MONTPELIER — The state House of Representatives on Friday took action to try to prevent potentially steep property tax increases next spring by short-circuiting the process by which property tax rates are set.
Property taxes provide revenue for the state Education Fund, and as of Sept. 9, the Legislative Joint Fiscal Office projects the deficit for that fund at $66 million for fiscal 2021.
The complication is this: Under state law, the state commissioner of taxes must, by Dec. 1, send a letter projecting what the statewide education property tax rate will be for the fiscal year ahead, and account for any deficit in the current year and maintain the Education Fund's stabilization fund at 5 percent.
Without amending that law for the upcoming fiscal year, the homestead property tax rate could increase by as much as 8 cents per $100 of valuation at current estimates.
With that in mind, Rep. George Till, D-Jericho, submitted a strike-thru amendment of an existing bill — S. 27, which originally dealt with a home health agency provider tax — and inserted language that would direct the state commissioner of taxes to "disregard the projected deficit in the Education Fund for fiscal year 2021" and assume the stabilization fund for fiscal 2022 is maintained at the fiscal 2021 amount.
Unless that law is abridged, Till told House members, "at this point it would fall on homestead property taxpayers. we would be looking at over 8 cent increase in homestead property taxes. We want to avoid the panic that would cause because we have no intention of letting it fall onto homestead property taxpayers."
That reflects the intent of another education spending law passed earlier this session. In Act 122 (passed as H. 959), the Legislature stated its intent to use "interfund loans from the General Fund and any other form of borrowing authorized under Vermont law" rather than passing the bill to taxpayers, many of whom have lost paychecks to the pandemic.
Rep. Cynthia Browning, D-Arlington, said she supported the bill, but added the Legislature should have done more to find money within the budget to prevent property tax increases that have already arrived in Vermonters' mailboxes.
H.959 set property tax rates that maintained the budget levels set by the votes of school districts at Town Meeting. That provided for an average property tax increase of 3 cents per $100 in assessed value.
"I support this bill. I think this is a useful way to straddle the difficult times we face," Browning said of S.27. "People in many towns in Vermont are now paying property tax bills that are hundreds more than if we had kept rates the same and used state resources. I think we should have been more supportive of our property taxpayers."
Greg Sukiennik covers Vermont government and politics for New England Newspapers. Reach him at email@example.com