• Panel set to scale back tax rate hike
     | March 26,2014

    MONTPELIER — The House Ways and Means Committee is poised to advance legislation that would raise the statewide residential property tax rate by 4 cents instead of the 7 cents that Gov. Peter Shumlin had recommended.

    The committee used a variety of ways to cut back the increase. The base homestead property tax rate under the committee’s bill would rise to 98 cents from 94 cents.

    Meanwhile, the nonresident property tax rate would increase 8 cents to $1.52 from $1.44. The committee tacked on an additional penny to the nonresidential rate to help lower the residential rate.

    Rep. David Sharpe, D-Bristol, the ranking member on Ways and Means, said the 7 cent increase Shumlin had recommended earlier this year was reduced in three additional ways:

    School budgets across the state were expected to rise an average of 3.8 percent, but the average increase came in at about 3 percent after Town Meeting Day.

    The committee tapped into a tax stabilization fund to the tune of $4 million.

    And $6 million in one-time money is being used from a surplus in the education fund.

    A provision in state law allows a portion of any higher-than-expected tax receipts to go to the education fund. The committee is using $6 million of the $11 million available. The state used about $20 million in similar funding last year.

    “The problem with spending one-time money for tax rate reduction is the next year you have to deal with the increases that year plus the hold created with one-time money,” Sharpe said.

    The committee made other changes affecting property taxes. The base education amount, used in the formula for calculating the rate at which property taxpayers are assessed, will rise from $9,151 to $9,382.

    The panel tinkered with the income sensitivity formula to provide relief to middle-class Vermonters. Households earning less than $47,000 a year will not see a change in their property tax adjustment under the plan. Households earning between $47,000 and $90,000, however, will see some benefits.

    Additionally, the committee lowered the maximum amount of an income-sensitized adjustment to $6,000, from $8,000. And the base income rate — used to determine income sensitivity — will rise to 1.9 percent, from 1.8 percent, in effect raising property taxes for income-sensitized Vermonters in fiscal year 2015.

    Rep. Patti Komline, R-Dorset, said she hoped her fellow committee members would go further in addressing annual increases in property taxes.

    “Basically, what we do in here is trade around every year who gets hit, which I don’t support doing,” she said.

    Komline, who has advocated repealing and replacing the current education financing formula, said the committee failed to seek a long-term solution to unsustainable education costs.

    “We didn’t do enough. If we were doing this this year with a very sincere focus that we’re going to attack this and solve this problem next year I’d feel better about it. But the projection for next year is another 5 cents and the year after that another 5 cents for the residential rate. So it’s not like this is an anomaly,” Komline said. “We’re not tackling the issue. I don’t feel good about it at all.”

    The Ways and Means Committee is expected to vote the bill out today.

    neal.goswami @rutlandherald.com

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