax rate by 2019, giving the gradual phase-out an extra year than the House previously did.

The measure is not yet final, as it is tucked into a much larger education tax bill that must return to the House in the 2014 legislative session's final week.

But it represents another small victory for those who had argued that the Vermont Yankee-related tax break should not disappear suddenly when the Vernon nuclear plant shuts at year's end.

"That would have been a steep cliff to fall off of," said Rep. Mike Hebert, R-Vernon.

Because Vermont Yankee pays a state electric generating tax, and because Vernon hosts the plant, those who own property in the town pay just 75 percent of the state's education tax rate.

The tax benefit dates to the 1990s and originally was a 50 percent reduction. Though the rate has risen over the years, it still represents big savings for Vernon residents -- in February, Hebert proclaimed that "it's a little over $1 million tax break for Vernon. That's why it's so important to get this done."

By that, Hebert meant an extension of the tax break even though Vermont Yankee owner Entergy is shuttering the plant soon.


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Hebert at one point argued that the tax benefit should continue for at least a decade in order to give Vernon time to recover from the loss of the plant and its associated tax revenue.

What was a standalone bill eventually was folded into the larger education tax bill, and Hebert's requested extension was scaled back for House approval on April 4. The House version said Vernon property owners would pay 75 percent of the statewide tax in 2015, with that rate rising to 83 percent in 2016 and 91 percent in 2017.

By 2018, Vernon residents would be paying the same property tax rate as everyone else in the state.

The matter then went to the Senate, where Windham County Sen. Peter Galbraith sits on the Finance Committee. He lobbied for a longer phase-out for Vernon.

"I argued that it will take at least three years before we know the effect of VY's closing on Vernon's grand list," said Galbraith, a Townshend Democrat. "People will leave Vernon gradually after VY closes, not all at once. Also, there may be an extended period when property does not sell. I expect it may take several years before we know the full effect of the VY closure on property values in Vernon."

An extended phase-out of the Vernon tax break "is intended to ensure that Vernon taxpayers are not paying on property that is overvalued," Galbraith added.

The Senate Finance Committee -- and, in votes on Thursday and Friday, the full Senate -- approved a revised schedule that "extends the Vernon tax break one more year than the House-passed version," Galbraith said.

"Thus, Vernon will pay the education property tax in 2015 and 2016 at the 75 percent rate, as if VY were still operating," he said. "For 2017, it is at 83 percent, and 2018 at 91 percent. I had hoped to add two years, but the committee compromised at one more year."

Following Friday's second and final affirmative vote in the Senate, Galbraith said the extension is worth millions to Vernon property owners.

"I think it's a big gain for Windham County," he said.

Hebert said the House will consider the Senate's changes in the education-tax bill, including the Vernon revision, on Monday or Tuesday.

"If we don't concur in the House, it will go to committee of conference ... and I'll have to monitor this," Hebert said.

But he is grateful for Galbraith's help in the Senate.

"Senator Galbraith did a lot of work just to get us what we got. He was very helpful to Vernon," Hebert said. "(Windham County Sen.) Jeanette White was helpful, also. They were looking out for the interests of Vernon."

Mike Faher can be reached at mfaher@reformer.com or 802-254-2311, ext. 275.