New tax rates affect education spending

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(Host) Today, VPR takes a close look at the school tax in Vermont. A new study shows that many communities will see a reduction in their rates.

VPR’s Bob Kinzel reports on the effect of recent changes to Act 60.

(Kinzel) The changes to Act 60 were passed last year after several dozen school budgets were defeated on Town Meeting Day.

Under the new legislation, known as Act 68, there will be two statewide tax rates to pay for education. A residential rate of $1.05 will be established to help finance a new student block grant of roughly $6,800. If a community spends more than the block grant an additional local share will be added to the statewide rate. For instance, if a town votes to increase spending 10 percent above the $6,800 block grant, their local share would amount to 10 percent of the statewide rate of $1.05 or 10.5 cents.

A second fixed rate of $1.54 will be assessed on all non-residential property and any increases in local spending will not affect this rate. Lawmakers also dedicated a one percent increase in the state sales tax to provide $50 million of new money for the Education Fund.

Brad James, who’s Finance Manager at the Department of Education, says the provisions of Act 68 will have a positive impact in many towns:

(James) “In general people can raise their budget spending an amount and the tax rate, the actual education tax rates, will decrease. And the main reason that’s true is because of the extra money that was put in under the increase in the sales tax under Act 68. The base amount went from $5,810 to $6,800 due to the increased funding under Act 68 and that’s what’s changing that dynamic.”

(Kinzel) Jeff Francis, who’s executive director of the Vermont Superintendent’s Association, says that while some towns are proposing sizeable school budget increases, a number of others are seeking very modest increases because they’re experiencing declining enrollment rates. Francis isn’t expecting a taxpayer revolt across the state on Town Meeting Day:

(Francis) “I think that in many ways school officials have responded appropriately. Again, what happens in a community is often a community-by-community determination. But I think in general, school boards have budgeted very tightly this year and I think that in combination the factors we’ve cited will hopefully result in more budgets passing the first time through than we saw last year.”

(Kinzel) A number of communities are also conducting reappraisals this year. While reappraisal is viewed as a revenue-neutral process, properties that have increased in value above the town average, will also experience additional tax burdens.

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

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