Lawmakers scrutinize Common Level of Appraisal

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(Host) Lawmakers are struggling to find a way to change a little known provision of Act 60 that’s causing local property tax rates to increase dramatically in many parts of the state.

VPR’s Bob Kinzel reports:

(Kinzel) If you mention the phrase “Common Level of Appraisal” to many people at the Statehouse, their eyes might glaze over. But these three words, commonly known as CLA, are turning out to be one of the most important factors in determining local property tax rates. While CLA has become a lightening rod under Act 60, it’s actually been part of state aid to education formulas for decades.

Here’s how it works: Because individual towns conduct reappraisals at different times, a mechanism is needed to update property values in all communities to make certain that all towns are taxed on an equal basis. That mechanism is the Common Level of Appraisal. Senate Finance Chairwoman Ann Cummings says this kind of provision is critical to maintain equity under Act 60:

(Cummings) “The Common Level of Appraisal, some form of equalization is necessary in order to have a level playing field for towns and to keep towns, give them an incentive to appraise and not to have one town having an advantage over another.”

(Kinzel) Because property values are increasing annually at double-digit rates in many parts of the state, the Common Level of Appraisal adjusts the local tax rate to reflect this growth in the grand list.

For instance, the school board in Barre estimated that a small increase in their budget would boost the tax rate by three cents. But the state has determined through an examination of recent home sales that property values in Barre have grown dramatically in the last year and the adjustment of the appraisal means that taxes will have to go up 14 cents to fund that small school budget increase.

Cummings says the appraisal system confuses voters and makes life very difficult for local education officials:

(Cummings) “I think the issue we have now is that we make the adjustment after Town Meeting. And so you go your Town Meeting and you vote for $1.28 and your tax bill comes and it’s $1.38. What’s really happened is that the value of your house has gone up that percentage, but that’s not how we apply it probably because it’s a little more complicated. So it just comes back as an adjustment to your tax rate. That’s not clear, it’s not understandable to people.”

(Kinzel) Governor Jim Douglas has proposed capping annual increases caused by this appraisal system. Cummings says she wants her committee to look at the plan to see how it will affect communities hit hardest. Cummings also wants her panel to study other options that would limit the overall impact of the appraisal method.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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