Tax equalization

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(Host) Commentator Dick Mallary says that a recent court decision has implications for all Vermonters.

(Mallary) Having recently completed a short tour of duty as Tax Commissioner, I probably have an inordinate interest in Vermont tax issues and policies. But an event occurred in Vermont in late October that should command the interest of all Vermonters, since it will affect our taxes and our schools for many years to come.

On that day, the Vermont Supreme Court reversed the trial court in a case brought by the Town of Killington against the Vermont Tax Department. In doing so, it confirmed the validity of the State’s procedure for equalizing property values — a foundation of Act 60 and our system for funding public education.

Act 60 seeks to assure equal educational opportunity for all Vermont children regardless of the town in which they live. It does so in part by assuring that each town in the state has relatively equal access to funds to educate its students.

Since the major funding source for education is the property tax, it is necessary to have an accurate estimate of the fair market value of all taxable property in each town in order to make the application of the statewide property tax fair.

Every town selects its own local listers or assessors, and their assessment practices range from excellent to highly questionable. Yet, even when their assessments are accurate when they are made, they tend to become unrealistic with the passage of time and the effect of inflation.

Act 60 charged the Property Valuation and Review Division of the Tax Department with determining the equalized fair market value of property in every town in the state to use as a basis for imposing statewide education taxes.

The primary method used by the Division to find equalized values is to compare all the valid, free market sales of property in each town for a specific period with the values established by the listers for the same properties.

By calculating the disparity between sale prices and the listed values for different categories of property, the Division determines a Common Level of Appraisal for each town, each year.

Admittedly, the system is not perfect. In some towns too few sales of certain types of property take place to have a valid statistical sampling. Some sales included in the study may be anomalies and don’t truly represent value. Some unusual or unique properties are also inherently hard to evaluate.

But, the state’s system of equalization was never, as the trial court said, arbitrary and capricious. The system is sound and is getting better, and it is the only practical way to equalize tax burdens short of having a single entity do all the appraisals in the state.

The Supreme Court was right and it did the state a service in ending the long guerrilla war that has been waged against Act 60 ever since its passage.

This is Dick Mallary in Brookfield.

(Host) Dick Mallary has served extensively in state government and is a former US Congressman from Vermont. He spoke from our studio in Norwich.

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