Despite rising property taxes, little appetite to curb local school spending

Prior to Town Meeting, Gov. Peter Shumlin implored Vermont voters to convey “a clear message to school boards and to their local communities that we’ve got to find ways to curb unsustainable costs of education in our state.”

Voters instead sent a resounding message that the prospect of rising tax rates hasn’t deterred them from supporting their local school budgets.

More than 90 percent of school budgets were approved on Monday and Tuesday in Town Meeting ballots. Sixteen school budgets were rejected.

Among the approved budgets was that of the town of Bolton — where residents gave the go-ahead to an over 18 percent increase in spending. Thirty-eight other districts saw increases in spending of over 10 percent.

Thirty-seven districts passed budgets lower than last year’s.

Of the 244 budgets that have been reported so far, 224 were approved. Four others were approved, but only in part. The rejection rate — about 7 percent — is higher than last year, when only 3 percent of budgets were voted down.

(The results aren’t quite comprehensive — 23 towns will vote at a later date, some as late as May, and, as of 4 p.m. today, three other towns had not yet reported results to the Vermont Superintendents Association.)

The average increase in education spending across all budgets is 5.34 percent. Salaries, health care premiums, and fuel costs account for much of this, according to Steve Dale, executive director of the Vermont School Boards Association (VSBA).

Other statewide cost-drivers include special education, maintenance projects put off during the recession, expansions in pre-K, new technology, and, in a handful of school districts, an increase in students, Dale said.

This year’s crop of school budgets also reflected a hole left by federal funding.

While education spending went up by 5.34 percent, the average increase in school budgets was 4.58 percent. The loss of American Recovery and Reinvestment (ARRA) funds accounts for most of this difference, according to Dale.

Two-vote towns

Twenty districts — an unprecedented number — had to cast two ballots for their school budgets under the guidelines of a 2007 state law; 15 of the districts approved both portions of their budget; four approved the primary part but rejected the additional spending, and one town rejected both components.

Three additional towns that have not yet voted will also be subject to the two-vote mandate.

School districts where education spending is higher than the statewide average must vote twice on school budgets, if budget increases are more than one percent above inflation. Residents vote once on the budget items that fall below that threshold, and once on items that exceed it.

The requirement, signed into law in 2007, is scheduled to sunset this June.

Prior to this year, only 10 two-vote budgets had confronted voters.

“We believe that it’s not a terribly effective mechanism for influencing budgets,” Dale said, pointing to the fact that only five of the 35 two-votes that have taken place since the law was enacted have resulted in split votes. Four of those occurred this year. During the others, towns either approved or rejected the entire budget package.

Shumlin drew two clear-cut conclusions from the school budget vote results. He first observed that “local control is alive and well in Vermont,” and then noted, “local communities have said they want to spend more money on schools.”

Dale said the results show that “overall local voters respect the job done by school boards and understand what needs to go into budgeting.”

But, Dale added, for many voters, the complexity of the state’s education finance system may have obscured the link between school spending and tax rates.

“My read of town meeting is that people are paying attention mostly to budgets and not necessarily to tax rates because our tax calculations are fairly complex. We strongly support the current education financing system. … However we do believe there are some features that could be looked at in terms of tightening the connection between a budget vote and a tax bill,” Dale said.

Lawmakers in the House grappled with the same quandary prior to approving a five cent increase in the statewide property tax rate, in anticipation of the predicted 5.5 percent increase in education spending.

Shumlin has consistently called on local school boards to curtail education spending. In a letter sent to school boards in November 2012, he asked them to “redouble efforts to constrain, if not reduce, education spending” by not increasing budgets beyond the rate of inflation.

“I understand that situations vary by district and support local decision-making by school boards and voters, but acknowledge that we are looking at the 15th consecutive year of declining enrollments,” Shumlin wrote. His predecessor, Republican Gov. James Douglas, made a similar appeal to hold down school spending, with equally little success.

There are expected to be 668 fewer students in Vermont next year. Declining enrollment drives up per-pupil spending.

But with the bulk of school budget votes already tallied, Shumlin conceded that some of the cost-drivers fell outside the scope of school boards’ control this year.

“They [school boards] were up against some huge odds this time,” Shumlin said, citing steep increases in health care and heating fuel costs.

The state has a role to play in keeping costs down, too, Dale told VTDigger. It could, he suggest, exert more control over salary levels by adopting a statewide teachers’ contract, an often-suggested proposal that so far has not gained much traction. The state could also help school districts keep health care costs in check by helping them negotiate the transition to the health-care exchange, Dale said. He added that fuel costs and special education costs are also within the state’s purview.

Though most towns didn’t heed the governor’s plea this time around, Shumlin said the message must sink in next year.

At a press conference today, Shumlin told reporters, “We’ve got to ensure that next year, as we work together with a dwindling school population and growing staff, that community by community, we do a better job of holding down costs because taxpayers just can’t take it.”

Correction: Bolton’s school budget will increase by over 18 percent. We originally reported this increase was 17 percent.

Follow Alicia on Twitter @aefreese

Alicia FreeseAlicia Freese

Comments

  1. Bob Zeliff :

    We all want the best education for our kids….vermonter have proven that we are willing to sacrifice a lot for our kid. but the costs to benefit as compared to other states show that we are not getting good value for out tax dollars. Mass has better outcomes for less cost. New Hamshire cost much less for outcomes that are close to ours.

    I do not know how to fix this, but for all the supervisory union people and principals that we are paying 6 figure salaries to ..I think we should expect both better results and less cost.

    I believe more people will become aware of this when their tax bill show up in the next few months.

    • Tom Pelham :

      Bob (and Alicia for future reference)….regarding your last sentence – don’t bank on it and here’s why.

      Vermont’s property tax system is a system based upon three rates. These are the income-sensitized rate applied to household incomes and the residential and the non-residential rates applied to listed property values. Generally, residential properties owned by households with incomes slightly over $100,000 qualify for the income sensitized rate.

      These rates are not managed or in the control of local school districts, but managed by the state legislature. The House has already passed a bill (H.265) in this regard. One might think that if school spending is going up by 5.3% that the Legislature would fairly distribute this added burden similarly across all three rates, but that’s not the decision they’ve made.

      The House bill results in the non-income sensitized residential rate effectively increasing by 6.8% from $1.32 to $1.41 and the non-residential rate increasing by 4.3%, from $1.38 to $1.44. However, the income sensitized rate, which effects about 70% of Vermont’s households, will effectively rise by only 7/10ths of one percent, from 2.68% of household income to 2.7%. This disproportionate distribution of the increase in education spending is a thoroughly considered choice by our legislators.

      Both residential rates are comprised of two factors – a base tax rate and a multiplier applied to this base tax rate driven by a local school district’s per pupil spending divided by a legislatively set “base education amount”. For school budgets just voted, the House increased the base rate for residential property from $.89 to $.94 but left unchanged the base rate of 1.8% applied to income sensitized residential properties. As designed, the “base education amount” was to be adjusted annually by an inflation factor. Here’s the underlying statutory language in Title 16, section 4011:
      (b) For each fiscal year, the base education amount shall be $6,800.00, increased by the most recent New England Economic Project cumulative price index, as of November 15, for state and local government purchases of goods and services from fiscal year 2005 through the fiscal year, for which the amount is being determined, plus an additional one-tenth of one percent.
      However, the legislature, given its encompassing powers, can by-pass this language and do as it will. For school budgets voted this town meeting, the legislature increased the “base education amount” by 5%, or more than twice the inflation rate, from $8,723 to $9,151. The result of this legislative choice is to lower the value of the multiplier applied to the unchanged 1.8% base household income rate and thus lower the relative tax burden assigned to income sensitized properties.
      The bottom line result of these legislative choices is that the tax rate on income sensitized taxpayers will rise by only 7/10th of one percent versus the 6.8% and 4.3% effective rate increases on all others. From a political perspective, this is likely a desired result as the increase in education spending is shifted away from the majority of voters who will see little increase in their tax bill and the politically active education lobby enjoyed a friendlier path to higher and higher school budgets.

  2. We have a problem with dealing with excessive school spending, and that problem is exacerbated, if not caused by, a disconnect between what the issues driving the costs are and the solutions offered by the state and feds.

    A fine example is Shumlin’s bit about needing a statewide contract to keep teacher salaries down. Teacher salaries are not the problem; but the federal and state requirements regarding licensing are. Educators are less and less being allowed to teach across multiple disciplines, and that means more teachers have to be hired just to continue the normal course offerings. This is a self defeating circumstance considering the need today and for tomorrow needs educators who know the art and science of educating – NOT skilled in a specific content area.

    Personalized learning plans in order to succeed will need educators who can guide students in exploring, evaluating and drawing conclusions from among a literally world wide offering of information. A focus on fewer, well paid professionals who are highly skilled in pedagogy is our real need.

    Steve Dale mentions special education: to assure proper access to a “Free and Appropriate Education” (FAPE) we are spending huge amounts of money providing supports to those children who need more then the normal amount of assistance. Your schools are providing food and safe physical harbor to many kids who otherwise wouldn’t have it. There are many other day to day social supports provided to kids from a wide diversity of homes. Your local school district has to step in and provide the home supports that many families either cannot or won’t. All of these items HAVE to be in place (when you think of school budgets stop thinking “school” and start thinking “youth services”).

    Hell new security spending is occurring throughout Vermont because there is no political will to deal sensibly with our overly armed population and the surplus of totally unaccountable firearms.

    There are many local efforts occurring across Vermont that are having various levels of success. Reaching out to families and community, changing how education is delivered to the student, making use of modern communications (that technology thingie), breaking down barriers to working with organizations outside the school district structure and more. We can find even more positive solutions if we give the parents, communities, local boards, principals and teachers the policy authority and leeway to move ahead with vigor. Best of all we can be responsive to the tens and tens of thousands of Vermonter who turn out every year to vote on school budgets (as opposed to the 181 who vote on the rest of the state budget). Unfortunately the federal and state governments are busy gathering the policy authority in jealously guarded heaps of centralized control and bureaucratic overreach.

    What I’m trying to say is simple: stop bitchin’! School districts are not about education in the sense of reading, writing and arithmetic; but instead public school districts are about providing a full spectrum of social services, including access to a high quality educational experience, to any and every child or young adult who needs those services.

    • Jim Christiansen :

      Rama,

      I’ve never heard a school organization (including mine) openly advocate against being a “youth services” provider. I’ve never heard the NEA or the VT principles Association take to the airwaves to rally the voters to say “no” to being a “youth service” provider.

      Yes, there are over-reaching, unfunded state and Federal mandates. However, the organizations running and servicing Vermont’s education system are happily complicit in the unsustainable rate of spending growth. It is this rate of growth that directly benefits them financially by keeping everyone well employed. (Reminds me of the perverse incentives in heath care funding)

      We don’t “HAVE” to do everything our State and Federal masters demand. It is our school leaders, and us, who choose to take the easy road and perpetuate the current, unsustainable system.

      • Actually Jim, as a school board member I am obligated to follow educational law whether I like it or not. Often times I find myself making decisions in the realm of lemonade from lemons – but that’s life. Nobody said it would be a series of easy or comfortable decisions.

        The administrators and teachers also are obligated to follow the law, and they have much more to lose by being defiant to the legal process then I as a volunteer board member do. It would be reprehensible of me to put any of our school employees in the position of feeling like they have to violate the law and the terms of their licenses to please anybody.

        I understand your point, Jim, but the answer is not to blame local districts for abiding by law and legal regulations. (And often times those laws and legal regulations make sense.)

        • Lee Stirling :

          Is there a law stating that schools have to “youth service providers”? What I think is reprehensible Rama, is the disproportional distribution of the funding schools receive. If a certain proportion of funding is assigned to programs and services to help those need extra support (due to a variety of social and perhaps biological circumstances) then an equal proportion of funding should be assigned to programs that will further propel those who are already over-achieving and allow them to realize their full potential. There has been much fuss in the past about equalizing education funding between “rich” and “poor” school districts so that the less affluent districts don’t fall behind, but what about equality within a given district?

    • Lee Stirling :

      Is there a state or federal law that says schools have to be “youth service providers” that we must comply with? What I find disturbing Rama, is the disproportional distribution of funds within school districts to the benefit of only a subset of those enrolled. There ought to be a proportional amount of school funding allotted both for programs and resources to further propel those who are already over-achieving to reach their full potential and for those who need the “youth services” that soak up so much of the education dollars now. There was much fuss not long ago about equal funding of education between “rich” and “poor” school districts so that the system was more equitable. Well, what about equality of education funding within a given school district?

      • Lee, I believe your point regarding an uneven distribution of resources is quite accurate, but the funds are distributed with the intent of achieving “substantially equal access to a quality basic education” (16 V.S.A. §1). Whether for good or bad is up to you or me to decide individually and then act as group. The reality is that there are kids and young adults who need more assistance and there others who need less. In my opinion the funding should be a reflection that.

        I do believe a problem arises when the funding mechanism can be shown to be depriving those who need fewer resource access to those resources they need. On a personal note I think we’re going to see a Brigham style lawsuit over just this issue in the not too distant future.

        As far as federal and state laws go I’ll just pass on one from the federal level that are integrated into Vermont law by both statute (16 V.S.A. §144b for example) and state education regulation.

        What we know as special education is based upon federal constitutional law that provides equal treatment regarding access to public institutions and leads us into the realm of “Free and Appropriate Education” or FAPE. The short version is that every child or young adult has the same right to access resources that meet their educational needs as every other child or young adult. This means, for example, a front door with steps leading into the school house is not legal because a child who uses a wheel chair or has problems climbing does not have substantially equal access to entering the building.

        This also leads to the requirement that public education be provided in the least restrictive environment possible (every hear complaints about unruly classmates that aren’t removed from classrooms?). This means if we’re expending time and effort to teach children to read we have to expend time and effort to teach EVERY child – including extra-ordinary financial, time and other resource expenditures as determined under a very well defined legal process.

        Public schools are being held accountable for results, and we should be held responsible. But sometimes kids come to school hungry and an empty belly does not make for a mind set on learning – thus the need to provide free or reduce meals. Children come from households that for one reason or another have not raised those children in such a manner they’re ready to learn upon entering kindergarten – thus the need to spend money on pre-K or remedial educational services.

        There’s a long and varied list of physical and emotional issues that directly impact the ability of a student to learn – and that is why we have special educational services.

        At the end of the day I think a good argument exists that we are at a point where the resources expended are so heavily weighted towards some “preferred” (defined as being those groups that are considered of greater need) groups to the detriment of those not considered of greater need.

        Somewhere else I wrote that I fully support the concept of public education as defined by access to a quality education that is free of charge at the door and open to all comers. I happen to believe this goal is best met by localized diversity with some general oversight and, of course, a respect for everyone’s rights under federal and state law. There aren’t a whole lot of easy answers, but there are a lot hard working people chomping at the bit to move ahead in positive ways – we can make it work.

      • Lee, I believe your point regarding an uneven distribution of resources is quite accurate, but the funds are distributed with the intent of achieving “substantially equal access to a quality basic education” (16 V.S.A. §1). Whether for good or bad is up to you or me to decide individually and then act as group. The reality is that there are kids and young adults who need more assistance and there others who need less. In my opinion the funding should be a reflection that.

        I do believe a problem arises when the funding mechanism can be shown to be depriving those who need fewer resource access to those resources they need. On a personal note I think we’re going to see a Brigham style lawsuit over just this issue in the not too distant future.

        As far as federal and state laws go I’ll just pass on one from the federal level that are integrated into Vermont law by both statute (16 V.S.A. §144b for example) and state education regulation.

        What we know as special education is based upon federal constitutional law that provides equal treatment regarding access to public institutions and leads us into the realm of “Free and Appropriate Education” or FAPE. The short version is that every child or young adult has the same right to access resources that meet their educational needs as every other child or young adult. This means, for example, a front door with steps leading into the school house is not legal because a child who uses a wheel chair or has problems climbing does not have substantially equal access to entering the building.

        This also leads to the requirement that public education be provided in the least restrictive environment possible (every hear complaints about unruly classmates that aren’t removed from classrooms?). This means if we’re expending time and effort to teach children to read we have to expend time and effort to teach EVERY child – including extra-ordinary financial, time and other resource expenditures as determined under a very well defined legal process.

        Public schools are being held accountable for results, and we should be held responsible. But sometimes kids come to school hungry and an empty belly does not make for a mind set on learning – thus the need to provide free or reduce meals. Children come from households that for one reason or another have not raised those children in such a manner they’re ready to learn upon entering kindergarten – thus the need to spend money on pre-K or remedial educational services.

        There’s a long and varied list of physical and emotional issues that directly impact the ability of a student to learn – and that is why we have special educational services.

        At the end of the day I think a good argument exists that we are at a point where the resources expended are so heavily weighted towards some “preferred” (defined as being those groups that are considered of greater need) groups to the detriment of those not considered of greater need.

        Somewhere else I wrote that I fully support the concept of public education as defined by access to a quality education that is free of charge at the door and open to all comers. I happen to believe this goal is best met by localized diversity with some general oversight and, of course, a respect for everyone’s rights under federal and state law. There aren’t a whole lot of easy answers, but there are a lot hard working people chomping at the bit to move ahead in positive ways – we can make it work.

  3. Michael Gardner :

    Budgets go up because 73% of the population is isolated from an increase in property taxes. If you can vote yourself more services, and force your neighbor to pay for it, you’re getting a good deal and will continue to vote in favor of increases. It is rational self interest.

    Until you change the funding mechanism and require a little more skin in the game the problems will continue.

    This theory of passing on liabilities, increasing profits (services) for oneself caused a great deal of the financial crisis when practiced by banks. Liberals are furious that banks should have had more skin in the game, but this time apparently “it’s different” and somehow through a combination of pixie dust and unicorn farts it will all work out.

    I call shenanigans on the whole process and our Dear Peter Shumlin should sack up and start telling the truth

    • Carl Werth :

      Spot on, Michael. For those who do not pay their full property taxes because of income sensitivity – who cares if they vote for a higher and higher school budgets. It means NOTHING to them because the part they have to pay never rises.

      • Dave Bellini :

        Not quite true. I benefit from income sensitivity but I vote NO because my taxes still continue to rise and eventually no one will be able to afford the out of control cost of “education.” We no longer pay for just education. Schools are a social services agency and have taken over parental responsibility.

  4. Curtis Sinclair :

    How many non-teachers and administrators are in VT schools? Could that be driving up the costs? A recent study by the Friedman Foundation for Educational Choice found that many states employ more nonclassroom personnel than teachers.

    I knew someone who used to teach at Burlington High School, and he was always complaining about how many administrators the school had.

  5. David Usher :

    Vermont is not a home rule state thus the Legislature has control of municipalities and school districts. The myth of local control must be exposed as a sham. School spending is out of control because the Legislature abdicates its responsibility to control the property tax rate and a realistic funding formula.

    The education funding mechanism is broken and the “Cillo” method must be abolished. It defies common sense that as student populations have declined, school costs have dramatically escalated.. No one in Montpelier is willing to make the hard decisions because the “Cillo” funding formula insulates politicians from doing their duty to property taxpayers. Defering to ‘local control’ is a cop-out.

    Tweaking the system is futile. We need a radical overhaul of both funding and structure. Do we have politicians willing to stand up to the challenge? Who are they?

  6. rosemarie jackowski :

    Front page headline in today’s Bennington Banner: “PARENTS CLAIM ‘CATASTROPHIC FAILURE’ ”

    This comes after years of trying for improvemnets by many parents. Finally, last week, one family ‘wired’ their 8 year-old boy. What happened in the school was secretly recorded that day.

    The system needs to be changed. Throwing money at it will not improve it. Getting more and more administrators will not improve it.

    Not too long ago, students learned to read when there were 35 in the class. Then came educational fads, hi tech, consultants, and ‘experts’. That led to a catastrophic failure.

  7. Al Salzman :

    All the comments above are a pathetic example of the blind leading the blind, and trying to shoot verbal arrows at the wrong target, if I may mix a metaphor. Teachers, unions, bad parents, ineffective lesson plans, no child left behind, race to the top, merit pay, charter schools, privatization …and on and on the back biting goes, and inevitably nothing really changes because one of the most vital root causes of educational failure are never, ever discussed at any length – to wit: the destruction of the family because of income inequality. The best way to improve the education of our kids is to provide them with an economically secure family structure where the parents have the time and wherewithall to participate in their child’s education. How can parents struggling to survive with two and three low income jobs, have the time and patience to help with homework or attend a school meeting? Study after study shows a stable, loving home environment, free of the anxiety and strife of poverty, is critical to a students learning capacity. To underscore that point – economic uncertainty is the leading cause of divorce. Raising the minimum wage to a livable level would do more to improve our schools than all the senseless jawboning so popular with piecemeal reformers. And income inequality in the U.S. is obscene. click here for some visuals which makes this clear: http://www.truthdig.com/avbooth/item/watch_the_staggering_extent_of_wealth_inequality_in_the_us_20130304/

    • The single greatest predictor of child’s success in education is how seriously the home views education. The single greatest predictor of how seriously the home views education is economic status. The single greatest predictor of a home’s economic status is the educational level of the “bread winners”.

      I’ll be happy to jump in the circle at any one of those points.

      However as a school board member I’m responsible for dealing with the realities of today. The realities of today is the fight for sensible economic policies is being lost (hopefully only temporarily).

      There is a lot local districts can do to enlist the help of the students’ homes, and I’m happy to say at least in Williamstown (other towns have done exemplary jobs in this matter due to local measures) we’re hard at work on this.

      At the end of the day local school districts are measured by educational results or the lack thereof. The truth is that measured against historical functional literacy rates, the public school system is doing a great job with much larger percentages of school age children and young adults attending. That is measuring against the expectations of yesterday – won’t move us into the future.

      The arguments over these fine points regarding education delivery are extremely important: these arguments are going to define the educational leg of the home-education-economics triad.

      So yes the arguments over the economics have to be held and won, but so do the others – it’s a three legged stool.

    • Michael Gardner :

      Al,

      With all due respect your logic is flawed. 99.9% of parents understand what action causes babies. If you are in a tough economic situation perhaps it is best to keep your pants on, and not rely on a redistributionist tax system to raise your children. There is much greater upward mobility for young adults that are not coincidently young parents, and mortality tables suggest that society doesn’t need to procreate at age 16 in order to ensure survival of the human race.

      I’m not sure why you feel it is perfectly acceptable to confiscate an ever greater portion of someone’s earned income to give it to someone else that refuses to live by reasonable societal mores.

      As a young adult I know several couples that worked hard, without college degrees, without complaining about minimum wage, and have built themselves great careers. They waited to buy a house, never drove new cars, clipped coupons, and waited for a certain degree of security to have children. In short, they accepted responsibility for their actions, and didn’t depend on government cheese for their success, despite the obstacles thrown at them. As a reward for their success they now subsidize all of their peers that got drunk, had babies, collected their benefits, don’t value education, and perptuate the cycle.

      Did you consider that poverty has a lot more to do with motivation, setting priorities, and accepting responsibility than it does with a fractional increase in the minimum wage?

  8. Dave Bellini :

    “The single greatest predictor of child’s success in education is how seriously the home views education.”

    How are you measuring this?

    “The single greatest predictor of how seriously the home views education is economic status.”

    Nearly all parents who don’t make a lot of money take their kids’ education very “seriously.” You equate competency and good parenting with wealth. What is the income level whereby parents take their kids education “seriously?”

    • In every study that includes home attitudes regarding education I have read (and it is a couple handfuls by now) a direct correlation is shown between how education is viewed at home and how well as a group children/young adults do in school. Lower income households tend to have lower expectations of what education can accomplish; lower income homes tend to be less aggressive in pursuing educational options and opportunities; lower income homes tend to be less able to provide the physical needs of education; and other.

      This is not because these people are all bad parents (bad parenting gets well spread out among economic classes), instead it is because low income homes tend to be made up of parents/other adults who themselves are not well educated.

      It’s a learned thing … cultural if you will: “It was good enough for me, it’s good enough for my child,” or “Of course you have to go to school, it’s the law,” or “You can’t get a job without a high school diploma so you’d better get that.”

      Nothing I’m saying here is controversial. These are well recognized and documented constants.

      I guess you have a choice if you’re a low income parent: take insult from this reality or break the cycle if you are in the low education-low income-low education-low income … cycle.

      It is an absolute truth that low income doe not equal low educational performance – but there is a group correlation that can’t and should not be ignored.

      Better educated kids will be able to better participate in society and the economy which will improve their family situations which will, because they achieved through learning, have them encourage learning as something that has a value of its own.

      That last part is, in my opinion, the holy grail of ANY education system (public, private, home school, self teaching, whatever) – a person who values learning enough to put great amounts of effort into doing so. That is the student who has the best chance educationally. That student will then enter the previous paragraph and on and on.

      As the old saw goes: you can lead a horse to water, but you can’t make it drink.

  9. Sara DeGennaro :

    Those of us who live in Vermont with income and sales tax often look across the river at New Hampshire and think “well, at least their property taxes are higher than ours”. And in general, this is true, if you are not a Vermonter unfortunate enough to be struggling to pay your ever increasing property tax.

    But the truth is, Vermont enacted a statute in 1797, referred to as the “commission law”, which results in approximately 10% of Vermont’s most vulnerable property owners being severely financially penalized and having their homes at risk, even though they have committed no crime.
    This law, VSA T.32, § 1674, States:
    (2) On all taxes collected after the expiration of the time established in the notice required by section 4772 or 4792 of this title, the collector MAY charge and collect from the taxpayer a commission of eight percent on the amount of the tax, unless a municipality votes otherwise pursuant to subdivision (3) of this section.
    [The word “penalties” in the introductory phrase was only added in 2003, the word does not appear anywhere else in the body of this law.]

    This statue has been interpreted by Vermont towns as permitting (not requiring) an ADDITIONAL 8% penalty on delinquent property taxes, on top of the 1% per month and 1.5% after 3 months, interest allowed by Vermont law (an annual rate of 12% for three months and 18% after that to cover the extra cost of collecting their taxes past the due date).
    Municipalities can borrow money if they need to at about 4% interest, thus earning a net of about 8-14% interest on the delinquent taxes owed. This is a very profitable deal for the towns and it is essentially a risk-free loan.
    All property taxes eventually get paid one way or another, a lien is put on delinquent property, and a house may eventually be sold. The longer it takes, the more interest accrues, and the more money the municipality makes.
    This net profit earned is greater than the total cost of collecting the delinquent taxes and goes to the general fund, and actually lowers the tax rate for all property taxes. So regardless of any penalty, there is no net financial harm to anyone except those paying the penalties.

    Interest on Delinquent Vermont Taxes
     End of Year 1: 8% + 16.5% = 24.5%
     End of Year 2: 24.5% + 18% = 42.5%
     End of Year 3: 42.5% + 18% = 60.5%
     End of Year 4: 60.5% + 18% = 78.5%
     End of Year 5: 96.5% + 18% = 96.5%

    New Hampshire has no penalty for overdue taxes and their percentage of overdue taxes is approximately the same as Vermont’s.

    Why does Vermont still have this law? The purpose of this law 100 years ago was to provide a 8% commission for the Delinquent Tax Collector, at the time this averaged about 75 cents for each delinquent tax collected. That 75 cents is equivalent to about $13 in today’s economy.

    With the increase in property values, the same 8% applied to the average delinquent property tax today yields approximately $150. – 10 times a reasonable Vermont hourly rate.
    Approximately 80% of Vermont towns still allow the elected delinquent tax collectors to keep the 8% penalties as their “commission”.
    This amounts to compensation in the range of $100 to $200 per hour.
    Is it possible for Vermont municipalities to solve this problem without fixing this law?
    The language of the law “allows” but does not require a commission of 8%.
    Municipalities may set the “commission” anywhere from 0% to 8% to provide a reasonable amount of pay for the actual work done in that municipality, they can also decide to pay an hourly wage. Citizens can decide this at town meeting or Select Boards can make this decision.
    In addition, this onerous penalty is probably a violation of the Vermont and U.S. Constitutions.
    Amendment VIII to the U.S. Constitution says: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”
    Also, The Vermont Constitution, Chapter II, …”§ 39. [Forms of prosecutions and indictments; fines] All prosecutions shall commence, By the authority of the State of Vermont. All Indictments shall conclude with these words, against the peace and dignity of the State. And all fines shall be proportioned to the offences.”

    But only about 20% of Vermont municipalities have taken any action to date to stop this huge amount of money that could be spent in our local economies.
    Only the Town of Hinesburg has eliminated the penalty altogether three years ago, and the number of penalties has not changed significantly in that town since.

    Why has nothing been done about something intended to be only a reasonable “commission” evolving into a penalty, in the form of a fine, which is excessive compared to any reasonable definition of the offense against the municipality?
    Change is strongly opposed by a very strong and effective lobbying organization, the Vermont League of Cities and Towns, who represent the following two groups who greatly benefit from the current situation.
    The first is almost all the delinquent tax collectors in the state who are not paid a salary by their town. They keep this 8% “commission”, for a part time job that pays more than $100 per hour, and they do not want to give that up.
    Second are the many municipal officials (and other citizens) who mistakenly believe that an 8% penalty is both just and necessary to prevent an increase in delinquencies, and who have grown accustomed to receiving the revenue from the penalty.
    The fact is most people pay their taxes before the due date because it’s the law, and because the interest rate of 12% – 18% on a late payment is very high. A deterrent is not needed.

    (See data of Bruce D. Cunningham, of Hinesburg, Vermont, who has been trying to get this law changed for more than a decade.)

    The final outrage is that many Vermont counties, including Windsor County, allow investors to come in and pay off a portion of these delinquent property taxes in return for Vermont Lien Certificates. These “investments” are touted on the internet as “real estate secured, high-yielding returns” on investment.

    A Vermont tax lien certificate gives an investor all of the tax money due – including fees, interest, and penalties. When the Windsor County Vermont Tax Collector collects the past due taxes, they send the investor a check, returning what they paid to purchase the Vermont tax lien certificate plus the penalties, interest, and/or late fees, paid by the struggling Vermont property owner.
    If the investor does not receive what they paid to purchase the Vermont tax lien certificate, plus interest and/or penalties within the law mandated redemption period, then by law Windsor County Vermont has the legal right to give them the property.
    As one ad for these investments crows: “Once you own the property you can do whatever you like; sell it for huge profit checks, rent it for monthly cash-flow, or if you like, even move in with no mortgage payment. The choice is yours, the property belongs to you.” And another Vermonter is homeless.

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