Promise of property tax reduction may disappear

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(Host) Property taxpayers should not expect a reduction in statewide school taxes this year.

That’s the message from Montpelier. The state has lowered its forecast for how much money will be collected in taxes. So that means little money for property tax relief.

But the Douglas Administration and legislative leaders are in a political spat over what to do about it.

VPR’s John Dillon reports:

(Dillon) In Montpelier, there’s policy – and there’s politics. The school tax issue has a bit of both.

In December the Tax Department is supposed to let school districts know the statewide property tax rate for education.

The idea is to give school boards enough time to plan their budgets before March Town Meeting.

But now an expected 2 cent reduction in the statewide school tax has vanished. Declining revenues are to blame.

(Smith) “There will be no statewide property tax decrease unless action is taken by the legislature.”

(Dillon) Administration Secretary Mike Smith says Governor Jim Douglas has a solution: lease the state lottery and use half the up front payment – about $25 million – to lower property taxes.

(Smith) “If they’ve got another proposal to reduce statewide property taxes – put it on the table.”

(Dillon) But the lottery lease plan is a non-starter at the Statehouse. Lawmakers are very skeptical of privatizing a state asset, and raising money by increasing gambling.

And Democratic leaders say the administration isn’t being responsible. They say the administration failed to get the word out to schools that they can no longer count on a tax rate reduction. Here’s House Speaker Gaye Symington.

(Symington) “Based on what we now know, that 2 cent reduction is not going to be possible. We all agree that that is the case for current law revenues. It is our feeling – and it had been my assumption – that they would let the education commissioner know that. They haven’t done that.”

(Dillon) Administration Secretary Smith says he’ll get the word out so schools know what money is available from the statewide tax.

But he turns the issue back around on Symington and the Democrats. He says it’s the Legislature’s responsibility to set the tax rate. Lease the lottery, he says, and taxpayers will get some relief.

(Smith) “You know, if there are other options out there, let’s look at them, but doing nothing is not an option.”

(Dillon) Symington isn’t buying the lottery plan.

(Symington) “The notion that you would take $25 million of one-time money and pump it into the education fund to mislead Vermonters on a one-time basis as an election year gimmick is outrageous to me. We learned in the ‘80s, I think it was, that you don’t take one-time money and pump it into school spending.

(Dillon) But Smith says the plan is sound because it provides a bridge to the following year. That’s when he expects a law that requires two votes on school budgets in high spending towns to reduce school spending.

For VPR News, I’m John Dillon in Montpelier.

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