July 29, 2014

Lawmakers give preliminary approval to property tax cuts

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By Ross Sneyd
The Associated Press

MONTPELIER — Statewide property tax rates and the accompanying education income tax rate would decline next year under a bill that won preliminary approval in the House last week.

The House voted unanimously by voice vote to advance the bill to final consideration.

The bill calls for the base residential property tax rate for education to fall by 8 cents to $1.02 per $100 of property valuation. Few property owners actually pay that rate because it is adjusted upward for towns that spend more than the basic block grant on their schools.

The nonresidential rate, which applies to businesses and second homeowners, would go down 8 cents, also, and would be $1.51.

The base education income tax rate, which is how people earning less than $88,000 pay for schools, would decline from 2 percent to 1.85 percent. Like the residential property tax, the income tax rate also is adjusted based on local education spending.

Rep. Richard Hube, R-Londonderry, urged the Legislature to do more to ease property tax burdens further. “Unfortunately, though we are voting here to reduce rates, many Vermonters' tax rates will increase even if education budgets are level-funded,” he said.

That's because of the soaring property values across the state, which drive up tax collections. “This makes year-to-year financial planning extremely difficult, if not impossible, for many homeowners and businesses,” Hube said.

There are a number of discussions already going on in the Statehouse about how to deal with that phenomenon, known as the common level of appraisal.

It has become a problem because the state attempts to even out its distribution of education aid by applying a formula intended to tax properties at their current fair market value. Because values are rising so rapidly, that has had the effect of driving up taxes, in some cases dramatically.

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