(Host) Governor Jim Douglas says a surplus in the state’s Education Fund will allow lawmakers to reduce the statewide property tax rate for education by eight cents. Douglas says the surplus is the result of escalating property values in many parts of the state.
VPR’s Bob Kinzel reports.
(Kinzel) When lawmakers passed Act 68 during the 2003 session, they added a provision to the new law that called on the state to return any surplus money from the Education Fund directly to taxpayers. Several members of the Senate Democratic caucus supported this provision because they believed that rising property values could result in a substantial surplus.
In the last year, property values have increased roughly 11.5 percent across the state, a situation that has created a $15 million surplus in the Education Fund.
Act 68 calls on the governor to make an annual recommendation for the appropriate level of the statewide property tax rate. The rate is currently $1.10 for residential property and $1.59 for all non-residential property. Douglas says he’ll ask the Legislature to drop each rate by eight cents:
(Douglas) “This brings the total property tax savings achieved by Act 68 to more than $40 million over a two-year period. The primary reason I’m proposing these rate reductions are because statewide property values are growing at an average of 11.5 percent while the K through 12 school population continues to drop by an additional one percent, or roughly 1,000 students. So without lower tax rates, the education fund would be collecting more than is necessary from taxpayers, even while the demand for education spending is being constrained by a lower school population.”
(Kinzel) Senate Finance Chairwoman Ann Cummings says she strongly supports the reduction in the tax rate because it’s important to limit the use of statewide property tax revenues to the Education Fund.
(Cummings) “We were very concerned that in the history of the past, if the state budget has difficulty we switch more of the education burden on the property tax. And so this provision was put in to prevent that from happening.”
(Kinzel) Cummings says it’s very likely that lawmakers will support the governor’s recommendation in January.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.