• Time to address property taxes
    April 15,2014
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    The reform in education has gained momentum this year as property owners question their rising taxes and the results of quality education in our schools. A recent approval of a 4 cent increase in residential tax rates and a 7.5 cent increase on nonresident taxes for 2014 and more to come next year certainly have caused 23 towns to reject their school budgets. This should be of concern to our state representatives. The state Legislature and governor blame these increases on our local school boards and voters. Not so fast. The Brigham decision was meant to equalize education throughout the state so that each school would benefit from equal spending per student. Unfortunately, Vermont has lost 15 percent of its students under Act 60/68 while the spending continues to rise.

    Currently, Vermont has 85,000 students, and the costs have risen from $600 million to $1.4 billion per year over the past 12 years. To pay for this increase, property taxes continue to rise. One reason is that the state has not funded its share of these increases by large amounts. It has found surplus funds to help cover the gap, but this will go away after this year.

    Another big issue is income sensitivity. Approximately, 70 percent of Vermonters are voting on school spending while at the very same time they are not being affected by the rising cost. This is because 70 percent pay their property taxes based upon income, which is “capped” at 1.9 percent of their income. As such, if these income-sensitized voters are capped, they really do not care because if they get a $5,000 property tax bill, they only pay 1.9 percent or, let us say, at $50,000 income, or only $950. The rest of the taxes due come from those who have higher incomes above $90,000, which includes every out-of-state property owner. And these nonresidents cannot vote.

    Another negative to this whole Act 60/68 dilemma is the equity value of our homes. Property owners, which includes nonresidents and higher-income residents, are paying larger taxes, and this is contributing to lower values of homes and in turn the selling value. In fact, the assessed values in many towns based upon the coefficient of dispersion are over-appraised. The “equity” value of a home is decreased by the taxes paid on the property. As such, the market value is going down while the taxes are going up, even when there are fewer students.

    One must ask just one or two questions to our legislators. If plumbers, electricians, carpenters, roofers, lumber sales, carpeting and Realtors are not making a solid living, why would they continue to live in Vermont? The second question is: Why would anyone want to build a new house or remodel an old house, if their property taxes are going up?


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