[A] House representative is proposing a change to the statewide property tax that could lower taxes for some towns and raise taxes for others.
Rep. Scott Beck, R-St. Johnsbury, proposes to shift the tax burden between districts.
“The biggest complaint I hear is constituents don’t feel they are connected to their tax rate. This will connect a district to its rate,” Beck said when presenting his plan to the House Education panel.
Currently, per pupil spending by town varies between $10,000 and more than $20,000 a year, while the statewide property tax rate for education is constant. That means taxpayers in low-spending towns are subsidizing higher spending districts.
Beck says his plan could contain statewide property taxes while meeting the equity standard set by the Brigham decision, a 1996 Vermont Supreme Court ruling that precipitated the creation of the statewide property tax system for education funding.
But an analyst from the Joint Fiscal Office says that Beck’s proposal isn’t likely to lower statewide spending.
Beck’s bill would change how the state calculates the tax rate for the education fund. Under the proposed formula, the statewide property tax would be adjusted to reflect spending levels. Lower spending districts would have lower taxes; higher spending towns would have higher taxes.
“It is an issue of fairness,” he said.
Beck showed members of the House Committee on Education three examples of how this new calculation would work using Fiscal Year 2017 numbers for school spending.
The base spending level per pupil is $12,437 in all three examples with a tax rate of $1 per $100 of assessed property value.
In a district that spent less, in this case $12,200 per pupil, the tax rate would go down to 98 cents. Under current law, that town is paying $1.26 per $100 of assessed property value.
For a school district spending the base amount, the tax rate would be $1, under Beck’s formula. Currently schools that spend the base level per pupil pay $1.28 because the burden of higher spending districts is shared across the state.
Currently, a school district that spends $17,000 per pupil has a tax rate of $1.75 but under Beck’s proposal, the rate would go up to $1.99.
“We will get much more equity and not such a broad range of education spending by putting these people on a steeper line and making the education money more expensive, it will restrict growth,” Beck said.
Beck’s plan would be phased in over three years to minimize the impact on school districts.
(This chart shows how it would work.)
Joint Fiscal Office analyst Mark Perrault says Beck’s proposal would have little impact on statewide spending. In fiscal year 2017, for example, Perrault says it would have increased homestead tax rates in about 46 percent of school districts – accounting for 44 percent of statewide spending – and reduced tax rates in 54 percent of school districts accounting for 56 percent of statewide spending.
“Without an infusion of new revenue or a reduction in spending, changing the way in which the homestead tax rate is calculated is a zero sum exercise,” Perrault told the House Ways and Means Committee.
Two-thirds of all homesteads pay property taxes based on income (they receive a discount based on ability to pay) and they would have paid more last year under Beck’s plan, according to Perrault.
Rep. David Sharpe, D-Bristol, chair of the House Education Committee said he wants to look into how this group of taxpayers would fair under the plan.