The Douglas Administration is considering a plan to lease the Vermont Lottery to a private company in order to finance a one time property tax relief plan.
Administration Secretary Mike Smith says the proposal would provide an additional $25 million to lower the statewide property tax for education in 2008.
VPRs Bob Kinzel reports:
(Kinzel) For the past few months, the Douglas Administration has been looking at ways to finance a one time significant reduction in the statewide property tax rate for education.
The Governor is backing this effort because he says rising property tax burdens are a huge issue for those Vermonters who aren’t covered by the income sensitive provisions of Act 68.
Here’s how this plan would work. The state would lease the lottery to a private company for a period of 30 years. The contract would guarantee that the state would continue to receive roughly $23 million a year from the lottery.
In addition, the state would receive a one time, up front payment of 50 million dollars from the company.
Administration Secretary Mike Smith says $25 million would be allocated to school construction projects and the remaining $25 million would be used to lower the statewide property tax rate for education.
Smith says a one time plan is needed because a new law that calls for supplemental school budget votes in high spending towns doesn’t go into effect until the 2009- 2010 school year:
(Smith) "We need to find a mechanism to provide property tax relief as a bridge until the new law comes into effect…The concept is to lease the Vermont Lottery to a private entity."
Smith anticipates that the state’s Education Fund will record a $30 million surplus this year. He says if this surplus and the up front lottery payment are both used to lower the statewide property tax rate, next year’s tax burden for most Vermonters will be stabilized:
(Smith)"…To make sure that Vermonters property tax burdens wouldn’t increase more than 3½% or thereabouts or less from last year’s property tax bills, so what we would have is a bridge so that people are protected around the rate of inflation in terms of the school tax burden for one year."
Smith says any agreement to lease the lottery would have to include protections to make certain that the new operation followed Vermont policies:
(Smith)"We will make sure that we negotiate the lease as tight as possible to make sure that we get the provisions in there that make this a Vermont scale operation not some out of state big scale operation so there are a lot of protections in this and a lot of things that we think have a lot of benefits for education in this state"
Smith says the lottery currently employs 23 people – if the deal goes through he says these employees will have the choice of working for the new company or taking a different position in state government.
For VPR News I’m Bob Kinzel in Montpelier.