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The Vermont Senate is planning to pass legislation Monday that would give town officials the authority to delay property tax deadlines this year to provide relief during the Covid-19 pandemic.
The bill would give selectboards and other bodies governing municipalities the power to create new deadlines for property tax payments due in 2020. It would also give them the ability to decrease, waive or establish grace periods for penalties and interest on late property taxes.
A town can currently make changes to property tax requirements, but only if its voters decide to do so at a public meeting.
Sen. Jeanette White, D-Windham, the chair of the Senate Government Operations Committee, which approved the legislation on Wednesday, said towns heard from concerned taxpayers and asked her committee to make the change.
White noted that legislation won’t mandate towns to push back deadlines or waive penalties, but gives them flexibility to do so.
“Some towns may think it’s the right solution, some towns may think it isn’t the right solution,” White said.
“The towns know their taxpayers and their budgets better than we do, and let’s just let them decide.”
But delaying the property tax deadlines could pose a problem for municipal and state finances.
Towns are responsible for paying the state what they owe for education spending, whether they have collected enough property tax revenue to pay for it or not.
And if towns don’t pay the state what they owe on time, they’re slapped with 8% penalties.
The Vermont League of Cities and Towns is urging lawmakers to add a provision in the legislation to eliminate the penalties towns face for making late payments, if they’re also pushing back deadlines for taxpayers.
“The reason that cities and towns would make incomplete education fund payments in 2020 is that people have no capacity to pay,” Karen Horn, a lobbyist for the league wrote in a letter to lawmakers this week.
The league is also asking the legislation to include a requirement for the state to borrow money to replace the funds towns may not have on hand to pay the education fund.
Sen. Ann Cummings, D-Washington, who chairs the Senate Finance Committee, said on Thursday that she had concerns about “giving towns blanket authority to reduce interest and penalties.”
She said she was open to towns abating individual residents’ property tax burdens, but giving the towns the authority to categorically push back deadlines could mean a lot less revenue for the education fund.
“I think if they do it on an individual basis, it’s fine. But if they do it on a townwide, ‘We’re just going to postpone’, that means some people who can pay, won’t pay. And we need to make sure we’re getting as much money in here as we can,” Cummings said.
The outlook for the education fund already looks bleak. Analysts predict it will face a deficit of at least $40 million by the end of the fiscal year, because other tax deadlines have been delayed and consumption tax revenues have plummeted.
But White said that towns aren’t going to make changes to their property tax requirements “in a vacuum” and may not all vote to move their deadlines.
“They’re going to do this in relation to their payment to the state … some towns have more of a reserve and some towns might be out straight already,” she said.
“But I think we can just trust them to make that decision for themselves.”
Lola Duffort contributed reporting.
