2/25/2018 - Lower My Property Taxes

I haven’t met anybody who feels that their property taxes are too low - quite the opposite.  It may be the one thing on which all Vermonters agree.  That said, there is no agreement on how to lower them.

The education funding reform currently being considered in the legislature is an attempt to enact sweeping reforms to the funding system to accomplish four things:

  • make it easier to understand
  • tax people based on income instead of property value
  • make home owners feel the direct impact of school spending decisions 
  • make high spending school districts pay more

The impact of this proposal is huge and the legislature has decided to slow down the consideration of it.  That’s a good thing because residents of the modified, unified Woodstock school district would see a large increase in property (and income) taxes.  We are a “high spending” district at $18,000 per student.   People with a high property value (over $400K) and who also receive some relief through and income sensitivity adjustment in a high spending district could see an increase in the adjusted property tax bill of 25-30%.  Others could see an increase in the property tax bill AND pay a new education income tax. 

The biggest impact, and the most compelling reason to argue against this bill, is on folks who have lived in their homes for a long time and have a fixed income.  For that reason, I am glad the bill is now on the slow boat.    

I introduced H.800, a bill intended to help long time home owners stay in their homes without being taxed out of them.  The idea is to simplify the taxable value of properties by using the purchase price (or value of construction for new homes) plus an annual adjustment for inflation.  In that way home owners would not suffer greater taxes because their property gained market value.  It also would eliminate the need for townwide reassessments and the CLA (Common Level of Appraisal).  Critics have rightly pointed out some of the consequences of such an approach:  inequity in property taxes for similar properties, stagnated sales of properties and renewal of neighborhoods, depressed sales of vacant lots for redevelopment, establishment of additional fees for existing services.  California has experienced all of these and more after passing Proposition 13 in 1977.  My proposal is different, in that the notion was to simplify the valuation but not to artificially restrain the tax rate.  But…it isn’t perfect and still awaits consideration by the Ways and Means Committee in the legislature. 

The current system for funding education has many flaws and the legislature will continue to look at ways to fix the system so that it meets the key principles of any tax system:  Simplicity, Fairness, Sustainability, Accountability, Tax Neutrality and Competitiveness.  We have some work to do. 

In the meantime, school boards and state officials continue to look for ways to reduce spending in education to lower the property tax, while at the same time improving outcomes and meeting the needs of all the members of the school community.  That is no easy task.  And, we are amidst the implementation of Act 46, the impacts of which won’t be fully realized for some time.  There will be some funding revisions brought forth in this legislative session, though it is not clear the exact form that they will take.  Stay tuned.